The ECB and Friends Are Responsible for Greece Not Meeting Their Conditions

October 03, 2011

It would have been helpful if the NYT had made this point in an article that discussed the failure of Greece to meet deficit targets set by the “troika,” the European Central Bank (ECB), the IMF, and the European Commission. The austerity conditions that the troika imposed on Greece and its trading partners coupled with excessively restrictive monetary policy by the ECB has slowed growth within Greece. 

While the article notes that the slower than expected growth is the cause of Greece failing to meet the targets set by the troika, it does not explain that the troika itself is largely responsible for the slower than expected growth. While the economic officials in key positions in the troika have a long track record of dismal failure (hence the current downturn), top officials in these bureaucracies are rarely punished for poor performance. As a result, they can keep repeating the same mistakes more or less indefinitely.    

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