Tuesday, April 14, 2009

Reforms are the only effective response to the crisis

Liberal Alliance press release 13 November 2008

Liberal Alliance (Greek Liberals) contents that the major political parties use the global financial crisis as an excuse dealing for populist stunts instead of dealing with it, seriously and responsibly. The Greek Government and the Opposition bid for the most spectacular spending splurge, and the most generous promises about redistribution of wealth to promote their supposed 'social sensitivity'.

Still none of those 'compassionate' politicians explains to the Greek people where the money will come from. It appears, that since they do not propose any measures to increase wealth and develop the economy, they are most likely to resort to their usual tactics of lending and sinking the government finances into more debt.

They are gravely misguided.

The disastrous mismanagement of the economy from the governments led by New Democracy and PASOK have accumulated a huge public debt the servicing of which, requires around 40 billion euros each year of new loans.

This annual borrowing is becoming even more unmanageable now, because of the recent increase to the spread of interest to 1.5 from 0.32 that it was at the beginning of the year. This means that whilst Germany is borrowing with an interest at 3.78%, Greece will borrow with an interest at 5.28% since October. This rate reflects the increasing unreliability of the Greek Government, to its creditors.
Greece's demotion to the countries with a high default risk combined with the limits set by the European Union's Stability Pact make the 'good intentions' of the 'compassionate' politicians impossible to fulfil.

Liberal Alliance believes that only economic growth through radical reforms can respond effectively to the crisis. Nuriel Roumbini, the economics professor of New York that became famous for predicting the global financial crisis, states that there is no alternative for Greece but to reform its economy.

Liberal Alliance proposes a different economic development model based in reforms implemented successfully all over the world. By applying Liberal Alliance proposals for the economy to the 'reforms simulator' of the World Bank, Greece's economy is placed at the ten most competitive economies in the world from the 100th position it is today.

Liberal Alliance proposes that the best protection of the citizens against this and future crisis is achieved by improving the competitiveness of the Greek economy.

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