Greece deal, step in right direction: Analyst
Press TV has conducted an interview with Mark Thornton, a senior fellow at the Mises Institute in Albama, to discuss Greece’s deal with its international lenders over a multi-billion-euro bailout.
The following is a rough transcription of the interview.
Press TV: I am looking at what Greece says has to implement and this is lawmaker taxpayers and ministerial salaries. Are these figures so high that they need to be slashed?
Thornton: Well if the 86 billion dollar deal represents a cutback on the amount of Greek debt, then it is definitely a step in the right direction. If they are simply adding another 86 billion dollars of new debt on top of the existing debt, then it is economic insanity that could never possibly ever be paid off no matter what Greece did with its internal reforms. So that is a key aspect of the deal. Is it a write down of the debt or is it just adding new debt to the old debt?
In terms of cutting ministerial salaries, that is actually a good step in right direction. Real austerity from the Austrian school of economics perspective is when you have a law in place that any budget deficit is covered by cutbacks in the salaries, benefits and pensions of existing politicians, bureaucrats, ministers, and government employees, that would bounce the budget automatically and it would give a tremendous incentive for everybody working in government to make sure that they have a bounce budget year in, year out without having to go into any new debts. So in terms of internal reforms, yes, that is a step in the right direction.
Press TV: And do you think that they are able to pay back their debt because some are saying this recent agreement might as well just put Greece away because they are not going to be able to repay this debt?
Thornton: Yes that is absolutely correct. The current Greek economy has no way of sustaining itself and it certainly in terms of paying off an enormous government debt that currently exceeded its entire gross domestic product for year and so the European politicians and banksters have essentially re-written that debt so that it paid off over an entire generation so it has already being pushed out into the future.
The interest rates are very low relative to Greece, creditworthiness and so just adding more debt on top of that makes the situation that much more unsustainable. And so the current politicians and banksters in Europe are hoping that they can push this problem off into a period of time when they are no longer in public office and somebody else will have to bear the burden and make the tough decisions that they have failed to do.
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