It should be remembered that austerity plans are a long-term solution, not the short-term economic boosters we’ve grown accustomed to.
This means that while countries like Greece may do the right thing and work towards fixing their long-term financial problems, thus solving their long-term crises, it doesn’t mean that they are off the hook in the short-term.
In fact, doing the right thing for the long-term is likely to make the short-term even uglier.
“I have no doubt that we will remain in recession in 2010, 2011 and 2012 and that the recession will deepen. It won’t be until the first half of 2013 that we will see a recovery,” said Yanos Gramatidis, president of the American-Hellenic Chamber of Commerce. “And I think most people have grasped that.”
The polls seem to show so, too. According to one poll in Sunday’s edition of To Vima newspaper, 37.9% of Greeks expect the recession to last three to four years. Another 19.3% think it could last five to nine years, and 22.4% think it could take a decade or longer for Greece to emerge from recession. Only a small minority, 15.4%, reckon that a recovery will come in the next year or two, the poll showed.
Thus it’s impossible for the Greece crisis to be completely over, even if they do everything right, since the near-term pain will be huge and recession seems inevitable. It’s like cutting an addict off his drug fix cold-turkey. The next day is going to be horrible, even though it’s in his long-term interest. This same problem will apply to other nations forced into austerity. Doing the right thing isn’t easy, especially if doing the wrong thing has, until now, been so easy for so long.