The rush from crisis to crisis is the stuff of daily life in Greece, and our report ranges from the pathetic to the rapacious, on to the tragic, and closes with the ridiculous.
We begin with artistic expression in the form of Athens street art, then quick cut to a prime ministerial plea for time, a prompt German rebuff, the latest morose numbers, a governmental spending shutoff, a recall of the cutting crew, a list of pocket-picking cuts, a vulture capitalist Grexit call, a dire assessment by Germany’s leading news magazine, a threat of Eastern European Grexit contagion, a protest against anti-migrant violence, a soaring suicide count, cuts to preschools and schools, plunging housing prices, some pious presidential discomfort, and a beauty contest fit for the times.
Street art from an Athens in crisis
For starters, a video report for Athens News compiled by George White:
Samaras prepares to go a-begging
Antonis Samaras, prime minister of the center-right ruling coalition, is getting desperate, seeing as how his coalition is threatening to splinter over the huge social costs of implementing the Troika’s austerity mandate.
Knowing that austerity leads to unrest and a possible breakup of his increasingly shaky mandate, Samaras is desperately hoping he can convince the Powers That Be to extend the memorandized mandate, presumably hoping the boiling frog phenomenon will inure his fellow Greeks to the pain.http://en.wikipedia.org/wiki/Boiling_frog
From Valentina Pop of EUobserver:
Greek Prime Minister Antonis Samaras is next week meeting top EU leaders in a bid to negotiate a two-year deadline extension of the current bailout terms due to the worsening recession.
But patience among eurozone donors is wearing thin.
Samaras is due to receive Eurogroup chief Jean-Claude Juncker in Athens on 22 August, after which he will travel to Berlin and Paris to meet Chancellor Angela Merkel and President Francois Hollande to lay out why Greece needs two more years to meet the agreed terms, Greek daily Ekathimerini reports.
According to internal documents obtained by the Financial Times, the €11.5 billion worth of spending cuts the government is still struggling to cobble together would be spread over four years until 2016, instead of the 2014 deadline that is currently expected by Greece’s lenders.
In order for the plan to work, Greece would need an extra €20 billion to support the budget as the annual deficit reduction in 2013-2014 would be smaller than planned.
But Athens would not seek extra money on top of the €130 billion bailout agreed in March, FT reports, and instead would ask for its repayment of the first bailout it received in 2014 to be postponed until 2020.
More from Kerin Hope of Financial Times:
Iannis Mourmouras, chief economic adviser to the premier, said that a deeper than projected recession this year with the economy set to shrink by 7 per cent would justify the extension.
“The deficit reduction demanded for the period 2013-2014 is excessive,” Mr Mourmouras said. “An overdose of austerity is self-defeating.”
The government debt agency on Tuesday raised €4.06bn of budget funds in three month treasury bills in a last-minute auction to cover a bond redemption due on August 20. Greek banks bought the bulk of the issue.
The European Central Bank had rejected a government proposal to delay the €3.2bn bond repayment by one month, highlighting the tough approach being taken to Greece by international lenders.
The Iron Chancellor gives him a big thumbs down
Not surprising, given the mounting discontent within Angela Merkel’s own party to any notion of giving the Greeks more time — or money.
From Deutsche Presse Agentur:
German Chancellor Angela Merkel on Wednesday rejected Greek requests that terms of that country’s financial bailout agreement be relaxed.
The statement came following an announcement that Greek Prime Minister Antonis Samaras would meet with Merkel next week in Berlin.
Government spokesman Steffen Seibert said Merkel remains opposed to giving Greece more time to meet the fiscal targets demanded of the country under the terms of the present bailout deal.
Samaras is expected to make a case for easing Greece’s austerity programme when he meets with Merkel on August 24.
More from Agence France Presse:
Merkel’s spokesman Steffen Seibert said the German position remained unchanged on Greek reforms.
“Of course the chancellor will listen to what Mr Samaras has to say here about the situation in Greece and the implementation of the programme,” he told a regular government news conference about the talks in Berlin on August 24.
“But for the entire German government, the agreed memorandum of understanding which states what the Greek obligations are remains the basis of all aid decisions.”
He noted that no ruling on the next installment of aid to the debt-mired country would be made until the troika of creditors from the European Union, the International Monetary Fund and the European Central Bank delivered a progress report in mid-September.
