Europe’s bailout package for Greece

At best the IMF-EU bailout package will stave off a disorderly Greek default for three to six months. It is fanciful to think that the application of the same failed policy prescription of hair shirt fiscal austerity in a currency union will work any better this time around than it did over the past two years. The limits will soon be reached as to how much further pain Greece can withstand and how much longer Greece’s body politic can continue with economic policies that are literally driving the Greek economy into the ground. It would seem highly probable that Greece will seek a new policy direction after its next election which will probably occur in April. And the IMF and EU will find out how little they got for the EUR 90 billion they spent in their futile effort to prevent the inevitable disorderly default and Greek exit from the Euro.

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About the Author

 

Desmond
Lachman
  • Desmond Lachman joined AEI after serving as a managing director and chief emerging market economic strategist at Salomon Smith Barney. He previously served as deputy director in the International Monetary Fund's (IMF) Policy Development and Review Department and was active in staff formulation of IMF policies. Mr. Lachman has written extensively on the global economic crisis, the U.S. housing market bust, the U.S. dollar, and the strains in the euro area. At AEI, Mr. Lachman is focused on the global macroeconomy, global currency issues, and the multilateral lending agencies.
  • Phone: 202-862-5844
    Email: dlachman@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202.862.5862
    Email: emma.bennett@aei.org

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