Much to report today, most notably a vow to save the euro at all costs from the common currency zones central bankster.
With Spain in the crosshairs, a dramatic picture emerging of a region-by-region economic implosion, including a call from one regional leader for a Spanxit if the Troika doesn’t lay off the austerity demands, more charges against the Troikarchs, revelations about warnings ignored, and growing pressures on crammed-together families.
Then we’ve got another downgrade, this time of Sicily and angry Italian retirees protesting after they were caught a a deadly double bind.
Greece is big in the news. While we’ve got another Grexit prediction by a major bank, the real story is the handover of the Greek austerity cuts to the Troikarchs [the folks Greeks have taken to calling the “Men in Black”], strong clues that the cuts — when and if they’re approved — will have been subjected to sharp parsing and heated questioning, harsh warning to Greek politicians, and German Grexit grumble, another visit from Washington, drastic health care cuts, more on those massive weapons buys from Germany and France, pay cuts for the elite, and lots more.
And we conclude with two stories from France, a legislative transparency fail and bit cuts by another major corporation.
But before we get to the numbers, a human story.
Retired Greek cop kills himself to pay for wedding
Another austerity tragedy, this one sparked by a father’s grief when he realizes the only way he can pay for his daughter’s wedding is by giving her his last possession of any value, his life insurance.
From Greek Reporter’s Marianna Tsatsou:
The local community of Heraklion is shocked by a new suicide committed yesterday, July 25 on Crete. A pensioner jumped from his balcony, unable to deal with his financial problems.
More specifically, the suicide victim left a letter behind, which was found by his brother. The retired police officer wrote that he could not afford to pay for his daughter’s wedding and thus, he did not have any other choice but to kill himself.
The coroner on duty, who was called to examine the dead body, told on a local radio station that “Although I’ve done more than 20,000 autopsies in Greece and the USA, I don’t feel strong enough to examine the corpse of a father who killed himself because he could not find the money needed to pay his daughter’s upcoming wedding.”
The latest reports on the pensioner’s suicide show that the retired policeman committed suicide so that his beloved family could receive money from his long-term life insurance policy.
Just remember that as part of the austerity memorandum, the Greek government has radically slashed pay and pensions for both the public and private sector.
In this instance, a retired civil servant had seen his pension dramatically shrink, the explicit promise on which he had counted to sustain his life.
Such is the true face of an austerity imposed to pay back speculators.
Draghi rides to the euro’s rescue
The head of the eurobank vowed to do “whatever it takes” to save the euro.
And the only way he can do it is by throwing a lot more money down south, which raises the question of where the hell will he get it, given that the central bank relies on member states for funding, and the richest of them is Germany — which has been showing notable reluctance at sweetening the pot.
From Agence France-Presse:
European Central Bank chief Mario Draghi vowed unconditional support for the beleaguered euro Thursday, sending markets into orbit as traders eyed further action from the bank to shore up the eurozone.
In apparently unscripted comments in London, the normally reserved Draghi said his institution was “ready to do whatever it takes to preserve the euro. And believe me it will be enough.”
Stressing that the euro was “irreversible”, Draghi said that part of his bank’s remit was to keep sovereign debt levels under control when they hampered the proper functioning of interest rate policy.
And Draghi’s hints had an immediate impact on borrowing costs, with Spain’s shooting below the seven-percent mark and Italian costs plummeting to just above six percent.
More on Draghi’s remarks from the London Telegraph’s Jamie Dunkley:
“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” he told an investment conference in London.
“To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate.”
When asked what probability he would assign to the euro zone having the same number of members it has today in two years, he added: “I don’t venture into speculations about things like changes in the treaty. The treaty was meant to have the number of countries that we see today, so frankly I can’t really estimate the probability of that.”
“We think the euro is irreversible.”
Catch that implicit threat to Greece?
And the market’s reaction, reported by the BBC:
In Spain, the Ibex share index closed up 6%, while in Italy, the main share index closed up 5.6%.
