No one could have foreseen this
Posted by Charles II on August 7, 2015
Heather Stewart, The Guardian:
Fresh evidence of the dramatic impact of the Greek debt crisis on the health of the country’s finances has emerged, with official figures showing tax revenues collapsing.
As talks continued over a proposed €86bn third bailout of the stricken state, the Greek treasury said tax revenues were 8.5% lower in the first six months of 2015 than the same period a year earlier. The bank shutdown that brought much economic activity to a halt began on 28 June.
Public spending fell even more dramatically, by 12.3%, even before the new austerity measures the prime minister Alexis Tsipras has been forced to pass to win the support of his creditors for talks on a new bailout.
To recap: public spending fell and tax revenues fell. In Keynesian theory, this is understood as a decline in demand causing a decline in sales, incomes, and other taxable events. To Austerians, this is proof that the degree of austerity was insufficient.
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