The economy of Greece has been a disaster for years due to massive entitlement and pension programs. Decades of overspending finally caught up with the Greek government in 2010, when their financial system nearly collapsed.
Other countries in the European Union, notably Germany, loaned Greece billions on the condition that Greece would impose austerity measures; those measures eventually produced small results at a slower rate than expected.
Frustrated with austerity and cuts to benefits, the people of Greece recently elected a new prime minister from the far left Syriza party named Alexis Tsipras.
Tsipras won by promising to end the pain of austerity and to renegotiate Greece’s debt, which means that the people of Greece have forgotten what caused their problem in the first place.
Nicholas Paphitis of the Associated Press via ABC News writes:
Greece’s First Radical Left Prime Minister Sworn In
Tieless and eschewing the traditional religious swearing-in ceremony, but with a surprise coalition deal in the bag and a sanguine international reception, radical left leader Alexis Tsipras took over Monday as austerity-wracked Greece’s new prime minister.
Hours earlier, the 40-year-old’s Syriza party trounced the outgoing, conservative government in Sunday’s national elections, on a platform of easing social pain and securing massive debt forgiveness.
Although Syriza fell tantalizingly short of a governing majority in the 300-seat parliament, Tsipras moved quickly Monday to secure the support of 13 lawmakers from the small, right-wing populist Independent Greeks party, raising his total to 162.
“”We have the required majority,” Tsipras told Greek President Karolos Papoulias, shortly before being sworn in as prime minister, the youngest Greece has seen in 150 years and the first incumbent to take a secular oath rather than the religious one customarily administered by a Greek Orthodox official.
Fans of Tsipras are celebrating, but his victory presents a whole new set of problems.
From the Wall Street Journal:
Syriza Win in Greek Election Sets Up New Europe Clash
Greek voters handed power to a radical leftist party in national elections on Sunday, a popular rebellion against the bitter economic medicine Greece has swallowed for five years and a rebuke of the fellow European countries that prescribed it.
With nearly all votes counted, opposition party Syriza was on track to win about half the seats in Parliament. In the wee hours of the morning, it clinched a coalition deal with a small right-wing party also opposed to Europe’s economic policy to give the two a clear majority.
“Today the Greek people have written history,” Syriza’s young leader and likely new prime minister, Alexis Tsipras, said in his victory speech late Sunday. “The Greek people have given a clear, indisputable mandate for Greece to leave behind austerity.”
Greek stocks fell by more than 3.5% on Monday but wider market reaction to the result was largely muted. The euro traded slightly higher against the dollar in early European trading.
Not everyone is skeptical. Paul Krugman of the New York Times is delighted:
Ending Greece’s Nightmare
Alexis Tsipras, leader of the left-wing Syriza coalition, is about to become prime minister of Greece. He will be the first European leader elected on an explicit promise to challenge the austerity policies that have prevailed since 2010. And there will, of course, be many people warning him to abandon that promise, to behave “responsibly.”
So how has that responsibility thing worked out so far?
To understand the political earthquake in Greece, it helps to look at Greece’s May 2010 “standby arrangement” with the International Monetary Fund, under which the so-called troika — the I.M.F., the European Central Bank and the European Commission — extended loans to the country in return for a combination of austerity and reform. It’s a remarkable document, in the worst way. The troika, while pretending to be hardheaded and realistic, was peddling an economic fantasy. And the Greek people have been paying the price for those elite delusions.
Where Mr. Tsipras is going to find the money to reinstate Greek benefits remains to be seen, but the European left has been reinvigorated by his win:
— a.tsipras (@atsipras) January 22, 2015
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