The comments also triggered a fall in bond yields. Spain’s 10-year yield, which had hit a record high of 7.6% earlier, fell back to 6.8%.
Bond yields are an indication of the interest rate a country would have to pay to borrow money. A rate above 7% is generally seen as unsustainable in the long run.
Earlier in the week, share prices had dived and Spanish bond yields jumped sharply on fears that the debt problems being faced by several of the country’s regional governments would push Spain towards a full bailout.
Mr Draghi’s comments also boosted the euro, which had been languishing at two-year lows against the dollar earlier this week. It rose 1% to $1.2284.
Now, on to Spain. . .
A voice of dissent from Spain
If Spain has to continue pleading with Europe, begging bowl in hand, then maybe it’s time to quit the eurozone, declares a regional head of government whose previous job was chairing the prime minister’s own party.
From Ambrose Evans-Pritchard of the London Telegraph:
The regional leader of Asturias in Spain has become the country’s first major figure to call for a radical change of strategy and exit from the euro, unless monetary union is fundamentally reformed.
Francisco Alvarez Cascos, the region’s president and former secretary-general of Spain’s ruling party, accused premier Mariano Rajoy of humiliating the nation by touring Europe with a “begging bowl”.
Mr Cascos said the government is “utterly incompetent”, but warned that the deeper crisis is a “perverse” monetary system where capital flight from countries in distress is funding creditor states at zero rates. “This can’t go on for long, or we will have to think about leaving the euro before we are thrown out,” he said.
Another region vows to eschew national aid
A key official in a second regional government says no to another memorandum.
It’s not the money — which they want — but the austerian conditions that would accompany the payout.
We suspect the move is more a bargaining ploy than an ultimatum, but, as Greece has learned, it’s better to negotiate before the deal is done than after the ink dries.
Catalonia will never bow to political conditions in return for state financial aid, the region’s economy minister, Andreu Mas-Colell told the Barcelona Chamber of Commerce on Thursday, as reported by EFE news agency.
Catalonia knows it will have to accept economic conditions, such as external audits and new interest rates, but it is not willing to submit to political conditions in exchange for federal bailout money.
Catalonia accounts for a fifth of the country’s economic output, and has GDP of 200 billion euros, equal to Portugal’s.
It is also Spain’s most indebted region, with debt repayments of 5.76 billion euros in the second half of the year, and a 2.61 billion euro bond falling due in November.
More regions, more woes — and banks
One’s about to opt for a bailout and the other already has.
The more interesting items of this Open Europe report focus on Bankia, the fruit of the merger of already failed banks, and the national government’s checkered role in its creation and subsequent second collapse:
On the Spanish regions’ front, the government of Castilla-La Mancha – headed by Dolores de Cospedal, Secretary General of Rajoy’s Partido Popular – refused to rule out seeking a bailout from the Spanish government, although it stressed that it doesn’t need one “urgently”. Meanwhile, Catalonia’s Economy Minister, Andreu Mas-Colell has made clear that his region won’t accept any “political” conditions the central government may try to attach to the loan Catalonia has decided to request.
His counterpart from Comunidad Valenciana, Máximo Buch, predicted that the Spanish government could consider boosting its €18 billion Autonomic Liquidity Fund (FLA, the rescue fund for Spanish regions) later this year, once all the Spanish regions in need of a bailout have shown their hand. Interestingly, Buch also suggested that several “shirking” regions will eventually follow Comunidad Valenciana’s example and request a loan, sooner or later.
On a slightly separate note, Bankia’s former chief Rodrigo Rato – who also served as Spanish Economy Minister and IMF Managing Director – has been heard by Spanish MPs today, and said a couple of interesting things. First off, he claimed that the Bank of Spain “ordered” him to go ahead with the merger of Caja Madrid and Bancaja, despite it being quite clear that the two cajas held a worrying combined total of doubtful real estate assets. For those unfamiliar with the story, Caja Madrid and Bancaja are two of the seven Spanish savings banks that form part of Bankia, which is effectively a conglomerate. Together, the two form almost 90% of Bankia.
Rato also told MPs that, last May, he submitted a restructuring plan for Bankia to the Spanish Economy Ministry, but was ignored. Rato’s plan involved a loan of ‘only’ €6 billion from the Spanish government – i.e. four times cheaper than the almost €24 billion Bankia is now in line to receive.
Another Spanish shot fired
This one’s more of an ornamental rage, an outburst done more for cathartic reasons than anything else.
But the finance minister has a point, though the solution is the one German Chancellor Angela Merkel demands, the surrender of sovereignty in matters financial.
The EU failed to intervene while there was still time to prevent the crisis, allowing countries like Spain to incur unmanageable levels of debt, Spanish Finance Minister Cristobal Montoro told the Senate on Thursday.
‘’The weakness of Spain is also that of European institutions, which did not sound the alarm when extreme debt was being generated,’‘ Montoro told senators as they debated the government’s proposed €126.792 billion spending limits for 2013, and how to balance the 2013-2014 budget.
‘’The rules have not always been clear,’‘ the minister said, and they must be clarified now that Spain is being ‘’thrashed by the markets.’‘ The minister expressed his hopes for a faster euro zone integration and ‘’more authenticity’‘ in European institutions, which must adapt to the current realities. ‘’There is no monetary union without a central bank, as is the case in the US. We’re not asking for extraordinary measures. We just want normality,’‘ Montoro said.
The next budget, he added, will not only execute European mandates but will aim to ‘’end the recession as soon as possible.’‘
Spanish crisis hits home — literally
Social tensions are the human cost of economic crises compounded by austerian impositions, and the crisis in Spain — wracked by catastrophic unemployment compounded by the implementation of a harsh memorandum — is striking at the web of family relationships.
Against the backdrop of speculation that Spain may be the next eurozone member to need a bailout, the country’s economic crisis is having an effect on generational relationships.
Catholic charity Caritas says 40 percent of people seeking help used to be middle class.
A quarter of people in Spain are jobless. This means increasing numbers of adults are having to move in with their elderly parents.
Spain has the highest rate in Europe of multi-generational families all living together, and as the crisis continues, this figure looks set to rise.
Also note that half of Spain’s youngest workers can’t find jobs, which means that some homes have two or three generations of unemployed.
And on to Italy. . .
Moody’s, busy again, downgrades Sicily
Having just downgraded German states and the the eurzone’s stability mechanism yesterday, the number crunchers at Moody’s struck again today, hitting at Italy’s most troubled region.
From Agence France-Presse:
Moody’s on Thursday downgraded the credit rating for the Italian region of Sicily to within one notch of junk status as the finances of regional governments in Italy and Spain rattle investors.
Moody’s said it was cutting the rating for the autonomous region to Baa3 from Baa2 with a warning of a possible further downgrade due to “heightened budgetary pressures” that would increase due to the recession this year.
Italian Prime Minister Mario Monti earlier this month warned Sicily was on the brink of bankruptcy and Italian newspapers dubbed it “the Greece of Italy”, pointing to decades of lavish public spending by regional authorities.
Biagio Bossone, the regional accountant general said the rating cut was based on “the media campaign that has targeted Sicily in recent days”.
Moody’s said Sicily had debts of 5.3 billion euros ($6.5 billion) and said the regional government had shown “a failure to consolidate the regional budget in response to fiscal-tightening measures imposed by the central government”.
Caught in austerity trap, Italian retirees protest
If having your pension chopped by an austerian memo is bad, consider the case of thousands of Italians who retired, only later to have the pensions stopped because they aren’t old enough to retire under standards imposed after their retirement!
Had that happened to us, we’d be protesting too.
Italians caught in a welfare limbo under the government’s austerity measures have been demonstrating in Rome.
Known as the “esodati”, up to 300,000 people who had negotiated early retirement before the economic crisis have now had their pensions taken away.