Greek miseries keep compounding
The real problem is endlessly compounding interest on all those loans, which can only be made good under two scenarios: Either the economy takes off like a rocket or the country sells off everything it owns to keep the loan sharks happy.
From David Jolly of the New York Times:
The Greek economy continues to contract rapidly, official data showed on Monday, a painful reminder of how Greece, the weakest member of the euro zone, was chasing a moving target in trying to meet its bailout obligations.
The nation’s gross domestic product slid 6.2 percent in the second quarter from a year earlier, the Hellenic Statistical Authority said. That follows a 6.5 percent year-over-year contraction in the first quarter.
Sarah Hewin, an economist at Standard Chartered Bank in London, said the second quarter had been a difficult time, with two parliamentary elections, tough austerity measures and a flight of deposits from Greek banks all weighing on confidence.
She noted that the Greek economy, which was stumbling even before the collapse of Lehman Brothers in 2008, had shrunk almost 18 percent since the April-to-June quarter of that year, a decline that suggests economic depression. So far, there appears to be little reason for optimism, with the unemployment rate in May reaching a record 23.1 percent, up from 22.6 percent in April. The jobless rate among youth has reached almost 55 percent.
The sole bright spot, Ms. Hewin said, was that the tourist season was shaping up better than many pessimists had feared.
Yeah, those tourists will save the day. Sure they will.
Government orders a stop to all spending
It’s the measure of last resort, and guaranteed to create still more discontent.
That means no funds for health care, schools, and everything the government does daily to keep the country running.
One certain result: More unrest.
From Andy Dabilis of Greek Reporter:
Under the gun to make cuts or find equivalent savings of $14.16 billion, the Greek government has put a hold on all spending, except for pensions and salaries, and will not pay its bills. The new coalition administration of Prime Minister Antonis Samaras said it has imposed the moratorium until the next bailout installment from international lenders, some $38.8 billion remaining from a first package of $152 billion in rescue loans, is released.
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) is also withholding a second bailout of $173 billion until the cuts are made and more reforms are implemented, squeezing the government to save money wherever it can.
Government spending for this year has been budgeted at 108.5 billion euros, some $133.27 billion, including money to be set aside to recapitalize state banks who took 74 percent losses on their Greek bond holdings under a program from a previous government to write down the country’s debt by $134 billion, but which left private investors taking the hit. The government said the moratorium is the only way for now that it can stay on target to reduce the deficit to 3 percent within two years, down from about 9.1 percent now.
Greece owes suppliers 6.6 billion euros, or $8.1 billion, and long ago had stopped paying many of them. Debts to suppliers have risen 15.4 percent, or by $1.08 billion since the beginning of the year. The Public Investment Program has also been frozen and social security funds and hospitals will have to wait as well.
The moratorium will do little to help Samaras get the deficit, as well as the country’s staggering $460 billion debt under control though, as without making the cuts demanded by the Troika the rescue loans could be cut off, leaving the country without money to pay anything or anybody, including workers and pensioners. Finance Minister Yiannis Stournaras is said to be working furiously to prepare a list of cuts that Samaras and his coalition partners – but political rivals – the PASOK Socialists and Democratic Left can accept.
Samaras calls back the cutting crew
Desperate to whip up a list of cuts that meets the Torikarch’s demands, Samaras is cutting short the vacations of his bean-counters in order to meet the deadline for the next tranche of Troika moolah.
Several government officials were recalled from brief summer holidays Tuesday as the coalition continues to look for ways to complete the 11.5-billion-euro savings package demanded by the troika while limiting the social impact as much as possible.
Labor Minister Yiannis Vroutsis asked members of the government’s actuarial authority to return to Athens to work on alternative scenarios for the pension cuts the three-party alliance will have to approve as part of the package.
As things stand, the government looks set to approve reductions to all pensions above 700 euros per month but to limit the cuts to the lower pensions to just 2 percent. However, given the unpopularity of such cuts, the government wants to explore all the alternatives available.
Coalition talks are due to resume on Monday with the aim of finalizing about 5 billion euros of the 11.5 billion that have yet to be agreed. Prime Minister Antonis Samaras would like to have the measures agreed before Eurogroup chief Jean-Claude Juncker visits Athens on August 22. This meeting will be followed by ones with German Chancellor Angela Merkel and French President Francois Hollande later in the week.
