Rivets Starting to Pop in Greece
By Global Macro Monitor
The FT reports,
Greece should get its next €8bn in international aid, but its economic outlook is deteriorating so rapidly that a second bail-out plan agreed just three months ago is no longer adequate to keep Athens afloat, international lenders have determined.
The report by the so-called “troika” of lenders to Greece – the European Commission, International Monetary Fund, and European Central Bank – put the blame for Greece’s deteriorating fiscal outlook on both the broader recession and failures by Greek government to implement reforms.
But in the first acknowledgement that mounting unrest within Greece was having an impact on official deliberations, the report – seen by the FT – said the occasionally violent demonstrations in Athens were contributing to economic problems.
“There is no doubt that Greece is undergoing a recession that is deeper and longer than expected,” the report said. “The deterioration in the labour market, with employment falling much faster than expected, uncertainties of political and financial nature, and social unrest and industrial action have weighed on supply and on domestic demand.”
Now watch the Greek protestors turn on each other. Makes you wonder if an EU plan to be announced Sunday Wednesday is really going to solve the core issues of the crisis in the eurozone: 1) too much debt that can’t be paid back; 2) debt/credit constrained growth; 3) growing unemployment; 4) over levered banks suffering liquidity problems with too much exposure to deteriorating sovereign borrower also experiencing liquidity problems; and 5) overly optimistic expectations in a “one shot kills all” policy announcement.
However, the S&P500 trades like a Kentucky Derby thoroughbred locked in the starting gate – 1190 to 1230-35 – and ready to bolt once the bell rings.
The politicians were stupid to think that they could solve this banking crisis. Greece is steadily moving towards revolution or even civil war and yet they dither like idiots. If the violence spreads then the only outcome will be a disorganised default, leaders escaping by helicopter and tanks on the streets. That will definitely set markets alight.
Agree 100 percent
As one of the 99% my thoughts are with the population of Greece not the bankers. My thoughts are getting towards a resolution that allows stability in Greece and a resumption of normality. That should be the objectives of the politicians not keeping the banks whole. I was listening to a BBC news podcast where a greek citizen talked about this becoming a civil war. That is a scary thought.
With all due respect, I’m not sure you really understand how Greece functions. The Greeks don’t pay their taxes. Among the earlier protests were angry Greeks demanding the right to not have to issue receipts, for example, so that that can evade tax. Is this really reasonable? Add to this Government workers getting 14 months of pay for 12 months of work and early retirement, and you might get a better idea as to how about 40% of that “99%” live.
Friend;
If you consider that the “40% of that 99%” you excoriate are just trying to emulate thier ‘betters’ in oh so many ways; tax avoidance, featherbedding, preferential treatment, hubris; you would have to conclude that any equitable resolution of the ‘injustices’ you cite will have to include great ‘levelling’ actions on the Greek national level. And not just the casting of ostrakons [sic?] either.
Sometimes it helps to think things through to the end.
I’m in Greece, every government worker I know is no longer getting the extra months pay. I know one person that works at a hospital. Her starting salary was 1,200 Euros a month 2 years ago. It was cut down to 800, and beginning January, it will be cut down again to 720 Euros. 12 months pay only.
Sales tax on most goods in Greece is 23% – I pay this whenever I buy something.
As for the protestors – the violent ones are a very small minority of disenfranchised yet spoiled youths.
As for early retirement in Greece – it is no different than state and municipal employees in the US that only need to work 30 years, who by the way, also can collect both a state or municipal pension as well as social security – unlike Greek gov’t workers that only get one pension.
Don’t get me wrong, the Greek gov’t is extremely bloated. But if you measure up all gov’t employees in the US including municipal, county, state, and federal levels – the US is actually either the same or worse than Greece.
In Greece, for example, teachers and police are paid via the national budget, not municipal like in the US. Thus, Greece’s debt service is not segregated as much as the US’s debts service where you separate Fed, state, and local.
Well, we have already seen how democracy has become a complete joke in European Union. Democracy goes down the drain when economics say so. However, there is still one superior force to the economics.
That is military power. Greece is a member of NATO. It will matter and it will have concequences. Do not forget that.
Well, my Olechka was quick to point out that the only thing that matters in life is “Who has the rockets?”
Greece is steadily moving towards revolution or even civil war and yet they dither like idiots.
What did/do you really expect them to do? There’s nothing they CAN do. All of Western Europe was promised an unsustainable living standard for two or three generations now. They got that living standard by borrowing. They will soon be able to no longer borrow and will likely all default (and by “all” I include even the supposedly strong countries like Germany and Switzerland). Once they default, they will no longer be able to borrow and maintain those lifestyles. Game over.
Sir;
I,m no economist, but I’m thinking that these promised living standards are indeed feasable. The secret lies in the equitable distribution of wealth within the society. So many resources are wasted by the persuit of ‘rents’ by the financial elites that it literally isn’t funny. Perhaps Marx was right after all. The Supply Siders have proven the bankruptcy of that idea through their implementation of that reactionary social dogma in the U.S. It’s not just Greece anymore, or haven’t you noticed?
The fact is that it was sustainable. The problem is that the benefits of tax cuts over the last thirty years have gone to the rich or the banks. With lower income taxes the bubbles were inflated and the banks basically sucked up all the benefits of the tax cuts. Reversing the policies of Reaganomics would deflate the bubbles and would raise the taxes for social programs and ease the income inequality.
Greece is not sliding towards a civil war, as that requires two positions (at least) competing for power. Greece is sliding towards anarchy (a word given to us by then Greeks!)as the people reject Government which they increasingly perceive as having abandoned them and no longer provides for civil society.
An interesting social experiment I am glad I’m not a part of.
I am sure that the Greek government will be fighting to hold onto whatever power it has.
The violent protestors are a tiny minority. Im not sure that posting videos of them is very helpful.
I mean, is the “Occupy Wall Street” protest representative of the public mood in the USA? Is Wall Street about to be taken over?
Greece is sliding toward a return to military dictatorship with an IMF-approved general who will extract what is necessary to pay off as much debt as possible.