The time to be "austere" should be when the economy is doing well. Fiscal (or deficit) spending should increase during slumps to buffer the economy. Unfortunately, someone has to lend you the money and Greece's really doesn't have many monetary options.
Yep, austerity works for the international banking elite and the upper reaches of the one percent as it transfers wealth to them.
Basic political economy, this is. Unfortunately, contemporary political economic thinking among elites seems to have this backward.
I think what the EU leaders are saying is basically, hey you put yourself in this mess, we think you should let your economy contract all the way to the bottom and then you can dig yourself out. Of course, that could take 20 years.
Yeah. It is what they are saying, but it isn't likely to solve the problem. It is a "micro" argument being applied at the "macro" level. Further contracting a contracting economy hasn't historically been a bright idea. And it may not just be worse for Greece, it can become more of a drag on the entire EU. The obvious question is: for which countries has austerity worked? And I am (not really) surprised to see little reporting on this in the media. The BBC did a pretty shallow look at austerity in various countries, most of which took the steps Greece has refused to take: http://www.bbc.com/news/business-33470220 Here is an Irish opinion in favor of austerity: One thing we can say is that the banking sector across all nations pretty much made out like bandits in these bailouts. The banks and bondholders didn't have to take the full losses they were mathematically exposed to because society bailed them out. I think the author of the above piece would do well to remember it was the folks he says the "anti-austerity" people expect to pay government debt ("the bondholders, the bankers") who got bailed out in the first place. In that, there is some bitter irony. All in all, governments are the opposite of households: they should incur debts when the economy is bad and pay down debts when the economy is good. And, due to both liberal and conservative projects and interests, in general, governments have been bad at this and do just the opposite. I'll just add this piece by Fintan O'Toole:
