The cuts are a done deal, save for some tweaking, and there’s plenty of misery, discussed in detail in our first rather lengthy item. In addition to pay and pension cuts, as well as tax cuts for salaried workers, a partial offset to the pay cuts. There’s also a provision to refund some of the pay and pension cuts if other revenue measures prove more effective than planned [a move that may not pass Troika muster].
The French fiancé minister added his own touch, a call on the Greeks to hew to the austerian credo and a suggestion that the big boys of the eurozone try a bit of kindness.
Protests accompanied the cuts, with a mass two-day law and tax enforcement walkout and a brief invasion of parliament by angry disabled folks who are losing much-needed support.
We also have the other debt crises, one in the form of money owned to government and banks, and plight of two political parties swimming in debt, and a call by another party for a eurodebt summit. Then there’s a new low in political rhetoric involving the S-word and a strange new twist in soccer sponsorship, with teams boasting uniforms advertisers mortuaries and a brothel.
Coalition finalizes the Troika-mandated cuts
They’re here and they’re brutal, though apparently, some fine-tuning remains.
From Xinhua:
Greece’s three-party coalition government leaders reached a “basic agreement” on the new austerity package for 2013-2014 as part of efforts to resolve the Greek debt crisis, Greek Finance Minister Yannis Stournaras said here on Thursday.
“There has been a basic agreement on the measures. Now we will seek an agreement with our creditors,” he told media upon leaving Prime Minister Antonis Samaras’ office after a meeting of coalition partners.
Stournaras added that the three leaders agreed to seek an extension of the fiscal adjustment program to 2016 in negotiations with EU and International Monetary Fund (IMF) lenders who back the debt-ridden country with multi-billion-euro loans to avoid a financial meltdown in the eurozone.
In separate statements to the press, Democratic Left chief Fotis Kouvelis and socialist PASOK leader Evangelos Venizelos said that they agreed on the main issues, but there are still some minor aspects unresolved which should be cleared in coming days.
Next, a video report from euronews:
More from Ekathemerini:
Finance Minister Yiannis Stournaras said the long-delayed agreement placed him in a stronger negotiating position ahead of talks Monday with representatives of the country’s bailout creditors, who will have the final word on the cutbacks.
He said Prime Minister Antonis Samaras’ deliberations with the heads of his two junior coalition partners resulted in “a basic agreement” on the measures intended to ax some 11.5 billion euros ($14.8 billion) off state spending in 2013-14.
Under its bailout commitments, Athens must also boost state revenues by an additional 2 billion euros over the next two years through tax reform and improved tax collection.
The three-party meeting came a day after more than 50,000 anti-austerity protesters took to the streets of Athens, in a demonstration marred by clashes between hooded anarchist youths and riot police.
And Athens News brings word of one set of key changes:
The austerity package, which will be implemented from 2013 to 2014, includes changes to the tax system for freelance professionals and for wage earners and pensioners.
The measures must be finalised by September 28, when the head of the government’s team of financial experts, Panos Tsakloglou, will present the package to a euro working group, finance ministry sources told the semi-official AMNA news agency earlier in the week.
It is understood that the measures foresee drastic changes to the system for taxing freelance professionals, with the introduction of a flatrate of 35 percent on income.
This percentage will apply to the total of their net income as it also foresees abolition of the current 5,000 euro tax-free ceiling.
Furthermore, the measures foresee a reduction of the highest tax rate from the current 45 percent to 35 percent for salaries and pensions, as well as maintenance of the 5,000 euro tax-free ceiling for these groups. This, combined with other adjustments to tax scales and rates, is expected to reduce the tax burden on salaried taxpayers.
More from Ekathemerini:
As a result of the cuts to pensions, retirees will lose roughly a month’s worth of payments. Any pensions between 1,000 and 1,500 euros will be cut by 2 percent. Those between 1,500 and 2,000 will be reduced by 5 percent and any above 2,000 are to be slashed by 10 percent. Beyond that, pensioners will have all their extra holiday payments abolished. These had already been reduced to a total of 800 euros per year. Retirees with supplementary pensions will be even worse off as two monthly payments are to be cut.
The increase in the retirement age from 65 to 67 is due to be implemented from next year.
Civil servants face cuts of up to 10 percent to their salaries, while those working at public enterprises will see reductions of between 20 and 30 percent. Policemen and soldiers will also have their wages reduced, despite the prime minister’s initial wish to prevent the reduction. The cuts will be from 6 percent to 23 percent.
