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AusterityInEurozoneAusterityInEurozoneTaoYunwen,LuoFatao,JiangSilong,ZhangChaoGroup#10AusterityFiscaltighteningDeficit-cuttingbyloweringspendingBenefitsandpublicservicesEuropeansovereign-debtcrisis*BelgiumGreeceHungaryIcelandIrelandSpainCauses•GDPgrowthrates----After2008,lowerthananticipated•Governmentdebt-level----strongeconomicgrowthCauses•Governmentdeficit-----Hugefiscalimbalancesfrom2004to2009•Statisticalcredibility-----SinceentrancetoEUin1999Inaccuratepredictionsineconomy•GDPgrowthrates-----After2008,lowerthananticipated•Governmentdebt-level-----strongeconomicgrowthWhat'stheAUSTRITYPolicies?•Since2010•UnexpectedlyTough•Upto5timesFirstausteritypackage–February2010•Aloanof€80billionfromIMF&ECB•FreezesalariesofallgovernmentemployeesSecondausteritypackage–March2010•EconomyProtectionBill•CutsinChristmas,Easterandleaveofabsencebonuses•Further12%cutinpublicbonuses•AriseofVAT*•Ariseoftaxonpetrol,importedcarsThirdausteritypackage–May2010•PrimeMinisterGeorgePapandreou•Nationwidegeneralstrikeandmassiveprotests•Cutonpublicsectorallowances•PaycutforDEKO(publicsectorutilities)employees•Limitof€800permonthto13thand14thmonthpensioninstallmentsGeorgePapandreouThirdausteritypackage–May2010•Specialtaxonhighpensions•Luxurytaxesandsintaxesonalcohol,cigarettes,andfuel•Men'sandwomen'spensionagelimits•Averageretirementagefrom61to65•public-ownedcompanies&municipalitiesnumbersGeorgePapandreouFourthausteritypackage(Mid-termplan)–June2011•155votesinfavor(amarginal5-seatmajority)•Taxesforthosewithayearlyincomeofover€8,000•Extrataxforthosewithayearlyincomeofover€12,000•Lowerpensionpayments*•Pivatizationsandsalesofgovernmentproperty*Fifthausteritypackage–February2012•Sovereigndefault*•22%cutinminimumwage•Holidaywagebonusescancelled•150,000jobscutfromstatesector•Pensioncutsworth€300million•Healthanddefencespendingcuts.Economic&SocialEffects•Bringdownitsprimarydeficit•GDPworstdeclinein2011with-6.9%•111,000Greekcompaniesgoingbankrupt•Unemploymentrategrow•CharitablefoundationsfundingeducationalprogramsbeforepayingforsoupkitchensSoupKitchenEconomic&SocialEffects•Houseownersdesperatetosellorrent•''Foodaid,inawesternEuropeancapital?Youdonotmeasureapeople'sabilitytosurviveinpercentagesofGrossDomesticProduct.''•''AsyouwalkaroundthestreetsofAthensandbeyondyoucanseethesocialfabrictearing.''Economic&SocialEffects•GreekcitizensturningtoNGOsforhealthcaretreatmentandgivingupchildrenforadoption•Suiciderate•DimitrisChristoulas,a77-year-oldpensionershothimselfTributestoDimitrisChristoulasEconomic&SocialEffects•UNgettinginvolvedinHumanrights--''food,water,adequatehousingandworkunderfairandequitableconditions''•UKeconomistRogerBootle：Attemptstocutbackonthedebtbyausterityalonewilldelivermiseryalone.OpenForQuestions•Germany'Role?•PossibleSolutions?•NewMovements?•PossibleConsequneces?•RadicalCauses?•......AngelaMerkelGermany'sRole&Actions•Greece'sbiggestcreditor•ComingunderheavyfireforperceivedHYPOCRISY(falselykindness)•Germany'sexperience----short-termsacrificesnecessaryforlong-termsuccess?•Tolayoffornot?AndWhy?•ArmsexportstoGreece---threetimespensioncutsinAthens*PossibleSolutionsForGreece•NobellaureatePaulKrugmanremarked--Governmentsborrowedtoomuch,nowthey'repayingtheprice,andfiscalausterityistheonlyanswer.•TradesurplusesforGreecewiththeoptionofdevaluingcurrency--Improbable•Germany'sdesiretomaintaintradesurplus•EuroactsasauniversalcurrencyGrexit•''Theeuroshouldnowberecognizedasanexperimentthatfailed,wroteMartinFeldsteinin2012•FallingbehindGermanyTheywouldnotallowtheeurozonetodisintegrateandhavelinkedthesurvivaloftheEurowiththatoftheentireEuropeanUnion.ToChallengeGermanyToChallengeGermany