How Austerity Is Pushing Greece Towards A Depression

Over the last four years, Greece’s economy has contracted by 18.4 percent. The International Monetary Fund sees no end to the bleeding in sight, estimating that the Greek economy will shrink by another 4 percent next year. As Bloomberg News noted, this puts Greece in Depression territory:

The economy shrank 18.4 percent in the past four years and the International Monetary Fund forecasts it will contract another 4 percent in 2013 as Greece struggles to reduce debt in exchange for its $300 billion rescue programs. That’s the biggest cumulative loss of output of a developed-country economy in at least three decades, coming within spitting distance of the 27 percent drop in the U.S. economy between 1929 and 1933, according to the Bureau of Economic Analysis in Washington.

An despite Greece’s austerity measures — implemented to appease international lenders — public debt is growing as the economy collapses:

The IMF forecasts that government expenditure this year will fall to levels last seen in 2006, while unemployment will reach almost 24 percent of the labor force, more than double the pre-crisis average, and the government’s debt will be 344 billion euros, higher than in 2010 and about double the level Greece claimed in 2003.

As ThinkProgress explained, America has rebounded from the financial crisis better than Europe has, in part because it embraced stimulus measures while the Eurozone has placed its bet on austerity. This chart shows that the U.S. has grown faster than the Eurozone or the UK:

Some economists posit that Europe is headed for a lost decade. U.S. conservatives, meanwhile, continue to push for austerity that clearly isn’t working on the other side of the Atlantic.