Greek politicians have slipped on their traveling shoes as they hit the road this month to sell the Troikarchs on handing over the next round of bailout cash. But the real action’s coming in September.
Unpaid pharmacists are refusing to fill prescriptions, immigrant roundups continue, Pakistanis say they were tortured by police, another tax rewrite is in the works, more privatizations are underway, and some are beginning to wonder if the whole bond game is nothing less than a Ponzi scheme.
The Coalition steps up the bailout hustle
With the government running out of cash and all expenditures halted except for pay and pensions, the coalition government headed by Prime Minister Antonis Samaras is getting desperate to convince the Troikarchs that they’re fully on board with the austerity agenda.
And with the Men in Black in Athens supervising the government’s efforts to pare more cash from their budget, top government members are hitting the road.
From Ekathemerini:
Foreign Minister Dimitris Avramopoulos is due to fly to Berlin on Sunday for talks with his German counterpart Guido Westerwelle.
The trip is seen as a pre-cursor to Prime Minister Antonis Samaras’s visit to Germany on August 24, when he will hold talks with German Chancellor Angela Merkel.
In recent comments, Westerwelle appeared to have softened his stance on Greece and the possibility of Athens being granted more concessions, such as a longer fiscal adjustment period.
“The time that was lost in the Greek election campaigns must be taken into account,” Westerwelle told Spiegel magazine, before adding: “It is clear that no substantial changes can be made to the reform agreements.”
More from Keep Talking Greece:
The are important dates one has to keep in mind: Prime Minister Antonis Samaras will meet with Euro zone officials and powerful EU leaders to discuss the option of extension to meet fiscal targets.
22. Aug 2012: Euro group head Jean Claude Juncker will visit Athens.
24. Aug 2012: Samaras will visit Berlin for a meeting with German Chancellor Angela Merkel
25. Aug 2012: Samaras will visit Paris for a meeting with French President Francois Hollande.
Nothing much is expected to be achieved as the Troika will conclude its report of the Greek progress in September. Nevertheless, Samaras will take the chance and officially discuss his proposal.
PS Hopefully, Juncker will not have as an exquisite taste as European Commission President J. M. Barroso. He and his aides, security guards, secretaries and so on enjoyed a superb dinner while in Athens in July. The most expensive fish one could buy in the Greek capital with side dishes, starters, dessert and wines. It is us, Greek taxpayers, who pay for such dinners.
More from EurActiv:
Samaras will insist he can ram through an austerity package worth about €11.5 billion – a key condition to continue receiving EU/IMF bailout funds and avoid default and a possible exit from the currency club.
Greece is falling short of the budget cut and privatisation promises it made in March to obtain a second, €130-billion bailout from the European Union and the International Monetary Fund. This has led to calls by politicians in its biggest lender, Germany, for the country be ousted from the eurozone.
“Our key priority is to regain our credibility by showing our determination,” a Greek government official said.
Greece has yet to nail down the requested austerity package.
The bulk of the cuts will come from state salaries and pensions, and up to 40,000 public sector firings, further angering an austerity-weary public that often takes to the streets. The coalition’s two leftist junior partners have also opposed any further cuts.
The two leaders on Samaras’s agenda have scheduled a little sitdown of their own in advance of the visit, Capital.gr reports:
Ahead of crucial decisions on Greece’s future, German Chancellor Angela Merkel will meet with France’s President Francois Hollande next Thursday, government sources said on Thursday.
Merkel and Hollande are scheduled to have dinner in Berlin on August 23 to discuss “European topics” before they each meet Greek Prime Minister Antonis Samaras, Reuters reported.
But that’s just the start
September’s the really big month for get-togethers and a critical court case, some focusing on Greece and others on the broader Eurozone crisis and the measures created by finance ministers in June in their attempt to patch up the stricken currency.
Athens News reports:
The flurry of activity presages a crucial period for the eurozone after European Central Bank President Mario Draghi bought a measure of calm by announcing he would do whatever it took to shore up the bloc, including tackling high Spanish and Italian borrowing costs.
On September 6, the ECB may spell out at its monthly policy meeting exactly how it could intervene in the bond market if asked. Markets will be on red alert for ongoing signs of internal opposition after Bundesbank chief Jens Weidmann made clear his reservations about the plan.
Six days later, Germany’s constitutional court will deliver a ruling on the eurozone’s permanent ESM rescue fund before which Berlin cannot ratify it. Dutch elections are held on the same day.
