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August 19, 2010 / joninews

Greek bonds slump as austerity backfires, country enters “Death Spiral”, and the violent end game approaches

“Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back. A mixture of fear, hopelessness and anger is brewing in Greek society.”

“If you take away my family’s bread, I’ll take you down — the government needs to know that. And don’t call us anarchists if that happens! We’re heads of our families and we’re desperate.”

Source: Zero Hedge

Those patiently following the Greek Bond-Bund spread to its inevitable conclusion have been fully aware that the plan that Europe is betting its entire future on, is patently flawed: namely that austerity, by its definition does not, and will not work. In fact, instead of bringing stability, austerity will slowly but surely eat away at the economy of whatever country it is instituted in – in some cases slowly, in others, like Greece, very rapidly.

Read full article

Comment: Perhaps the Georgian government would be wise to heed the warnings given here, a government which has had to renege on what Saakashvili himself called “the most important principle” of the Act Of Economic Freedom, which was his promise that “the government should not be able to use the right of increasing a tax or introducing a new one without public consent”. In the latest round of tax increases there was no sign of the promised referendum – which sounds a little bit like there’s some cloak and dagger austerity measures being implemented here. The IMF, of course, are full of praise for the economic soundness of the decision to cross out this “most important principle”, but then they would, wouldn’t they? We all know that the primary mission of the IMF is not to help countries, but to enslave them in eternal debt to provide rich picking grounds for their corporate buddies

Who knows what might happen if the Georgians got all “Greek” about things?

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