So what cuts are already envisaged?
Ports, utilities, mineral rights, choice stretches of costline, and lots more are already on the table.
Now consider a few examples that will reach directly into people’s pocketbooks.
From A. Papapostolou of Greek Reporter:
Greek pensioners who have had money deducted from their salary for years for a lump sum payment to be awarded when they retire would lose half what they are owed under one government scheme to reduce costs.
That means, for example, that a teacher who was due $50,000 after 30 years of work will receive only $25,000 – but not for years after retiring, and maybe in Greek bonds, which have little value, and not cash. People who have already retired from state enterprises received their full lump sum and immediate monthly payments while civil servants will have to wait up to 14 months when they retire before receiving a monthly benefit – and are not allowed to work in the meantime.
The newspaper Proto Thema reported that other measures under consideration include:
- Lowering the income threshold for eligibility for welfare, to perhaps 25,000 euros ($30,800) annually, which would exclude half those who now receive benefits and leave them with no income
- Cutting retirement lump sums by 50 percent, even for those who have already retired, making the cuts retroactive. Those who have already received their full amount may have to return some of it as yet another tax, on top of doubled income and property taxes. The government said that’s because many beneficiaries are getting from 2-83% more in payments than was deducted from their salaries over the years, although it was not revealed if that included accrued interest over the years.
- A benefits plan under which the annual income used as a criterion for issuing payments will also include presumptive income, which means most pensioners will lose auxiliary pensions completely, although those over 65 may be exempt in some cases
- Putting civil servants charged with corruption in a pool of as much as 45,000 layoffs being considered. Under the Constitution, it is virtually impossible to fire a public worker, even for wrongdoing and even some of those found to have broken the law have returned to work
Vulture capitalist recommends a Grexit
Vulture capitalists are the folks who find money in misery, scooping up asxsets on the cheap from desperate sellers.
So when one of them gives advice, it’s reasonable to listen with a jaundiced ear.
The words of wisdom come from 74-year-old leveraged buyout king Wilbur Ross, uttered during a CNBC interview in which he claims, rightly, that the Greek reality is even worse that what the media portray.http://en.wikipedia.org/wiki/Wilbur_Ross
From Agence France-Presse:
Ross, a vulture capitalist who seeks to turn around distressed companies and who has invested heavily recently in Ireland, toured the region and said he found the country in disarray, with many citizens expecting Greece to leave the European Union so it can establish its own currency and pay off its onerous debt.
“There’s almost a feeling of resignation both among the people on the street and the wealthy people that eventually Greece doesn’t stay in the EU,” Ross said in a “Squawk Box” interview.
That’s not necessarily a bad thing, said Ross, who believes that the impact of a Greek exit now will be less than it was earlier, when some economists feared that if Greece left it would trigger other debt-laden nations to do the same and lead to a larger crisis.
Greece would benefit from having its own currency, which it could devalue and make it easier to repay its more than $400 billion in sovereign debt.
“I’ve been in favor of Greece going out, frankly both from the Greek point of view and the EU point of view,” Ross said. “I think there are enough firewalls being built up, particularly now that (European Central Bank chief) Mario Draghi is acting like the lender of last resort, that I don’t think it would be that traumatic anymore. Most of the indebtedness of Greece is official debt, no longer private debt, so you don’t have the domino problem.”
Merkel’s quandary: Is Greece too broken to fix?
A blunt assessment from Spiegel paints a very dark picture indeed, and consistent with the vulture capitalist’s.
Here’s the opener:
Officially, at least, everything is going according to plan. In September, officials with the troika — made up of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) — are planning to travel to Athens to check on the progress that Greece has made with its cost-cutting program. Then, according to the plan, they could disburse billions more in aid out of the second bailout package for Greece, which the euro-zone countries and the IMF agreed on in February.
But, in reality, it is rather unlikely that all of the €130 billion ($160 billion) in the bailout package will ever be paid out. And what is even more unlikely is that the money would keep Greece from going bankrupt.
