why do governments impose austerity?

[dsgrue3]

kowenicki said:

the2real4mafol said:

kowenicki said:
Because its time for a serious reality check?

Because your proposal hasn't worked in the long run?

Because they can?

Well if look at Greece, you will the highest unemployment rates in History and falling standards of living, only austerity could do that. Investment in things like business, only increases debt shortly before helping the economy to keep it growing. Austerity risks stagnating the economy completely

Bad example. I have zero sympathy for Greece.

Uh, yeah.

Why is Greece in trouble?

Greece was living beyond its means even before it joined the euro. After it adopted the single currency, public spending soared.

Public sector wages, for example, rose 50% between 1999 and 2007 - far faster than in most other eurozone countries. The government also ran up big debts paying for the 2004 Athens Olympics.

And while money flowed out of the government's coffers, its income was hit by widespread tax evasion. So, after years of overspending, its budget deficit - the difference between spending and income - spiralled out of control.

Moreover, much of the borrowing was concealed, as successive Greek governments sought to meet the 3%-of-GDP cap on borrowing that is required of members of the euro.

When the global financial downturn hit - and Greece's hidden borrowings came to light - the country was ill-prepared to cope.

Debt levels reached the point where the country was no longer able to repay its loans, and was forced to ask for help from its European partners and the IMF in the form of massive loans.

Sound familiar? We have to curb this spending ASAP.