The expectation is that the court will not block the fund’s inception but it could demand greater political oversight.
Draghi has said the ECB could only intervene to lower borrowing costs if a eurozone sovereign had first asked for similar help from the bloc’s bailout funds, to which conditions would be attached.
On September 14 and 15, European Union finance ministers meet in Cyprus. By then, the troika of EU, IMF and ECB inspectors may have delivered a verdict on Greece’s debt-cutting progress.
Rajoy and Monti, who have consistently urged the ECB to act, are expected to put their heads together later in September.
Unpaid pharmacists refuse to fill prescriptions
The government’s cash shortage is choking the national health system, and pharmacists aren’t getting paid for the prescriptions they fill.
Now they’re refusing to dole out more medicine until they get paid, transforming what had been a series of short-term actions into an outright boycott.
From Ekathemerini:
Pharmacies in 14 prefectures of Greece are refusing to provide medicines on credit to customers insured with the National Organization for Healthcare Provision (EOPYY) due to the fund’s debts.
EOPYY owes 117 million euros for prescriptions in May and another 145 million for drugs provided in June.
Pharmacists from Thessaloniki, Imathia, Pieria, Halkidiki and Kilkis joined the boycott on Thursday, saying that they will be forced to close if EOPYY fails to settle its bills.
Customers in these areas will have to pay for the drugs themselves until the matter is settled.
The Panhellenic Pharmaceutical Association is due to meet on August 25 to decide whether to take nationwide action.
Meanwhile, the roundups continue
The one area where the government’s more than willing to spend is on those roundups of suspected undocumented aliens, and the major sweep launched in Athens last week is continuing, with the campaign now expanding across the country.
From Capital.gr:
Operation “Xenios Zeus” continued yesterday with arrests of illegal immigrants in the centre of Athens.
According to the assessment of the Greek Police, a total of 269 foreigners were brought to the General Police Directorate of Attica. 6 foreigners were arrested because they did not meet the legal requirements to remain in the country, while in the presence of prosecutorial officials police officers made 11 searches of premises.
Since the beginning of the operation, 1,662 foreigners that did not meet the legal requirements to remain in the country have been arrested in a total of 8,023 arrests, along with 79 searches of premises, Protohema reported.
More from Ekathemerini:
Greek police are planning to extend the Xenios Zeus operation, which has seen more than 1,600 immigrants arrested this month, to other major cities, according to reports.
Officers detained another 50 migrants on August 15, of whom 11 were later arrested for not having residence papers.
Since the operation began earlier this month, just over 8,000 migrants have been detained, leading to 1,673 arrests.
Meanwhile, Athens Mayor Giorgos Kaminis has called on the government and citizens to stand against racist attacks on migrants. One immigrant group claims that more than 500 migrants have been physically attacked over the last six months.
An Iraqi man was stabbed to death in Athens last weekend. Nobody has yet been arrested for the attack.
“When fellow human beings are being stabbed in the street on almost a daily basis, society has to be alert and the state has to abide by its commitment to lead the perpetrators to justice,” said Kaminis.
Kaminis attributed the attacks to “gangs of motorcycle-riding fascists trying to take the law into their own hands.”
Pakistani workers say police tortured them
And they had papers, so they weren’t “illegals.”
From Athens News:
Pakistani community leaders have condemned what they allege was the torture and racist taunting of Pakistani nationals by police.
In a statement, the Pakistani Community of Greece alleged that at 8.30pm on Tuesday two Pakistani nationals, who had immigration papers, were taken to Egaleo police station by motorcycle unit (DIAS) officers.
There, the pair were subjected to racist taunting by a large group of officers, the statement continued.
“Not content with firing obscenities at them, they proceeded to brutally torture and beat them.”
One of the detainees, Gul Zeb, had his fingers squeezed with a pliers until his fingernails turned black.
Another, Khaled Massoud, 45, had his moustache cut off with a scissors.
Yet another tax overhaul in the works
Greece has seen it before, and the latest announcement has drawn a bit of ridicule from the folks at Keep Talking Greece:
To tell you the truth I’ve lost control over how many times Greece changed its taxation system, since the country sought the “rescue” of IMF, EU and ECB. Now, for one more time, Greece’s economic team plans changes – exactly when tax accountants and taxpayers struggled to adjust to the new system.
In an interview to daily Naftemboriki, Deputy Finance Minister G. Mavraganis said that the new taxation system would be “friendly” in terms of “reasonable penalties” and interest rates for those failing to meet their tax obligations on time.
