Cuts beget cuts.

I think it humorous - or dangerous folly - that, according to Bloomberg, Greece has pledged to cut minimum wages by 20% and cut 15,000 government jobs as a result of the Greek economy contracting faster than what was previously predicted.

Or as I call it: Cuts beget cuts.

If you are lucky enough to even have a job with a minimum wage - considering the 18.2% unemployment rate for last October - now your wages are being cut, or your job is being eliminated altogether.  Simple question: If your wages are being cut 20% or you lose your job, what will you do, spend more or less?  The obvious answer is spend less.

I get what they're trying to do: reduce wage costs to make their manufacturing and services products competitive with the core EU.  But they're destroying the bottom end of income (the folks who already needed help surviving) and the cuts are dubious in benefit, considering that the lowest-wage earners tend to be the youngest demographic (15-24 years old) which happens to have the highest unemployment rate -- 45.5%.

That EU rescue plan hardly seems like a rescue plan at all.  It feels more like two fingers crossed that severe austerity will work, and so far, the prior attempts at austerity have failed.  I guess the idea must be, if a little crazy didn't work the first time, then full-blown insanity should work.

Waiting for the austerity to work its magic -- chart from ELSTAT.

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Update: Greeks under 25 will have their minimum wage cut 30%. The pain is going to be real, the suffering is being required by people who drive in BMWs, Mercedes and fly first class. Athens is burning down.