The assumptions on which the current program was based in February are no longer valid. At that time, it was thought that the Greek economy would only contract by 4.5 percent this year, but now it appears that this figure will be closer to 7 percent. This would mean even fewer tax receipts and even more social expenditures. What’s more, given these circumstances, it’s almost irrelevant that the Greek government is expected to ask for a two-year extension, to 2016, of the agreed austerity plan.
One thing is clear: In addition to more time, Greece also needs more money. And those who have been financing it thus far — primarily the major euro-zone countries and the IMF — are either unwilling or unable to give the country any more. In political terms, that is completely understandable: One can only imagine the earful that German Chancellor Angela Merkel would get if she were to present a third aid package for Greece before the Bundestag, Germany’s parliament. In fact, the members of her own conservative coalition would probably chase her out of the building.
But what other impacts could a Grexit pose?
Given the recent economic news from Eastern Europe, the impacts could be significant, according to an analysis by Lidia Moise of Xinhua:
An eventual exit of Greece from the eurozone would severely affect South Eastern European (SEE) economies via banking, trade and investment channels, said Mihai Tanasescu, vice president of European Investment Bank (EIB).
“The main threat of a Greek exit lies in the tentacular expansion of its banks in the region,” Tanasescu told Xinhua.
“There will be an indirect consequence via the fiscal channel as the funds will be fewer and more expensive and that will have negative effects on the economies of the region,” he added.
Bulgaria is seen as the most vulnerable SEE economy to the Greek problems. According to the latest Standard & Poor’s report on Bulgaria, “Greek banks own about one-third of the banking system, which has increased risks for Bulgarian banks with respect to the provision of liquidity and capital.”
Romania has the second largest exposure to the problems of the Greek banking sector. At the end of 2011, Greek banks held 13.3 percent of Romania’s banking sector assets, according to Unicredit Group’s estimates.
Migrant workers protest violent attacks
As we’ve been documenting, folks born in other countries are the inevitable targets of anger during economic crises, and there’s been a lot of it in Greece as the crisis grips tighter.
Now a group representing migrant laborers in Greece is speaking out.
Nearly 500 racially motivated attacks have been carried out over the past six months in Greece according to the Migrant Workers Association, as immigrants say that the rising wave of xenophobic violence has left them afraid to walk the streets.
The victims were in most cases attacked with steel rods, knives and brass knuckles, the association says.
“We are afraid to walk around. It’s Ramadan [the Islamic month of fasting], we’re invited for dinner and we don’t go. If we go outside, we will be caught either by the police or by Golden Dawn,” an immigrant, who did not identify himself, told Kathimerini in reference to Greece’s neofascist party whose members have been linked to similar attacks in the past.
The Greek suicide count escalates
Were it up to us, we’d make the Troikarchs attend a few autopsies of Greeks made so desperate by the crisis that they’ve killed themselves.
But then maybe they’d enjoy it. . .
On July 16, a businessman and father of three hanged himself in his shop on the island of Crete. A 49-year-old man from Patras was found by his son. He had also hanged himself. On July 25, a 79-year-old man on the southern Peloponnese peninsula hanged himself with a cable tied to an olive tree. On August 3, a 31-year-old man shot himself to death at his home near Olympia. On August 5, a 15-year-old boy hanged himself in Pieria. And, on August 6, a 60-year-old former footballer self-immolated in Chalcis.
These are also reports from Greece, reports that, at first glance, seem to have nothing to do with the economy. They come together to form a grim statistic, raising questions of what is triggering the suicides and whether the high incidence is merely a coincidence.
Or do people see suicide as a way out of the crisis that has taken hold of their country and their lives? Are they bowing out before things get even worse? Germany and the International Monetary Fund (IMF) are opposed to a new bailout package for Athens. The country faces a shortfall of at least €40 billion ($49 billion). Greece could very well be officially bankrupt by the fall.
Greece, a country whose Orthodox Church does not condone suicide, has always had one of the lowest suicide rates in Europe. But now, there were 350 suicide attempts and 50 deaths in Athens in June alone. Most of the suicides were among members of the middle class and, in many cases, the act itself was carried out in public, almost as if it were a theatrical performance.
Austerity’s impacts hit early
Consider the kids who face exclusion from preschool and kindergarten because local governments can no longer afford to educate them.
More than 50,000 children might not be able to attend nursery schools and kindergartens run by local authorities due to a lack of funds, the president of the Confederation of Greek Municipalities (KEDE), Costas Askounis, warned the government on Tuesday.
