Thursday, September 1, 2011

Greece's Austerity Plan is Already Failing

Well, that didn't take long (around two months).  Apparently Greece's tax increase heavy austerity plan is already failing miserably, putting additional aid at risk.  According to officials who spoke to Reuters, the main problems are:

  • "The deficit is certainly at least one percentage point higher than the target"
  • The economy is currently contracting at a 4.5-5% rate versus a 3.9% target
  • "Previous measures which were in the baseline plan yield less than expected, in particular tax measures"
Hmmm, so raising taxes in a recession hurts the economy and doesn't yield as much as expected.  Shocking.  I'm not sure how Northern European politicians survive voter wrath if they let Greece get bailed out after missing targets, again.

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