We open with a strike in Attica, follow up with an IMF blessing, then conisder the latest trek to the North, catch the latest attack on the left, catch the latest inflationary numbers [bad], learn of another bank failure, hear another excuse, and catch the closing of a big tax loophole.
Attica municipal strikes underway
A video report from Press TV on the 48-hour municipal walkout in Athens and surrounding cities in Attica called to protest drastic cuts in national government funding for municipalities.
Police, fire, and coast guard join the strike Friday
While the strikers who turned our Thursday didn’t include emergency workers, they’re walking today, as Ekathemerini reports:
Police, firefighters and coast guard officers said they will be taking industrial action starting with a protest rally in central Athens at 11.30 a.m. on Friday, following the government’s announcement of more cutbacks in the public sector.
So-called “uniformed workers” are protesting plans to further cut their salaries, bonuses and benefits as part of a series of severe measures to reduce state spending.
Representatives of the unions representing the three sectors will also attempt an unscheduled meeting with Finance Minister Yannis Stournaras, while they also expressed the desire to meet with inspectors from the country’s creditors — the European Commission, European Central Bank and International Monetary Fund, known as the troika.
They said that they will continue to strike and stage marches until their demand for a freeze on cutbacks to their salaries are met.
Also joining the action will be the staff of the paper itself, along with all other unionized Greek media.
IMF signals support for Greece
A key keg of the Troika has given its blessings, but only as long as conservative New Democracy Prime Minister Antonis Samaras continues hewing to the austerian line.
From Agence France-Presse:
The International Monetary Fund on Thursday voiced steadfast support for debt-riddled Greece ahead of next week’s return of international inspectors overseeing its progress under a rescue program.
“The IMF is supporting Greece, has been supporting Greece and continues to support Greece in its efforts to overcome the economic crisis,” IMF spokesman Gerry Rice said in a regularly scheduled news briefing.
“And that’s again precisely what the mission will be discussing with the Greek authorities” when the delegation from the IMF, the European Union and the European Central Bank returns to Athens “next week,” he said.
The mission of the so-called “troika” will determine whether enough progress has been made on Greece’s economic reforms to unblock the next aid installment of 31.5 billion euros ($39.4 billion), he said.
Given the latest push from China [see the first item in the EuroWatch below], we suspect that the next round of cash is a given.
Finance minister prepares for a northern trek
Following on the heels of Prime Minister Antonis Samaras’s northern pilgrimage this week, his finance minister is heading closer to that melting polar ice cap in hopes he can melt some previously icy hearts.
From ANSAmed:
Next week will prove to be particularly busy for the Greek government as besides the visit in Athens by the representatives of its creditors — known as the troika — and of the head of the European Council, Finance Minister Yannis Stournaras will meet his German opposite number.
The Finance Ministry announced on Thursday that Stournaras will visit Berlin on Tuesday to meet with Wolfgang Schaeuble. No further details were released, as daily Kathimerini reports. On Friday, September 7, the heads of the troika and the European Council’s Herman Van Rompuy are visiting Athens, with the latter having arranged to meet with Prime Minister Antonis Samaras.
Finance Ministry sources said Stournaras will meet with the troika representatives on Sunday, September 9.
Samaras pushes his anti-Syriza talking point
The left coalition that scored the second-highest voting tally in the last parliamentary election has been demanding a renegotiation of the Troika’s disastrous bailout austerity memorandum, a message that’s beginning to make sense to more Greeks as the government carves out its latest round of cuts.
Desperate to tar the most outspoken opponents of his Troika-subservient agenda, Prime Minister Antonis Samaras Wednesday unveiled the label “lobby of the drach,” implying that any effort to retool of the misery-inflicting diktat would force a Greek expulsion from the euro.
To drive his point home, Samaras trotted out the label again Thursday.
From Athens News:
Greece must avert a return to the drachma currency, Prime Minister Antonis Samaras told a meeting of his New Democracy (ND) party’s political committee on Thursday, adding that the ‘drachma lobby’ is the rival of the country and the party.
He stressed the need for taking the painful 11.5 billion euro measures, and said that “this package will be the last”.
Samaras said that the package is necessary in order for Greece to receive the next tranche of the EU/IMF bailout loan, which he said would go entirely to “the interior” of Greece so that the economy may ‘move’, and placed combating the spiralling unemployment as the top priority.
He expressed optimism that “if all goes well, in two years Greece will be very different and soon it will be moving at impressive growth rates”.
More from the London Telegraph:
Greece’s prime minister Antonis Samaras has promised his austerity-weary countrymen that new spending cuts planned for 2013-14 will be the last, but warned that without them the nation would have to leave the 17-member eurozone.
>snip<
“This is the last such package of spending cuts,” Samaras told a meeting of his conservative party’s officials. “The Greek economy can take no more.”
Samaras’ promise will sound familiar to Greeks, as previous governments have offered – and broken – similar pledges during more than two-and-a-half years of harsh austerity measures designed to curtail huge budget deficits.
“Many of these cutbacks are difficult, painful,” Samaras said. “But they are also inevitable. For without them the country would return to zero credibility and effectively leave the euro. Which would … destroy the country.”
Inflation grows worse as crisis deepens
Inflation is hard enough when salaries remain the same, but this latest spoke in basic food and service prices comes when salaries have already been slashed and more cuts are on the way and the public is being forced to pay more for medicines and other critical supplies.
The news is bound to increase pressure on government and increase support for Syriza.
