The deep fiscal crisis [in Mexico in the 1980s] and the lack of leniency from international organisations forced Mexican power-holders to have an ‘internal conversation’ on whether to become a liberalised economy or a statist economy. The outcome of such heated conversation was a radical trade liberalisation and privatisation program. Such decisions were politically difficult – they led to a deep political rift that ended in the breakup of the Institutional Revolutionary Party (PRI)’s long-lived hold on power.Which turned out to be a good thing;
Despite the forewarnings of experts, positive effects of the reforms became apparent quickly. The economy became a successful exporter of manufacturing goods and the value of manufacturing goods as a percentage of total goods exported increased sharply from 24% in 1982 to 71% in 1989.And;
After seven difficult years, there was light at the end of the tunnel – Mexico's public debt-to-GDP ratio fell to 47% in 1989 (from 60% in 1982). In contrast, in the six years between 2008 and 2014, that of Greece increased from 109% to 176%. [our bold]And some in Greece are listening(?);
Even if it survives the next three months teetering on the brink of bankruptcy, Greece may have blown its best chance of a long-term debt deal by alienating its eurozone partners when it most needed their support.
Prime Minister Alexis Tsipras' leftist-led government has so thoroughly shattered creditors' trust that solutions which might have been on offer a few weeks ago now seem out of reach.That's because;
Tsipras' denunciations of EU-prescribed austerity, demands for German war reparations and cosying up to Russian President Vladimir Putin, and Varoufakis' foot-dragging on reform negotiations and initial calls for a "haircut" on Greek debt, have dried up the reservoir of sympathy for Athens.They're just not that into you, Greece.
Creditors like Germany, the Netherlands and Finland are bent on keeping the IMF involved as an enforcer of economic reform and fiscal discipline because they don't trust the Greeks to keep their word, nor the European Commission to hold them to it.