Under the new system, pensions depend on the length of time worked while the retirement age is being raised to 66 for men and 62 for women with immediate effect.
At the protest, union leader Susanna Camussi said the government had no financial resources, because it had not looked in the right place.
“They choose the easiest way,” she said. “Hitting workers and businesses, rather than introducing a property tax. So, the government saying there are no resources is unacceptable.”
And now, one to Greece. . .
Big league bank predicts a Grexit
A Dutch economist based at Citigroup in London who also sits on the Bank of England’s Monetary Policy Committee isdeclaring as Grexit all but a done deal.
Citigroup Chief Economist Willem Buiter’s promnouncement, quoted by Kate Mackenzie of FT alphaville:
We now believe the probability that Greece will leave EMU in the next 12-18 months is about 90%, up from our previous 50-75% estimate, and believe the most likely date is in the next 2-3 quarters. As before, for the sake of argument, we assume that “Grexit” occurs on 1 January 2013, but we stress this is an assumption rather than a forecast of the precise date. Even with the Spanish bank bailout, we continue to expect that both Spain and Italy are likely to enter some form of Troika bailout for the sovereign by the end of 2012.
Over the next few years, the EA end-game is likely to be a mix of EMU exit (Greece), a significant amount of sovereign debt and bank debt restructuring (Portugal, Ireland and, eventually, perhaps Italy, Spain and Cyprus) with only limited fiscal burden-sharing.
Budget cut plans handed to Troika
It’s the package of cuts, proposed to be carried out over the next two years, that Prime Minister Antonis Samaras and his coalition partners hope will sooth the savage Troika.
It’s the capitulation that Samaras had vowed to fight in negotiations for memorandum modifications, negotiations he formally renounced Wednesday in a complete capitulation of the central plank of his election campaign.
From Deutsche Presse-Agentur:
Greece’s finance minister presented the country’s lenders with new austerity measures Thursday, in the hope that this will convince them to release further bailout funding for Athens.
International inspectors from the EU, IMF and European Central Bank have been in Greece since Tuesday to assess the country’s troubled austerity programme under its second bailout.
In a meeting that lasted more than two hours, Finance Minister Yannis Stournaras presented plans to save an additional 11.5 billion euros (13.9 billion dollars) over the next two years.
Later Thursday, visiting European Commission President Jose Manuel Barroso was to hold talks with Prime Minister Antonis Samaras.
Local media in Athens reported that the inspectors would finish their current mission in early August and return again in September to finalize their review of Greece’s progress in implementing reforms.
In an effort to meet the EU/IMF target, the government is proposing health spending cuts worth around 2.8 billion euros, 5 billion euros in cuts to benefits, the imposition of a ceiling of around 2,000 euros on pensions and new cuts in civil service salaries, according to state television NET.
More from Agence France-Presse:
Greek Prime Minister Antonis Samaras met European Commission President Jose Manuel Barroso on Thursday as his political allies considered 11.6 billion euros in spending cuts.
Government officials are hoping for a message of support from Barroso, who is on his first visit to Athens in three years, at a time when speculation is rife that Greece may be forced to crash out of the eurozone.
Samaras was elected in June after promising to soften an austerity drive deemed to have accelerated a five-year recession in crisis-hit Greece.
But Greece, which has a multi-billion loan agreement running with the EU, the IMF and the European Central Bank, has been told by its creditors to stick with reforms if it wants to maintain its fund lifeline.
The finance ministry on Thursday said the spending cuts, reportedly to come largely from pensions, health care and benefits, are designed to help Greece negotiate more time to overhaul its spending to cope with a deep recession.
“It’s a weapon to request a two-year extension,” the official said after talks between Finance Minister Yannis Stournaras and senior EU-IMF auditors.
Greece’s coalition leaders are to resume talks on the cuts on Monday.
