On Monday night the Greek prime minister George Papandreou addressed representatives of trade unions and business groups in Athens in a speech that was meant to mark the beginning of the country's economic recovery. It was a night of high drama, and an attempt at inspirational leadership. Papandreou offered some indication of his economic strategy while trying to drum up support among society and cultivate a feeling of wartime-style national unity. He did not, however, offer the immediate fiscal fixes the world markets were anticipating. And that is not necessarily a bad thing.
Greece's ailing fiscal situation has led its creditors, the markets, the financial press and its European partners to exert an unprecedented amount of pressure on the country. Comparisons to Dubai and wild speculation about Greece defaulting have created a frenzy around its 12.7% deficit – the highest in the euro area. In view of all this, analysts and pundits were expecting Papandreou to announce measures like a cut in public sector pay and a freeze in hiring, similar to those endorsed by the similarly embattled Ireland.
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