I really like his argument that austerity as it is being used in the Greek sense is not the right path. It especially makes sense when he argues for reforms of the public welfare system, proper retirement age, and lower government spending on the person while saying that cuts made there would have been a better version of 'austerity' instead of the blanket cuts that were made in Greece. When you cut public spending and it removes people from the labor market, then you're also cutting government revenue. Not just once, but on every taxable transfer of that person's money. This is the government money multiplier. You have to balance that cut with the effects that removing government spending has on the market. However, the Greek people are not making this easy on the politicians and financiers, and it's not their job to, but it will be their consequence to live with. They joined the EU and the Eurozone for a reason. I think it's likely that cuts to the social welfare program made in an effort to reform spending in Greece would have been met very similarly with anger, because most Greeks are angry with reduced spending in social programs, rather than in economic programs.
How do you feel about the referendum that Tsipras has proposed? I think it's terribly misguided. For better or worse, the government was elected to negotiate on behalf of the people. The people aren't policy experts and have had no say in the negotiations. It seems irresponsible to me to make them the arbiters of where this saga is going to end up. Of course, there is an argument that the people should have the ultimate say, but to me this decision feels more like a way for the government to wash their hands of the consequences of a bad decision.However, the Greek people are not making this easy on the politicians and financiers, and it's not their job to, but it will be their consequence to live with.
Honestly, the referendum is just a way for Tsipras to get out of being the bad guy to his European counterparts. He was elected by the people to negotiate on their behalf, but they (and I say this as a 3rd party outsider) seem to want only an end to the austerity measures without a firm understanding of the consequences that will bring. He, if he didn't before, at least now knows better. Greece doesn't have any weight to swing around in this arena, and the Eurozone doesn't need them as much as they need the Eurozone. The bottom line is that Greece owes a lot of people a lot of money that Greece can't pay. The lenders shouldn't have lent the money because it was a bad bet, and they should have negotiated sooner (2009) to cut their losses, but they didn't instead giving them even more money. And now it's crazy. Greeks won't accept austerity, and lenders have finally learned the lesson to stop lending to Greece until they prove they can pay it back, or at least treat their debts to outsiders as more important than the debts that they have promised to their people. If I tell my son I'm taking him to Disneyland, but I can't pay my mortgage, at a certain point it becomes necessary to admit that I can't afford Disneyland or I'll lose my house. My son will dislike me, but I'll have a house to live in.