Stilll more from Andy Dabilis of Greek Reporter:
Greek Prime Minister Antonis Samaras’ uneasy coalition government has reportedly agreed on most of a plan to cut the state budget by $15 billion over the next two years, with likely targets again including pensions he had promised to exempt.
A meeting with his coalition partners, PASOK Socialist leader Evangelos Venizelos and Democratic Left leader Fotis Kouvelis, was supposed to yield a list of the cuts, but broke down late on July 26 when the they could not settle on where to cut a remaining 1.5 billion euros, or $1.84 billion, although the government promised there would no more pay cuts for public workers. The trio will meet again on July 30 to see if they can make the final trim in the budget.
About 5 billion euros ($6.15 billion) of the cuts will come from from pensions and welfare benefits while tax evaders owing the country some $70 billion have largely gone unpunished and lost revenues not recouped. The remaining cuts will be spread out across various ministries, including a big chunk from the health ministry.
But the deal’s not final yet
That’s because a key player in the Troika doesn’t have all the answers it wants yet.
The International Monetary Fund said on Thursday it expected discussions with Greek authorities over the country’s bailout-supported program to continue into September, longer than expected.
An IMF mission is in the field in Greece and is having the first opportunity for “substantive” discussions with the new government, and those talks were expected to continue “into September,” IMF spokesman David Hawley said at a regularly scheduled news conference.
The spokesman’s comments suggested a longer timeframe for talks than anticipated. A report on the findings of Greece’s creditors in the multibillion rescue program was expected to be published at the end of August or early September.
And a second Troikarch weighs in
The message to Greece is the same: Put up or shut up.
From Agence France-Presse:
Greece must deliver on its obligations if it wishes to remain in the eurozone, European Commission President Jose Manuel Barroso, on his first visit to Athens since the crisis began, said on Thursday.
“To maintain the trust of its European and international partners, the delays must end. Words are not enough, actions are more important,” Barroso said after talks with Greek premier Antonis Samaras and Finance Minister Yannis Stournaras.
Stournaras, elected in June, is now in charge of pushing through a new wave of reforms demanded by EU-IMF lenders while also committed to offering a sigh of relief to a Greek population fed up with more than two years of crisis.
The heavily indebted country is under immense pressure to carry out a structural reform programme, part of the EU-IMF multi-billion loan agreements that have been keeping its economy alive since 2010.
“All heads of states and governments of the euro area have stated in the clearest possible terms that Greece will stay in the euro as long as commitments made are honoured,” Barroso told his hosts.
But during the difficult process, the “Greek people don’t stand alone”, Barroso said.
And what’s a day without a German Grexit mumble?
This time, the call comes from Bavaria.
Bavaria’s Finance Minister Markus Soeder said Thursday Greece should leave the euro area instead of receiving more European aid.
“Because Greece can’t or doesn’t want to make it… it only makes sense to smooth its way out of the euro — otherwise it is just like a money sink,” the Wall Street Journal quoted him as telling German radio.
The comments by Soeder, who is a member of the Christian Social Democrats, the junior coalition partner of Chancellor Angela Merkel’s Christian Democrats, followed remarks by German Economy Minister Philipp Roesler who this weekend indicated he was skeptical about Greece’s progress with reforms.
“In terms of reform steps, there is nothing,» Soeder was quoted as saying about Greece. “So I don’t think the solution lies in giving more money to Greece but that Greece will leave the eurozone.”
Fears of “The Men in Black”
And by that Greeks don’t mean Will Smith and Tommy Lee Jones.
The sinister epithet does seem fitting, since it refers to the Troika hit team now gutting their country in the interests of investors.
People here are preoccupied by a single question: Are there even worse things to come?
Since inspectors from the so-called troika — made up of the European Commission, the European Central Bank and the International Monetary Fund (IMF) — arrived in Athens on Tuesday, tensions have been high in Greece. The group is preparing a final report that will determine whether the country has made sufficient progress in its belt-tightening and reform efforts, earning it the right to receive more bailout funds — or whether the money spigot will be turned off and Greece will be allowed to finally go bankrupt.