Askounis said that unless more funds were released by early September, the schools would have to offer a reduced number of places.
Labor Minister Yiannis Vroutsis responded by pointing out that municipalities have already overspent on European Union-funded programs to boost female entrepreneurship and that this money would have to be recovered.
He invited mayors to talks aimed at discussing the allocation of funding.
Teachers decry worsening school conditions
Once again, it’s austerian cuts that are at the root.
From Greek Reporter’s Spyros Kouvoussis:
Anxious over continued slashes in the education budget, the Greek Confederation of Teachers has sent a letter – which condemned goverment policies – to Interior Minister Evripidis Stylianidis, asking for a meeting to talk about what the union said are deteriorating conditions in the schools.
Labor leaders said teachers, whose pay has been cut 30 percent or more during a crushing economic crisis, are finding it hard to meet their expenses and that physical conditions in the schools are worsening because of maintenance cutbacks, and that even heating oil is being limited.
Schools are funded through municipalities. Last year they received half of the amount for fuel in February but never got the rest in April as was due. The Confederation also reminded that last year school budgets were cut 33% and a 50% hike in fuel oil costs has further depleted their budget. It is asking for an increase in educational spending to 5% of the Gross Domestic Product (GDP) or 15% of the government budget.
The union stated that only 200 new teachers were hired last year even though some 2,000 teachers retired, a 1-to-10 ratio that is twice as tough as that demanded by international lenders providing Greece with rescue loans, who recommended one hiring for every five departures. The letter added that Greece is crushing the spirit of workers and that the union will continue to fight cuts in educational spending.
Housing price plunge continues
Fitch says the falling prices are just over halfway down to the bottom.
And that means that equity, the primary financial asset of so many, is vanishing just as salaries, healthcare, and pensions have been cut.
No wonder people kill themselves.
From New Europe:
Over the next two years, Greek house prices are set to fall by a further 17% according to ratings agency, Fitch.
Since 2009. prices have already fallen by 20%, and the total decline is set to be 37%, if Fitch is correct. however, the agency reached its conclusion on the assumption that the recession, and austerity measures will weaken in 2014. If they don’t, the reduction in house prices will fall even further.
If Greece leaves the Eurozone, the agency says prices will be in freefall and it is impossible to predict exactly how far they will plummet.
Fitch predicts that Greece will see another fall in its GDP this year, down 5% before signs lessening recession in 2013.
Receiving a presidential razzberry
Though he’s only a figurehead the Greek president is a figurehead, and that can carry consequences, as noted by Greek Reporter’s Areti Kotseli:
Greek President Karolos Papoulias – as he was at other Greek holidays as the government is cutting back people’s pay, raising taxes and slashing pensions during an economic crisis – was booed again at a public appearance, this time at the religious ceremonies at the Koimisis tis Theotokou (Assumption) Church in Theotokio, Arta, on Aug. 15, where churchgoers had gathered to celebrate Virgin Mary’s Day.
They reacted furiously when they saw Papoulias enter and verbally assaulted him, and police had to arrest one elderly person who would not stop shouting at him. One yelled: “You convicted the people to death!” The President remained calm and did not react and stayed until the end of the service.
Speaking to reporters later, he ignored what had happened and said only that, “It’s a great day for Orthodox Christianity. It’s a day of faith and hope that we can – in unity – overcome this crisis and better days will come for the tested Greek people.”
That last sentence brings a song to mind. . .
Greece holds an appropriate beauty contest
As always, it involves a “Miss,” but the rest of the title is clearly in keeping with the times, as Keep Talking Greece reports:
Traditional beauty contest titles like “Miss Beauty”, “Miss Smile” and “Miss Thigh” are passe. In times of austerity and recession the organizers of a beauty contest in Artemida, in Attica, decided to be creative and original. So they voted and gave the title to “Miss Crisis 2012.”
Anastasia Katmerdzi, 19, is the proud and ambitious winner of the beauty contest. She wants to be a singer…
Organizers did not elaborate, which specific crisis they had in mind. “Miss Greek Crisis”? “Miss Euro Crisis”? “Miss Identity Crisis”? Or just “Miss Crisis” in general.
PS We definitely need humour to overcome any crisis whatsoever…