"The Euro at Any Cost?" New Elections in Greece Could Provide Opportunity to Consider Alternatives to Endless Austerity, CEPR Co-Director Says

The announcement that Greek Prime Minister Alexis Tsipras will resign, and snap elections will be held on September 20, could give the Greek people a chance to reconsider whether the "euro at any cost" strategy is a rational decision, Center for Economic and Policy Research Co-Director Mark Weisbrot said today. Weisbrot said the economic impact of leaving the euro (a so-called "Grexit") would be less severe than the continuing depression that will result from a new bailout arrangement Tsipras' government has negotiated with the European authorities.

"European Union officials have already said that, under the new agreement, the Greek economy will remain in depression for this year and next," Weisbrot said. "This is not a bailout for the Greek people - this is the Greek people being thrown overboard."

Weisbrot noted that even this prognosis, which forecasts a return to growth in 2017, is likely to be over-optimistic. Almost every forecast from the IMF, for example, since 2010 has been wrong, and the outcome has been significantly worse.

"Many people accept this continued punishment because they think the alternative would be worse," Weisbrot said. "But it is unlikely that Greece would remain in depression for longer than what is forecast for the current program, if the country were to issue its own currency. And it could avoid some of the worst 'reforms' that the European authorities are demanding."

Tsipras announced today that he will step down and call snap elections for September 20. The news comes following the Hellenic Parliament's passage of a bailout deal negotiated with the European authorities, but one-third of the members of parliament of Tsipras' Syriza party either voted against the deal or abstained. Tsipras was not expected to survive a censure vote.

Tsipras' acceptance of the bailout arrangement, which entails continued austerity measures, has been seen by some in the Syriza party, and others, as an unacceptable reversal of his previous vows to reject further spending cuts and other austerity.

"The Greek depression, even under current EU forecasts, will be one of the worst depressions in modern times," Weisbrot noted.