Open Letter to the Troika

Dear Troika,
Thank you for your concern about our economy and any financial assistance you may decide to provide us. This island has not always been in financial difficulties. Despite the trauma of invasion and occupation, the economy of this island had performed surprisingly well in the decades prior to joining the euro zone. It’s true that more recently things have deteriorated. Our government spending and the nation’s debt have grown alarmingly.
Now that you have talked to some of our economic decision makers you will understand why this is so. A good number of those behind our economic “strategy” live in their own fantasy world of outmoded ideological beliefs that they themselves do not fully understand.
You must realise by now that politics and the next election, not the welfare of the economy, is the dominant consideration of our rulers. You will hear talk of red lines (meaning “vested interests”) and social cohesion (meaning “votes”) to decide economic matters.
Most of the population here will be eternally grateful if you can do something about the many powerful interest groups on the island promoting their own benefits, especially our privileged and ever growing public sector. Thank you for your support of initiatives to curtail such abuse. But there is also a major problem.

The Troika Record
Your economic model which prescribes austerity as a path toward economic stability and development does not seem to be working.
The bailout countries (Greece, Portugal, Ireland) which have followed your advice have experienced years of privation, unemployment, and falling GDP. Capital has fled. Their banks are on the brink of bankruptcy and unable to lend. Businesses have closed. An entire generation of young people has been lost to the work force, many of them leaving their homes to find work abroad.
Ireland is often cited as your one success story – but let’s look at it a bit more closely. The estimated (projected) GDP increase for year 2012 has recently been downgraded by the IMF to less than one half of one percent (.4%). Even that is questionable.
If we look at the official figures from the Irish statistical office, GDP growth for the latest quarter compared to the previous year is negative (-1.1%). Capital investment during this period has declined 29%. The main increase has been in unemployment. The number of person unemployed in Ireland has risen steadily every year since 2009, the percent of unemployed is now over 14%.
This should surprise no-one. You arrive in countries characterised by falling demand, on the brink of recession and in financial distress. The loans you provide come with conditions attached. Your first priority is an increase in taxes and a reduction of financial benefits.
In banking, your initiatives have led to a major decline in liquidity, an increase in non-performing loans, capital flight and a restriction in the amount of credit banks can make available to new businesses. Do you really think that all this will lead to growth?
The facts indicate otherwise. In Greece and other bailout countries your economic requirements have quickly led to social privation, civic upheaval and a destruction of the spirit that gave rise to the European movement.
After years of effort and innumerable crisis meetings “to put things right”, one might expect that the euro zone countries might be doing better than other EU countries that are not members of the single currency. This is not the case. Growth for the EU as a whole this year is zero, nothing to brag about. However, the euro zone countries as a group are doing even worse ( -.2%). Unemployment in the euro zone has just set a new record of high 11.4%, compared to 10.5% for the EU as a whole.