The economic crisis continues to advance in Europe at breakneck speed, with Greece getting hit with yet more austerity demands and Spain on the verge of — well, call it another austerian bailout.
That said, we’ll break today’s economic report in two, with Greece first.
But first, we’ll begin with a couple of loud alarm bells for the whole continent.
IMF says dominos are aligned
The folks who wield the biggest austerity cudgel are being unusually pessimistic these days, which means that things are rapidly heading from bad to worse.
From The Guardian’s Larry Elliott:
The global economy is on the mend after suffering a major setback in 2011 but the recovery is fragile and the risks of a relapse are high, the International Monetary Fund said.
In its half-yearly World Economic Outlook, the Washington-based Fund said a pickup in activity in the United States and better policies in the euro area had reduced the threat of sharp slowdown.
But it warned that a disorderly default and exit by a member of the single currency might lead to a full-blown panic in financial markets that would raise fears of a breakup of the single currency. The IMF said the political shock could “aggravate economic stress to levels well above those after the Lehman collapse” of September 2008.
In the absence of a euro meltdown, the IMF predicted that weak recovery was likely to resume in developed countries and to remain relatively solid in emerging nations.
Catch that trick of sugar-coating the bitter pill? They’re basically saying that absent more “restructurings” [mandatory pay and pension cuts, sell-offs of public assets, etc.], Europe is headed down the drain.
Nowhere do they mention one logical solution: A debt jubilee.
And now for the really bad news
It merited only a couple of lines in The Guardian’s blog of the day’s economic news, but it screamed out to this blogger.
The smart money, it seems, is starting to bet on a German collapse.
Here are the lines:
[B]illionaire hedge fund manager John Paulson is shorting German bonds because he believes the eurozone crisis will get much worse in the months to come.
If it gets as far as Germany, it surely really is all over.
And now, on to Greece
We being with news that the Troika is demanding even more austerity, with the sugar-coated bitterness conveyed in this viddeo announcement from President of the European Commission Jose Manuel Barroso:
Here are some of the details of the latest mandate imposed by Baroroso & Co., reproted by Costas Papachlimintzos of Athens News:
The Athens News has obtained a copy of the 42-page report on Greece that European Commission President José Manuel Barroso will shortly present to the European Parliament in Strasbourg.
The report calls on the government to implement a number “priority actions”. The mains points are listed below [for the full list, see the link — esnl]:
- Bank recapitalisation should be completed by September 2012, safeguarding the business autonomy of the banks
- Nominal unit labour costs in the business economy should be reduced by 15 percent in 2012–2014
- A timetable for an overhaul of the national collective agreement for the wage-setting system should be prepared by end July 2012, in consultation with social partners
- A systematic review of export clearance and customs formalities should be completed, stripping away excessive controls and aligning control systems on practices in the rest of the single market
- Further steps should be taken to make it easier to set up a new company
Two other demands: Creation of a “growth-friendly tax system [read “corporate giveaway] and more cuts to public pensions.
The full document is posted online here.
Keep Talking Greece reports on the impact on Greek workers:
The plans of EC president come too late. Employers started already before Easter to cut salaries up to 15 percent. That’s the second wave of wages cuts, the first was about 20%, for young employees under 25, it was 32 percent.
Unfortunately neither the EU minimum wages draft nor Barroso’s paper include any amendments that could enforce employers to pay the full salary/minimum wage as agreed. The practice of paying just a part, maybe a 25% instead of the full monthly salary has become very trendy in the Greek private sector in the last six months. People work, full or part-time, and see no full salary.
At the same time, Barroso’s paper mentions, that every Greek citizen owes 33,000 euro due to the debt crisis.
And Greek Reporter adds this nuance:
Despite the silence of the government before the elections, the troika is in Athens and is working feverishly on the new measures. According to Vima newspaper, Troika’s first target is social benefits, including the benefits that are given to the families with three children, single parent families, etc. These benefits will be removed without exception and a new type of a benefit will be given only to people that make minimal income or are below the poverty line. The next goal will be cuts in spending on health and defense, from where the government must save around 6.6 billion euros.
The troika wants the Greek wages both in the public and the private sector to reach levels of 2000, and demands more layoffs from the public sector. They are also preparing more hospitals to merge and public organizations to shut down immediately.
Are these measures going to work? Common sense says no. Just like the previous measures, these measures will bring Greece into deeper recession. They will bring more poverty, more pain, more suicides. How many Greeks have to die before the EU and the IMF bosses kill this austerity obsession? And when will the EU stop behaving as a corporation that only cares for the numbers and not for the well-being of its own people? This was the reason it was created in the first place, wasn’t it?
Another demand: Sell the power system
Yep, the Eurocrats have demanded as one of their points a sell-off of Greecde’s publically owned electrical power system.
And it’s already underway.
From Athens News:
The Public Power Corporation (DEI), the country’s biggest electricity producer, will start selling power stations this year to help meet the terms of the country’s international bailout and hopes to raise at least half a billion euros in the process, its chief executive said on Tuesday.
