Tough Love. Freight Train Style.

By Stephanie Kelton

President Obama, who met with Greek Prime Minister Antonis Samaras at the White House yesterday, is reported to have said that while Athens can’t rely exclusively on austerity for its economic recovery, it will need to take tough action:

It is important that we have a plan for fiscal consolidation, to manage the debt, but it is also important that growth and jobs are a focus,” said President Obama.

I think Prime Minister Samaras is committed to taking the tough actions that are required, but also, understandably, wants to make sure the Greek people see a light at the end of the tunnel.

The Greek people have already seen household incomes fall by a third as a consequence of three years of “tough action.” Unemployment stands at nearly 28 percent, and youth unemployment is a staggering 64.9 percent. A quarter of the population has trouble putting food on the table, public health is deteriorating, suicide is up 26 percent, etc. Worst of all, there’s no end in sight.

The Greeks have served as Guinea Pigs in the most vile neoliberal macroeconomic experiment in modern history. From where I’m sitting, that light at the end of the tunnel looks like just another oncoming freight train.

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16 responses to “Tough Love. Freight Train Style.

  1. Translation: Do the impossible by running a fiscal surplus while the domestic private sector desires to net save, with Greece along with the rest of the South is in a trade relationship with the mercantilist North, while at the same time improving the economy through expansionary economic policy.

    Did the president pass Algebra I? Doesn’t seem so, or else he forgot what he learned and none of his advisor has the temerity to tell him. Or maybe they had trouble with algebra, too. Like the Eurocrats.

    Or maybe something else is going on in Neoliberal Land.

  2. It is important that we have a plan for fiscal consolidation, to manage the debt, but it is also important that growth and jobs are a focus,”

    Pres. Obama then advised the Greek PM that they could achieve greater energy efficincyb y making all roads lead downhill.

  3. More evidence for Dan Kervick’s comment (at “Is That Harsh? Tough.”) that Mr. Obama is “a transparent plutocratic stooge.” On this, the state of denial among “progressives” is as great as that among regressives on climate change.

  4. Obama seems to say “he cares for struggling economies” (US Fed chairman needs to focus on jobs- which it has no actual way to improve-when that job is actually Congress’s responsibility). But saying he cares and then making comments like that only exposes the real disconnect that the austerity backers like him have. Sure the US economy is adding new jobs each month but those new jobs barely meets the level of new workers added. US unemployment rate drops only when more unemployed workers stop looking. Obama is hanging his hat with the austerity crowd and he is sorely wrong. He will go down in history as Pres. that spoke about empathy for struggling middle class but never actually provided any means for them to move up the ladder. He is all talk and no substance. He is huge disappointment for his 2012 voters. He will leave the WH and have very comfortable living standard as ex-pres but US middle class will be in the same place it was when he took office in 2008. He really believes Larry Summers is best choice for next Fed chairman (the same guy who laughed at anyone in 2005 that said risky loan products with housing bubble could create a huge financial these financial markets understood the risks involved). Since most of financial risk managers and CEOs are still in charge on Wall Street we can only hope the next crisis will not be as bad as 2008.

    • Harvard Law, Chicago ConLaw Professorship (where they teach Nobel Peace Prize Drone Strikes 101, and the NSA 4th Amendment Seminar), Geithner, Summers…
      Man Of The People.

  5. Sunflowerbio

    That freight train is carrying a load of new jobs, however, if the Greeks can just stand up to the impact. If they can’t, oh well, they won’t ever need to work again.

  6. Pingback: EB | Heterodoxia, diru teoria modernoa eta finantza ingeniaritza

  7. Just published yesterday: greek household wealth has contracted by 122 billion euros over 4 years, which equals just over half of GDP.

  8. From a Greek point of view (I’m Greek) we see another scenario playing out here. In July Jack Lew sent a little shock-wave through the Eurozone (and Greece) by a more or less unscheduled visit to Greece 4 days after German Foreign Minister Wolfgang Scheuble’s visit. Both Lew and Obama said ‘Austerity is not enough’….

    The follow-up visit by Samaras now, and Samaras’ and Obama’s ‘agreeing that Austerity is not enough’, is another demonstration by the US to Germany that German obstructionism in the Eurozone is threatening not only the western economies but global economy.

    The US has been clear in its position over the mishandling of the EZ crisis since 2010.
    So we see it as a bit of well-timed low-key theatre in the quieter August vacation period preceeding the 22 September German elections.

    Economics? Not really!

  9. This is the light at the end of the tunnel:

    Canadians are about to take their country (and control of their money supply) back. We have to follow suit in every other country, if we are to accomplish this. There is no alternative. We have to take this legal action.

    Essential reading for ALL:

  10. Pingback: Tough Love. Freight Train Style. | The Money Ch...

  11. Roger Erickson

    May as well send a Joseph Heller impersonator.

  12. Benson Njonjo Ndehi

    Proof that “deteriorating” current account deficits are great while “improving” ones are devastating.

    The full spreadsheet is here:

    Benson Njonjo Ndehi
    Nairobi, Kenya
    IT dude and MMT hobbyist

  13. Yes I always love how these sadists insist that someone else needs to take some tough medicine…… which ALWAYS means loss of income. The Greeks have made regular income concessions (or had them foisted upon them more accurately) for 5 years! When is it enough?

  14. The president, who is not an economist, or frankly someone with enough free time to read thisblog, and depends upon the policy advice of others, largely chosen for him by the Washington establishment. Also as a politician, it is risky to make pronouncements not in the mainstream of public discourse. He acts within his subjective reality, you guys within yours; if I were president, I would submit in humility to the expertise of others. It is why i believe that global warming is a reality for example. And while there are plenty of economists and policy professionals on the left, there are many ifnot more much farther toward the right, all or most influenced by neoliberalism. what to do?