Holiday payments for civil servants, which add up to 1,000 euros gross, will be abolished, meaning that bureaucrats will earn 12 monthly salaries, rather than the 14 they were originally paid.
Finally this from the Irish Times:
The leaders also want a clause inserted in the package that allows Athens to roll back some of the pension and wage cuts if Greece overshoots its targets or produces savings in other areas, Nr Venizelos told reporters.
But with Greece facing certain bankruptcy and a possible euro zone exit without fresh aid, the country is hardly in a position to drive a hard bargain with the troika.
The lenders had already rejected parts of the government’s initial package of proposals for the cuts and it remains to be seen if they will accept tweaking the composition of the package in favour of higher tax revenues – long considered Greece’s Achilles heel.
French money minister: Keep doing that austerity thing
But Greece should also get some more help from the eurozone, he told an American talk show host.
From Capital.gr:
Greece requires a mix of deficit cuts and help from other euro zone members to remain a member of the single currency, French Foreign Minister Laurent Fabius said in an interview with Charlie Rose on PBS.
“Provided that they make sacrifices and that we give them some help,” Fabius said when asked if Greece would remain a euro member Bloomberg reported. “But the answer is ‘Yes.‘ We need the integrity of the euro zone.’’
And then came another call for moderation, this time from a bankster.
From Ekathemerini:
Greece needs more leeway from its creditors as a pair of aid packages and the biggest-ever debt restructuring are “clearly insufficient,” according to the financial adviser to the nation’s bond swap.
“Hyper-austerity policies are showing their limits. Greece needs more time,” Matthieu Pigasse, the head of Lazard Ltd.’s Paris office, said in an interview with France’s Le Figaro. “There will also be a need for creditors, particularly public ones, to make a new effort,” Pigasse said.
Protests accompany cuts agreement
First, Keep Talking Greece reports on a law enforcement strike that started Thursday and continues Friday:
A day after the mass protest in Athens, tax and customs officers as well as policemen staged protest actions to oppose the upcoming additional wages cuts. Tax and customs officers are on 48-hour strike, today Thursday and tomorrow Friday, September 27-28, 2012.
“We oppose any further cuts in our wages, abolition of our labour rights and labour reserve,” customs officers said.
Also police offiers took to the streets today and launched protests outside the headquarters of the three coalition government parties, Nea Dimocratia, PASOK and Democratic Left.
The second protest involved some of Greece’s most vulnerable citizens, as Xinhua reported:
Chanting slogans against the anticipated new round of cuts on salaries, pensions, welfare benefits and tax increases, Greeks with vision problems and kinetic disabilities marched in the center of the Greek capital, calling on the government to protect the most vulnerable groups of society.
More from Dioni Vougioukli of Athens News:
There were angry scenes at a protest called by disability groups against spending cuts when MAT riot police prevented demonstrators from entering parliament to submit their demands.
The demonstration was called in protest at cuts in social benefits and pensions for people with disabilities. Protesters say that they also want the government to protect the tax exemptions they enjoy and for the reopening of schools for people with disability.
Over 700 people, including dozens on wheelchairs, attended the protest, which began in Omonoia Square shortly after 11pm and made its way to Syntagma Square, where they intended to enter parliament.
>snip<
Seizing an opportunity, some demonstrators, including a few on wheelchairs, pushed forward and broke through the security cordon erected by the riot police.
Unsure of how to react, the police eventually allowed representatives from the protest to enter the parliament building.
Al Jazeera reports on the protest:
Greece’s other debt crisis, a political one
Turns out that two of the coalition government’s parties are in debt.
Deeply in debt.
So deep they made need a bailout themselves.
From George Georgiopoulos and Stephen Grey of Reuters:
The two main political parties in Greece are facing their own financial crisis. New Democracy and Pasok, the key members of the country’s coalition government, are close to being overwhelmed by debts of more than 200 million euros, say rivals, as the big parties head for a slump in state funding because of falling public support.
In Greece’s state-financed political system, parties that receive more votes get more funding. Relying on past good results, the big political parties have pledged future state funding as collateral for bank loans. But in the most recent poll their support collapsed, leaving them with big loans and facing much smaller incomes.
Banking sources familiar with the issue say that conservative New Democracy and socialist Pasok now owe a combined 232 million euros to Greek banks. Some of the loans are going unpaid, those sources say. The debts far exceed the combined 37 million euros the parties received in state funding last year – a figure set to decline.
So, we have a case of bankrupt policies from bankrupt parties.