From Furio Morroni of ANSA:
In spite of the economic crisis, basic foods and services prices are on the rise in Greece, compromising the livelihood of many families, whose income has shrunk drastically over the past two years.
Eggs, sugar, vegetables, milk, coffee and legumes prices are all higher over last year, with peaks at 8% in some cases. In another peculiarity of internal Greek demand, while hundreds of clothing and shoe shops have gone under in the past two years, the prices of these products are equal to or higher than those of 2011. Even in cases where the prices fell slightly, the numbers were not what would be expected during such a long-lasting recession, now in its fifth consecutive year. The Greek economy contracted by 17.4% and consumption fell by 17.1% in the second quarter of 2012 against the second quarter of 2008, but prices rose 10% between July 2008 and July 2012, Kathimerini daily newspaper reported national statistics bureau Elstat as saying.
This year, first-quarter private consumption equaled 31.8 billion euros, a 17.1% loss over the same period in 2008 (38.4 billion euros), while GDP contracted by 17.4% over the same five years, on the drop in consumption and investment. In the same period, the unemployed reached 1.1 million, or 23.1% of the country’s labor force, Elstat reported. The price of eggs rose 7.95% in July over the same period last year, while sugar rose 6.04%, fresh milk by 3.46%, vegetables by 4.24%, fresh fruit by 1.89%, beef by 1.07% and bread by 0.88%, according to Elstat. These basic foods are not subject to VAT tax.
A study by the European Commission’s Agriculture Directorate confirms the irrationality of the Greek market. Although June 2012 prices of basic agricultural products used as raw materials in food production fell significantly over the same period last year, consumers paid more for the final products. For example, while soft wheat fell by 17.4%, durum wheat by 13%, and corn by 26.7%, bread and cereal prices rose by 1.4% on average.
State-controlled bank goes bust
The government’s ordered its privatization.
The failure, ironically, was caused by imposed haircuts on the bank’s investments in Greek government bonds.
From Andy Dabilis of Greek Reporter:
Hellenic Postbank, a small state-controlled lender, is insolvent, Finance Minister Yiannis Stournaras said, and must be sold or transferred to private investors. It was a big lender to the government, which last year imposed 74 percent losses on investors, wiping out many who had put their savings into Greek bonds, and putting Greece’s banks on the brink of bankruptcy. The government is planning to recapitalize the country’s banks but it has been delayed.
Postbank, along with many other Greek banks, took big losses too on Non-Performing Loans (NPL’s) as Greeks have stopped paying loans and credit cards because of pay cuts, tax hikes and slashed pensions. Some 20 percent of the loans are now uncollectable because most banks had been insisting on being paid in full despite the big pay cuts to their customers.
More from Athens News:
The Athens Stock Exchange suspended trading in shares of state-controlled lender Hellenic Postbank on Thursday following a nearly 30 percent plunge in its shares after the government said it was not viable.
“It [Hellenic Postbank] has been judged unviable,” Yannis Stournaras told MPs on Wednesday, referring to a report by the central Bank of Greece and its bank bailout fund, the Hellenic Financial Stability Fund.
The announcement paves the way for its sale or transfer to private investors.
The state directly and indirectly holds a 44 percent stake in the deposit-rich lender and officials have already said that the government has placed the bank on its privatisation list.
Blame it all on tax cheats, says former prime minister
The former Socialist [Pasok] leader is undoubtedly right that untaxed cash in foreign tax heavens is a cancer on society [think Mitt Romney’s Cayman Islands cash stash], tax scofflaws are symptomatic rather than causal.
But George Panandreou is playing to the Troika, which has been focusing on tax cheats as a prime source of potential revenues which could be used to pay off some of that ever-accumulating debt interest.
From the London Telegraph:
Former Greece prime minister George Papandreou has said his country might have avoided a bailout if the economy had not been robbed by funds being funnelled to tax havens.
Papandreou told the opening of Socialist International’s four-yearly conference that $21 trillion was hidden in tax havens around the world.
“Whether it is in developed or developing nations, it is our citizens that are being robbed,” he said, saying this “plain robbery” denied governments the capacity to invest in areas like welfare and education.
“I know this, Greece is suffering from this. Had this alone been tackled, Greece would have most likely never have needed a bailout.
“Yet Europe, the G8, G20, the banking system despite my pleas as prime minister, despite token reference in our council of G20 decisions, have done nothing to change this.”
Greece’s finance ministry in February said Greeks had legally moved €16bn (£12.7bn) abroad in the past two years, while efforts to clamp down on tax evasion have met limited success.
But now one of the biggest loopholes is about to close, as Spiegel reports:
The negotiations have been going for years. And if all goes well, Greece and Switzerland will finally finalize a tax treaty this September which could bring billions of euros back to Athens. Modelled on Switzerland’s agreements with Germany, Great Britain and Austria, the deal is aimed at the billions of euros Athens estimates that wealthy Greeks have parked in the Alpine country to avoid taxes back home.
After months of delays, the three party coalition led by Greek Prime Minister Antonis Samaras now wants to implement the deal as quickly as possible in hopes that they’ll be able to find billions for Athens’ coffers. But there’s also another reason for the rush: Samaras needs to show he is serious about reform. Greece desperately needs a win in its fight against rampant tax evasion.
For one, Samaras needs to demonstrate resolve on the issue to his country’s international creditors. Indeed, the issue was a topic when the Greek prime minister paid a visit to Chancellor Angela Merkel in Berlin last Friday. For another, the Greek government is eager to show honest taxpayers that their dishonest compatriots can’t get off so easy.
