January 26, 2015

It seems the Greeks have finally had enough of austerity: Europe's Austerity Moment Is Ending:

Voting in Sunday's much-watched Greek elections has ended, and exit polls suggest that the far-left Syriza party has captured nearly 40 percent of the vote. While this may not be enough to ensure a parliamentary majority in Greece's electoral system, it's now clear that Alexis Tsipras, a fiery 40-year-old once considered too radical for national politics, will lead the next Greek government. Tsipras has promised to end Greece's "austerity program," a series of spending cuts and tax hikes designed to reduce the country's enormous bailout debt, which equals 175 percent of its GDP. Freed from this burden, Tsipras argues, the Greek government will implement policies to generate economic growth.

Since the 2008 financial crisis, Greece has endured an extreme version of the troubles plaguing Europe as a whole. One in four Greek adults do not work, and the unemployment rate for the country's youth exceeds 50 percent. The black market is estimated to comprise half of Greece's economic activity. More than 200,000 have voted with their passports and emigrated. Given these conditions, the appeal of Syriza—once considered a fringe leftist party—has grown markedly.

Tsipras' victory presents the troika—a consortium consisting of the European Central Bank, the European Commission, and the International Monetary Fund—with a series of unappetizing options. If the troika gives in and writes down Greek debt, then other, larger countries—such as Spain—will have an incentive to negotiate a similar deal, triggering a major financial headache in Brussels and Frankfurt. If the troika refuses, then Greece is likely to default on its debt obligations this year and be forced to exit the eurozone—a fate that neither Tsipras nor the European leadership say they want. Either way, the events in Greece signal that Europe's long, failed experiment with austerity is cracking. Read on...

As Yves Smith discussed, the reaction from much of the media is predictable: Media Demonization of Syriza: Pretending that Neoliberalism is Popular and Mainstream:

We’re having two posts on the Greek elections tonight, since the media accounts are so slanted as to merit discussion. The notion that a democratically elected government would put broad social interest over continued, self-destructive sacrifices to financiers and their allies in European governments is so threatening that a large swathe of media outlets seem almost to take visceral offense at the idea. Editors and writers are thus serving as vocal enforcers of keeping the Overton Window locked in its present, far right position. Read on...

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