The Greek media has been full of reports about rumors that the IMF will no longer take part in additional financing for Greece because there have been too many delays in making reforms. Greek officials, however, have argued that several austerity and reform measures have been slowed by the two national elections in May and June, and they want the country’s lenders to give it two more years to achieve the budget goals to avoid an even deeper economic slump.
The media has also criticized speculation that Greece’s exit from the euro zone is becoming increasingly likely, calling it irresponsible. “Stop the negative rumors,” ran the headline of one commentary in the daily Kathimerini. “Nothing positive will happen in this country unless the looming threats of Greece exiting the euro zone disappear completely.” That almost mirrored the sentiment of Wolfgang Dold, Germany’s ambassador to Greece. In an interview with the Sunday paper To Vima, he had previously warned against giving in to “the temptation to exit the euro.”
The Greeks are anxiously following the work of the “men in black,” as the troika inspectors are colloquially known here. Right after their arrival, the government of Prime Minister Antonis Samaras announced plans to merge or shut down 200 inefficient public organizations to save an estimated €40 million. An additional €9.5 billion are also supposed to come from more wage reductions for public-sector workers and a range of cuts in social services. In a speech before parliament, Samaras said that the real issue was re-establishing Greece’s trustworthiness in the eyes of its creditors, adding that he was confident that the country would be able to shoulder its burdens if given more time to do so.
Washington’s money man meets with Greece’s
The White House is deeply interested in a quick interim fix to the eurocrisis since the current occupant is running for reelection at a time when voters are deeply worried about the American economy.
After an Obaman gaffe about Europe causing an American crisis and the apt rejoinder that it Wall Street that triggered the whole thing in the first place.
From Keep Talking Greece:
US-Treasury’s Assistant Secretary for International Finance Charles Collyns had a meeting with Greek Finance Minister Yiannis Stournaras in Athens on Wednesday morning.
According to Greek media, Charles Collyns expressed the support of US-Finance Secretary Tomothy Geithner to Greece and his confidence to Greek efforts. Furthermore Collyns expressed the concerns of Obama administration regarding the worsening of the debt crisis in the euro area and listed Washington’s positions abou the efforts that should be gradually made in order to overcome the economic crisis.
Only recently Timothy Geithner had urged the European leaders to be more aggressive in addressing these problems.
Yinannis Stournas briefed Collyns on the situation of the Greek fiscal condition and the key challanges of the Greek economy.
Charles Collins, a close associate of the US-Treasury Secretary Timothy Geithner, is a distinguished economist with long tenure at the International Monetary Fund and responsible for the field of International Economic Relations. He is an old classmate and close friend of Yiannis Stournaras, Greek media reported.
Drastic healthcare cut plans spark outrage
The austerian cuts proposed are simply draconian, and lethal.
A proposal for a 1,500-euro ceiling on the amount that social security funds can spend for the healthcare of each Greek every year has drawn stinging criticism from associations representing patients.
The suggestion for a limit to be placed on what is spent by the funds was included in the cost-cutting plan drawn up by the Center of Planning and Economic Research (KEPE), which the government has used as its blueprint for setting out the 11.5 billion euros in cuts that it has to make over the next two years to satisfy Greece’s creditors.
Health Ministry sources have denied that this option is being considered but the plan for the cuts has not been made public, fueling speculation that some form of spending limit could be introduced. Currently, social security funds cover the full cost, or at least heavily subsidize, medical treatment and drugs. Kathimerini understands that under the plan, anyone exceeding their limit would have to pay 10 euros per visit to a doctor and 15 percent of their daily treatment if they are hospitalized.
A doctor at a public hospital pointed out to Kathimerini that an appendectomy costs 1,400 euros, which means that should a patient use his or her social insurance to cover the operation, they would only be left with another 100 euros of cover for the rest of the year.
