We can start to dig ourselves out of hole by building houses people need
Wherever there is demand for homes, planning must be granted to help create jobs writes Colm McCarthy
EUROZONE leaders have maintained, since the first Greek bailout back in May 2010 that suitable adjustments by the distressed members – principally budgetary tightening and bank rescue financed locally – would ensure a successful emergence from the crisis. The initial policy foresaw no haircuts for bank creditors or sovereign bondholders in Greece or even when Ireland and Portugal joined the bailout club. After the Greek sovereign default, the largest in history, and the chaotic bank defaults in Cyprus, this policy stance has been abandoned (without apology, of course). A series of European Central Bank initiatives, including extensive liquidity provision to banks and the promise of sovereign bond purchases has helped to contain the crisis, which threatened to boil over last summer in Italy and Spain.
The current eurozone survival plan includes, it would appear, the belief on the part of the German government that Greece will now be able to pay its debts and that the Greek economy will begin to recover. German finance minister Wolfgang Schauble ruled out the need for any further Greek debt relief on a visit to Athens last Thursday. But economic output in Greece is expected to fall by at least another five per cent this year, over a quarter of the workforce is unemployed, the economy does not have an internationally competitive manufacturing or service sector and thus has no engine of recovery.
It is the universal opinion in the financial world, Herr Schauble excepted, that there will be another large haircut for Greece's creditors and this is reflected in Greek sovereign bond prices. But there can be no talk of further Greek debt relief, however inevitable, since the German election is due on September 22 and the voters are not to be frightened. They are already under the impression that Greece has been receiving large handouts from Germany and persuaded that no more is either deserved or necessary.