We also suspect they’ve have an interesting time trying to raise the money, given that voters will be taking home smaller paychecks. And they’ll be too tired to participate in the usual political activities, given those longer workdays and six-day work weeks.
People in such a condition are motivated mainly by anger, something both parties are more likely to be recipients rather that mobilizers thereof.
Syriza leader calls for a eurodebt summit
Given the state of the current crisis and the historical precedent he cites, we’d say he’s got a good idea.
From Deutsche-Presse-Agentur:
Greek opposition leader Alexis Tsipras on Thursday called for the European Union to hold a conference on debt – comparable to the 1953 international meeting that granted West Germany some relief on its loans.
“We have to give the opportunity to the Greek economy to collect its breath and not strangle it again with a 13.5-billion-euro package,” Tsipras told reporters in Brussels, referring to cuts and tax hikes currently being negotiated with Greece‘s international creditors.
“It is time we find an ultimate solution to the sovereign debt problem and follow the solution found for Germany in 1953,” he added. “We have had two bailout programmes and the debt is still not viable … (This) medicine is deadly and it‘s killing the Greek economy.”
Tsipras also demanded that “threats” suggesting that Greece should leave the eurozone stop, arguing that the common currency is “a chain with 17 links; if one of the links break down, the chain breaks.”
Greek political rhetoric hits a new level
And the spat involves two members of the prime minister’s own party, bringing the flavor of the street into the hallowed halls of the legislature.
It’s the first time we’ve heard one pol telling another in public to suck him.
From Damian Mac Con Uladh of Athens News:
Greek Parliamentary Speaker Evangelos Meimarakis, who is in spot of trouble over money-laundering allegations that surfaced some days ago, on Thursday lashed out at a New Democracy colleague who earlier spoke on air about the revelations.
Meimarakis’ outburst, which took place in the corridors of parliament in front of shocked journalists, was directed at former interior minister Prokopis Pavlopoulos, who earlier had spoken about the case on Real FM, which is owned by the journalist who broke the story, Nikos Chatzinikolaou.
“I heard this morning that you went to Chatzinikolaou and sucked up to him. Come here and suck mine; it’s better!” Meimarakis said, according to reporters who witnessed the unparliamentary exchange.
Greece’s other major debt burden
This time it’s not money the state or banks owe, but funds owed to those very institutions.
Part of the problem is that lax tax enforcement the Troika insists be tightened, but much of it is unpaid bank loans, the stuff of which bailouts are made.
From Ekathemerini:
The total amount owed by entrepreneurs and the self-employed to the state, social security funds and banks is 194 billion euros, just short of the country’s gross domestic product, according to data compiled by the National Confederation of Greek Commerce (ESEE).
Of that total, about 44 percent, or almost 85 billion euros, comprises overdue debts. This huge amount cannot simply be explained away by the economic crisis, but it is obvious that the dramatic drop in turnover, the rise in extraordinary taxes and reduced access to bank loans due to the dire financial situation have exacerbated the problem.
The ESEE data show that the total debt comprises 41.1 billion euros owed to the tax authorities, 4.3 billion euros to the fund for self-employed professionals, OAEE, and 11.5 billion euros to the Social Security Fund (IKA), while expired debts to banks come to 28 billion euros.
For 2012, the sum of the enterprises’ obligations is estimated at 104 billion euros, half of which concerns taxes due.
The cheerleaders will be something else
The economic crisis has been hard on Greek soccer teams, who’ve been losing their sponsors as the misery deepens.
But two teams have found unusual sponsors in business that rely on two fundamental biological imperatives, sex and death.
Yes, Greece will have soccer teams sponsored by a mortuary and a brothel.
From A. Papapostolou of Greek Reporter:
“When we announced to the players that our sponsor would be a brothel, they wanted to know about bonuses,” Voukefala president Giannis Batziolas told NovaSport FM radio station Wednesday with humour.
Batziolas complained that everyone had turned their backs on amateur football and that the club had no choice but to resort to an unconventional backer. “The proposal was made strickly for economic reasons. As soon as the offer was made, we couldn’t turn it down,” Baziolas said.
He stressed that the brothel in question is “a legal enterprise valued at two million euros.”
Baziolas said that the brothel will be advertised on the players’ jerseys throughout the season.
As for Paleopyrgo the situation is the same, lack of funds forcing the team to make a deal with the local funeral home.
“It was a matter of survival. The owner of the funeral home is a friend and we agreed,” Paleopyrgo general manager and player Lefteris Vasiliou told NovaSport FM.