“The idea is to have this privatisation process completed by the end of 2013,” DEI chief executive Arthouros Zervos said, on the sidelines of a wind energy conference in Denmark.
Zervos said the company would initially sell four power plants and expected to raise more than half a billion euros.
Only after the sale of the power stations would the state reduce its holding as required under terms of the bailout for heavily indebted Greece.
The government is required to cut its stake in the loss-making company from 51 to 34 percent.
Greek prisons hold on to immigrants
The European Union, upset by a wave of “illegal” immigrants entering its territory, has put a lot of pressure on Greece to build a bigger wall along its Turkish border — one measure austerity won’t slow down.
Now it turns out that Greeks are keeping immigrants they’ve managed to catch in prison longer than the terms set by the courts.
From the Greek Streets reports:
Today was revealed – by the head of the prison guards union in a corporate radio station- that up to 400 undocumented migrants remain in Greek prisons although their penalty has ended. These are people who come from war-zones so deportation is not possible as has been decided by the judges, but still they are held hostage in Greek prisons although their penalties have ended. Although this information was revealed in order to aid the government in their plans to build 30 new detention centres in fact talks about the barbaric practices of modern capitalism in Greece.
Greek health care cuts hit hard at neediest
Cuts already imposed by the Troika have imposed major spending cuts on the Greek health care system, and now the pain is coming down — hard.
From A. Papapostolou of Greek Reporter:
Four years of a recession and two years of wide-ranging cuts to the state budget to reduce expenditure and balance accounts is turning health care in Greece into more of a luxury for the privileged few.
With public health care spending at around 10 billion euros, 25% less than in 2009, staying healthy ”risks becoming a privilege,” said Haralambos Economou, who teaches Sociology at Athens’ Panteion University. Two years of harsh austerity have led to over a million officially unemployed people in Greece, over 20% of the workforce. Sector experts say that up to 10% of the population, when in need of treatment, are now forced to dip into their steadily-diminishing savings.
In the past, most Greeks (whenever possible) made use of private healthcare facilities, even if they had to pay almost 40% of the total treatment costs out of their own pockets, one of the highest rates in developed countries. Now, however, the demand for treatment in public hospitals has risen by 20-30%, with expenditure once again falling on a state system already suffering due to a cut in costs.
However, even worse, many people try to get round the system and reduce costs by showing up at the emergency room in order to get immediate treatment instead of requesting an appointment in advance for which they would need to pay. Hospitals are trying to do their best to deal with the situation.
Greek police warned over attacks on the press
One group needing a lot of health care these days is the new media, who have been singled out for violent attacks by Greek police.
Now their superiors are telling them to stop beating journalists.
From Athens News:
Police officers have received a written warning from senior officers to stop attacks against journalists, after a veteran photographer was brutally beaten by riot policemen suffered a fractured skull.
“While carrying out police duties, news media professionals must be treated with respect for the role that they must fulfil,” the written notice to officers said.
“We must always display understanding and act professionally and responsibly.”
Photographer Marios Lolos was seriously injured earlier this month after being confronted by riot police in Syntagma Square, during demonstrations that followed the suicide of retired pharmacist Dimitris Christoulas.
Lolos, who colleague says was struck with the handle of a riot police truncheon, suffered a fractured skull and has still not recovered full use of his left arm.
One group is making out quite well
That’s foreign investors, who are finding Greece a perfect place to but a vacation or retirement home on the cheap.
From Greek Reporter’s Danai Kanella:
More and more foreigners are interested in investing in real estate, especially on the Greek islands, due to low prices as a result of the economic crisis. According to the facts, the prices for holiday homes was reduced to 40%, and in some cases even more during the last two years, so now a new market has been created for anyone who can afford it.
The biggest interest is shown, according to real estate offices, from Germans, Austrians, Swiss, British and Russians. A new element is that, on the contrary of what would happen previously, the buyers are looking not only for houses for personal use but also as an investment opportunity. The types of buyers have also changed; millioners are interested as well as international hotel chains and cruise companies. In addition, the interest is not limited only to houses but expands to land as well. On the island of Rhodes, for example, an estate near the sea is accessible for an average German income of around 30,000 euros.
One creative repose to crisis: Local currency
As economic systems fail, jobs become scarce, and paychecks are cut, how can local communities to respond in a way that will keep local functioning?
One way of surviving when money gets short is to create your own, and that’s just what’s happening in Hellas.
From A. Papapostolou of Greek Reporter:
In Volos, locals have started to use their own barter-based currency, called TEM. It hasn’t replaced the euro but lives alongside it, and local residents say they can’t imagine how their economy would function without it.
Nowhere in Europe is the financial crisis more pronounced than in Greece.
The country is buried under a huge debt and austerity measures have made everyday life challenging for the country’s residents. But in one city in the center of the country, residents have taken matters into their own hands.
In Volos, locals have created an alternative to the euro. It’s called the TEM, and it functions like a bartering sytem. If you’re selling goods or services you get credit in TEM, with one TEM being equivalent to a euro. According to the BBC, some 800 merchants and businesses accept and offer TEM.