Hope the following helps, I think we all are trying to learn as much as possible about this as it unfolds.
I thought the article about Peronis Democracy was interesting but I need some help seeing the connection to the current crisis.
Judging from your comments it seems like you believe the Greek government is spending more than it's taking in(primary budget deficit). Which is not true at least for 2014 according to the Wall Street Journal. The Greek government needs to borrow more money not to fund additional purchases but to pay off debt that is coming due. For example they have $5 billion(not sure on exact number) worth of debt that matures in 2015 but they will run a primary budget surplus of $2.25 billion so they need to borrow an additional $2.75 billion to pay off the additional debt.
The next few years will be very terrible for Greece, but so have the last few years. The fundamental problem with Greece comes down the idea of a fiscal multiplier, which is how much gdp changes when government spending is cut[1]. Right now the IMF estimates that the fiscal multiplier is 1.7.[0] This means that every dollar the government cuts(increasing the primary budget deficit) reduces the size of the economy by $1.7(which also reduces the governments tax revenue). So the current austerity measures of a surplus of $2.24 billion reduce the size of the Greece economy by at least $3.8 billion[2]. The current Great Depression level unemployment in Greece is the result of cuts in government spending that generated a surplus of just 1%. Imagine what Greece would be like if they achieve their target of 3.5%(was 4.5%).
P.S. excuse any spelling or grammatical errors, its too late for me to be on hacker news.
[3](at least because of the feed back loop of +surplus-> -gdp -> -taxes -> -surplus so to achieve a surplus of 2.24 billion more than 2.24 billion in cuts would need to be mead)
Greece stopped having a primary surplus the moment Syriza came to power, as one of the first things they did was reverse tax rises and rehire fired civil servants.
I thought the article about Peronis Democracy was interesting but I need some help seeing the connection to the current crisis.
Judging from your comments it seems like you believe the Greek government is spending more than it's taking in(primary budget deficit). Which is not true at least for 2014 according to the Wall Street Journal. The Greek government needs to borrow more money not to fund additional purchases but to pay off debt that is coming due. For example they have $5 billion(not sure on exact number) worth of debt that matures in 2015 but they will run a primary budget surplus of $2.25 billion so they need to borrow an additional $2.75 billion to pay off the additional debt.
The next few years will be very terrible for Greece, but so have the last few years. The fundamental problem with Greece comes down the idea of a fiscal multiplier, which is how much gdp changes when government spending is cut[1]. Right now the IMF estimates that the fiscal multiplier is 1.7.[0] This means that every dollar the government cuts(increasing the primary budget deficit) reduces the size of the economy by $1.7(which also reduces the governments tax revenue). So the current austerity measures of a surplus of $2.24 billion reduce the size of the Greece economy by at least $3.8 billion[2]. The current Great Depression level unemployment in Greece is the result of cuts in government spending that generated a surplus of just 1%. Imagine what Greece would be like if they achieve their target of 3.5%(was 4.5%).
P.S. excuse any spelling or grammatical errors, its too late for me to be on hacker news.
[0]http://www.eurointelligence.com/news-details/article/imf-adm...
[1]http://www.wsj.com/articles/greece-misses-target-on-budget-s... - behind paywall unfortunately, so there will be a need to google.
[2]https://en.wikipedia.org/wiki/Fiscal_multiplier#Net_Governme...
[3](at least because of the feed back loop of +surplus-> -gdp -> -taxes -> -surplus so to achieve a surplus of 2.24 billion more than 2.24 billion in cuts would need to be mead)