The Greek tragedy, approaching the exode

In the typical ancient Greek tragedy the chorus plays a key role in the unfolding of the drama.  It offers a significant amount of background information to help the audience follow the plot, expresses aspects of the drama such as hidden fears or secrets that the main characters could not reveal and most importantly it is instrumental in the conclusion of the drama in the exode.

Exode, exit ode, is the conclusion of the play where the chorus exits the stage singing a song with lyrics of wisdom, directly linked to the plot with the intention of emphasising the main message of the drama and providing food for thought for the audience.

Watching the Greek Prime Minister Lucas Papademos in his press conference after the 14 hours marathon of the last eurogroup I had a growing feeling that the modern Greek tragedy is approaching the exode.

Greece’s new and old creditors agreed on a combined package in the early hours of Tuesday that relieves Greece from a significant portion of her debt obligations, clinching the top spot in the history of debt restructures, but at the same time the Greek Prime Minister knows that this deal comes with a heavy price for the Greek economy, the Greek society and the sovereignty of the country.

Exactly what it says on the tin

Over the last few months, particularly since June last year when the first major cracks started showing in IMF/EU led program of fiscal consolidation in Greece, there is an ongoing discussion around the failure of the program with a growing body of economists now having the evidence on technical level to present how by design and based on basic macro logic the program was destined to fail.

One of the most concise analysis can be found in the most unlikely of places.  A publication of the Finance and Development department of the IMF, titled Painful Medicine, back in September 2011.  In their research, Ball, Leigh and Loungani, present the impact of fiscal consolidation on incomes and unemployment.  Leigh and Loungani are both with the IMF’s Research Department.

One would think that in the IMF they speak with each other and the extensive research is not only shared but at the same time applied where is required.  In the case of Greece this particular research could not be more applicable.