Think about it. Greeks, who’ve already lost 40 percent of their salaries will not be faced with catastrophic choices, live and death choices. Recall that despairing has killed himself to fund a daughter’s wedding; what kind of choices will now be demanded?
And a second Ekathemerini reports an even equally alarming development, the impending collapse of the nation’s hospital system:
Several weeks of work-to-rule action by doctors at state hospitals in northern Greece have caused serious setbacks for several institutions with some hospitals barely functional, Kathimerini understands.
The main general hospital in Serres is reportedly in the worst state following the resignation last week of 10 out of the 11 pathologists who were complaining about funding cutbacks. Doctors in the broader prefecture of Serres are planning walkouts and legal action, according to sources, while medics at hospitals in Komotini, Polygyro and Kavala have also launched go-slow action.
The George Papanicolaou General Hospital in Thessaloniki is also said to be in crisis mode, with doctors boycotting morning duty hours over unpaid wages and understaffing.
According to Dimitris Varnavas, president of the Federation of Greek Hospital Doctors’ Unions, morale is at an all-time low. The atmosphere is “explosive,” he said.
Greece poured cash into weapons
For a population smaller than many of the world’s larger cities, Greece has been spending a lot on weaponry.
A helluva lot.
And the folks who profited from the profits are the very ones pushing the austerity agenda.
According to the independent Stockholm International Peace Research Institute (SIPRI), Greece has spent much of the 2000s as one of the top five arms importers globally, lavishly spending on new submarines, tanks and fighter jets. Just last year, the country spent €4.6 billion on defense, representing 2.1 percent of its economic output. European NATO members, by contrast, spent an average of 1.6 percent, Germany just 1.4 percent.
Athens, though, has been reluctant to cut its defense budget. As part of the austerity package Greece pushed through in exchange for the second euro-zone bailout package, the government announced cuts worth just €300 million. Planned cuts to medication subsidies alone are worth over a billion euros.
Why the hesitation? Much of the weaponry imported by Athens is bought from German and French manufacturers. As such, deep cuts to the military could actually conflict with the interests of Greece’s largest creditors. “There is an element of hypocrisy when Germany and, to a lesser degree, France blame Greece for being spendthrift without acknowledging at the same time that a lot of money that Greece spent ended up in German and French pockets for the purchase of consumer goods and weapon systems”, says Thanos Dokos, head of the Hellenic Foundation for European and Foreign Policy (ELIAMEP). Still, he adds, “neither Germany or France or any other supplier for that matter forced Greece to spend all this money on defense or opt for specific weapons systems.”
Note that Greece staged a provocative live fire military exercise with Israel in Greek waters, a direct provocation to Turkey, providing more justification for more money because things are so tense, doncha know?.
Greek bankster lashes out at Troika
The claim that the would result in growth was absurd, and Greek has been placed in an impossible situation, rendered so because single currency blocked the country from using the [Keynesian] tools traditionally employed in combating crisis.
“We knew at the fund from the very beginning that this program was impossible to be implemented because we didn’t have any — any — successful example,” said Panagiotis Roumeliotis at New York Times, a vice chairman at Piraeus Bank and a former finance minister who until January was Greece’s representative to the International Monetary Fund. Because Greece is in the euro zone, he noted, the nation cannot devalue its currency to help improve its competitiveness as other countries subject to I.M.F. interventions almost always are encouraged to do.
At the same time, Mr. Roumeliotis and others note, the troika underestimated the negative effect its medicine would have on the Greek economy.
“The argument that is used usually by the troika in order to criticize Greece — and to ignore their mistakes — is that the deep recession is because of the nonimplementation of the structural reforms,” Mr. Roumeliotis said. While Athens has fallen woefully short on that front, he conceded, the bigger problem is that the severe cuts contributed to the downward spiral by decimating economic demand within Greece.
It remains to be seen whether the troika is prepared to force Greece to default. Much of the talk on both sides is aimed at extracting concessions in negotiations. But while Greece has been pushed to the edge before, it now appears to be running out of time because its European partners, however complicit in Greece’s current plight, appear to be running out of patience.