In addition, taxable and estimated living standards – so -called ‘deemed income’ – will be eliminated, property transfer taxes will be decreased, the receipts collection system will be overhauled.
Target of the government is to raise the tax-free cap – currently at 5,000 euro annual income – to 8,000 and 10,000 euro.
The new system will bring tax justice, so that the honest taxpayers will not pay, so that others escape taxation, Mavraganis said more or less.
I gave up reading because nothing concrete was said, except about the efforts of the finance team to fix the new taxation system.
A side effect of crisis: Bulgarian firewood sales up
With conventional fuel costs soaring, more Greeks are heating and cooking the old fashioned way, with firewood.
And that’s good for Bulgaria.
From Greek Reporter’s Marianna Tsatsou:
Greece’s economic crisis is making many people change their lifestyle and shopping habits. Now they are turning to neighboring Bulgaria to buy cheap firewood, a report on Greece’s imports shows, looking for alternative sources of fuel as taxes have pushed heating oil prices up so high many people can’t afford to buy it and they are stocking up on wood for the coming winter.
The Greek newspaper Proto Thema wrote that the Bulgarian firewood is another example of how Greeks are searching for cheaper goods wherever they can because of a crisis that has seen workers’ pay cut 30 percent or more, taxes hikes and pensions slashed.
Representative of one of Greece’s biggest companies dealing with firewood imports told the Bulgarian news agency BTA that their company is sending about two trucks with firewood to Greece daily. She added that Greeks’ orders for firewood could fill 12 trucks each day but bureaucratic problems are limiting how much can be shipped into the country.
More privatizations ready to close
The Troika demands the transfer of public assets into private hands as a key tool in its austerity agenda, the theory being that profits from sales and the reduced state payrolls will allow all the profits and savings to be sent off to the folks who own the country’s debt.
ANSAmed reports on the latest impending sales:
Greece’s privatizations authority (TAIPED) was on Tuesday reported to have reached agreement for the liquidation of two of the country’s most indebted state-owned enterprises, the ODIE horse-racing organization and mining and metals group Larco. Their combined debts exceed 500 million euros and assets will be sold after the liquidation. The assets of ODIE, a legacy of the 2004 Olympics, are the license to conduct horse-racing betting and its real estate in Markopoulo, outside Athens. TAIPED, as daily Kathimerini reports, has handed the government a long list of pending matters that have to be legislated upon for the privatizations to proceed. It is considered important for Larco, once one of Europe’s leading nickel producers, to remain in operation until it is sold.
The circular dynamics of the bond game
And it all resembles a Ponzi scheme, where the folks who come in later provide the cash to pay off those who bought in first, a scheme destined to fail because at some point there’s simply not enough cash to keep the game going.
From Capital.gr:
Greek and other heavily-indebted euro zone countries? banks are staying afloat thanks to a system which creates a circular flow of cash not unlike a Ponzi scheme, analysts told CNBC on Wednesday.
Greece sold 4.063 billion euros ($5 billion) of 13-week treasury bills with a uniform yield of 4.43 percent. It’s hoped this will enable it to repay the bonds held by the European Central Bank [cnbc explains] which mature on August 20.
This was the country’s biggest auction in two years but it was mainly Greece’s domestic banks that bought the bills. The same domestic banks that receive Emergency Liquidity Assistance from the Bank of Greece. And that ELA is being funded by the European Central Bank through the Bank of Greece. The domestic banks are expected to use the short term bills as collateral to receive more ELA loans.
Nick Beecroft, Chairman at Saxo Capital Markets UK is worried by this strategy and doesn’t single out Greece and sees this happening in other peripheral countries.
“One has to be concerned that this is actually a huge Ponzi scheme,” he told CNBC. A Ponzi scheme being a swindle where later investors are used to pay earlier investors, giving the appearance of an opportunity where investments dramatically increase in a short amount of time.
“The LTRO (Long Term Refinancing Operation, a cheap loan scheme from the ECB to give European banks more liquidity) accepts peripheral government bond as collateral, lends to the banks and the banks buy more of the peripheral debt. It is very circular isn’t it?”
This suggests that Greece’s domestic banks are effectively using ECB money to buy Greek bonds so they can continue to borrow from the ECB. Meanwhile the Greek government is selling bonds to its ECB-funded banks so it can repay the ECB for what it has previously borrowed.
