16 Feb '12, 4pm
Greece should reject the Troika and default on its own terms | James Meadway
It has very largely failed. Worse: the Troika’s sheer ineptitude has actively worsened the situation. Austerity – sharp cuts in public spending – was the only solution offered to debtor nations. But cutting public spending to repay heavy debts is self-defeating. Take Greece. In late 2009, its national debt was 130 per cent of GDP. After two years of austerity measures, of increasing severity, that debt is set to hit more than 160 per cent of GDP. By strangling real economic activity, austerity destroys the ability of an economy to repay debt. The cost of this failure is immense: in blunt monetary terms, the Greek economy has shrunk by 20 per cent since the crisis broke. But the human cost is worse: to pick just one example, the Greek suicide rate has increased 40 per cent in the last year. It was once the lowest in Europe. An entire country is being torn apart.