Cash Grexit continued in June
Though the claim is that it slowed after the election that ended with the present coalition government.
A rush by consumers and firms to pull their money out of Greek banks continued in June, European Central Bank data showed on Thursday, adding to the pressure on the country’s troubled banking system as doubts grow about Greece’s future in the euro.
Speculation about Greece possibly quitting the euro was intense in May when anti-bailout parties saw a strong showing in elections, but the Greek central bank said the process had reversed after the June 17 election, Reuters noted.
The ECB’s data for June showed that deposits for the month as a whole continued to decline. Private sector deposits in Greek banks fell almost 5 percent, matching the previous month’s sharp decrease.
The total fell to 156.2 billion euros at end-June from 163.1 billion a month earlier and is more than one-third below the peak in December 2009. They are now at their lowest level in more than six years.
Analysts said it was possible that deposits had started to return after the elections, but did not make up for the falls early in the month. However, as long as doubts about the country’s future in the currency union continue, people might prefer cash holdings to bank deposits.
More pay cuts for the political elite
Included on the salary slice in Syriza leader Alexis Tsipras/
From Athens News:
A draft bill legislating cuts in the total salary of the prime minister, members of cabinet, the Parliament president and the leader of the main opposition was uploaded on the government website for public consultation on Thursday.
The bill is designed to reduce the cost to the public sector of running the country’s political system and political administration.
Under the proposed bill, the prime minister and Parliament president will undergo a monthly pay cut of 1,872 euro, the government vice-president and main opposition leader will see their pay reduced by 1,404 euro per month, ministers and deputy ministers that are also MPs will see a 935-euro monthly pay cut and members of cabinet that are not MPs will have their pay cut by 468 euro per month.
The finance ministry announced that Staikouras is due to issue a decision regulating the remuneration of ministry general secretaries after reviewing comments by the public on the government site.
Yeah, we can imagine that people getting their own salaries chopped would demand that the folks carrying out the hit get hit themselves.
And on to France, and a different response to a similar issue. . .
No transparency for French legislator spending
Yep, the folks who write the laws, the majority of them belonging to the Socialist [sic] party of President François Hollande.
Gee, you’d think folks who claim to be socialists woudl want full accountability, would you? But such is the nature of what passes for European socialism these days.
From the BBC:
Members of the French parliament have thrown out a proposal to audit their allowances as the government prepares austerity measures for the economy.
They voted four to one to reject the bill which would have each deputy account for his or her annual allowance of 76,944 euros (£60,000; $93,000).
One deputy who opposed the bill said it would impinge on parliamentary freedom.
The bill’s sponsor predicted an eventual expenses scandal like that which gripped Westminster in 2009.
A French study conducted in June suggested that, on average, those working for the French parliament enjoyed a 77% higher income than their counterparts in the British House of Commons or the German Bundestag.
The French are fiercely defensive of the benefits they have earned and none more so than the members of the National Assembly, the BBC’s Christian Fraser reports from Paris.
More layoffs at another French corporation
This time, it’s a telecom.
From Radio France Internationale:
French telecoms giant Alcatel-Lucent on Thursday announced it will shed 5,000 jobs worldwide as France’s unemployment rose for the 14th month running. Job losses are also expected at Air France and pharmaceuticals group Sanofi.
Announcing losses of 254 million euros, Alcatel-Lucent said it plans to make savings of 1.25 billion euros by the end of 2013 and axe 5,000 of its 72,500 employees around the world. Only 8,470 of those jobs are in France, 10,500 in China, 8,800 in India and 14,000 in the US.
The latest news comes as a further blow to President François Hollande’s pledge to create jobs and promote growth after PSA Peugeot-Citroën’s confirmation that it will axe 8,000 jobs.
The government’s plan to prop up the ailing car industry has been attacked from both its right and its left.
French unemployment crept nearer to the three million mark in June with 23,700 people added to the jobless figures.