The Economist re-examines the Greek crisis since 2009 and highlights the mistakes made by the creditors. I quote : "As rising bond yields threatened to push Greece to default, creditors botched the first bail-out in 2010 (see chart 1) by imposing too much austerity too quickly. For all of their railing against austerity, Greek leaders mostly cut deficits instead of promoting growth. For too long, the ECB resisted any notion of imposing losses on private bondholders even when it was obvious that Greece was bust. When haircuts for bondholders, known as “private sector involvement”, were agreed on in 2011 they were too late to do the trick'.
In 2012, the issue of debt sustainability was not addressed and debt now stands at 177% of GDP. This inaction led to the brink on which Greece is now without much hope of recovery. The referendum will not be decisive on the future of Greece, because there is not much choice between accepting another bailout and probable chaos.
The Greek crisis is the expression of Europe's crisis and this is not solved yet . None of the bailed out countries returned to their pre-crisis levels. But the crisis hit Greece harshly with Greek GDP shrinking by 25% over 4 years, unemployment rising to 27% and youth unemployment to more than 50% .
Here is a graph published by the Economist which describes the evolution of the crisis :
If we look at the evolution of domestic demand, it has started growing in the US and Japan after the collapse resulting from the 2008 crisis, while in the euro area it has strongly declined since 2011.
Do we need more evidence that austerity is not a cure for the crisis? Just the ideologues of the euro zone want us to believe it.