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Getting ugly in Greece

by IdiotSavant Wed May 5th, 2010 at 10:45:19 AM EST

From No Right Turn - New Zealand's liberal blog:

The past few months have seen a slow-motion train-wreck in Greece, as the government faces increasing debt as a result of the global economic crisis.  The government has negotiated a bailout from the EU and IMF, but the cost of that is savage austerity measures: a 25% cut in public sector salaries, wage freezes, cuts to pensions and public services, VAT (but not income tax) increases, followed by a terminal dose of NeoLiberalism.  But there's a problem: the Greek people don't like it.  They especially don't like the fact that the burden is being unfairly dumped on them, rather than the politicians who lied systematically about the country's accounts, or the wealthy who systematically evade their taxes.  And their protests have grown louder and louder.

Yesterday, they stormed the Acropolis.  Today, they held a general strike and set fire to banks - in the process killing three people.  Things are getting very ugly indeed, and if the government persists in bowing to the international money markets, they will only get uglier.  In 2001, the government of Argentina was toppled by its people in similar circumstances, and if the Greek government is not careful, they could find themselves sharing the same fate.  Unfortunately, in that case, the bankers will probably make out like bandits anyway.


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I don't think they are as upset with the lying or the tax evasion as they are with the corruption.

The corruption is key.

All else comes from the corruption.

Notice what the crowd in Syntagma was chanting. The Ministers are all thieves.

by Upstate NY on Wed May 5th, 2010 at 04:58:46 PM EST
Any chance that people will start paying their taxes, or is hatred of the bureaucracy too profound?

Align culture with our nature. Ot else!
by ormondotvos (ormond.otvosnospamgmialcon) on Thu May 6th, 2010 at 12:36:59 AM EST
[ Parent ]
As I said earlier, tax evasion is hardly anywhere near the center of the Greek problem.
by Upstate NY on Thu May 6th, 2010 at 09:05:00 AM EST
[ Parent ]
I think one can safely assume that the vast majority of big tax evaders were not among the demonstrators and are not too unhappy about the bureaucracy so far!

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu May 6th, 2010 at 01:38:01 PM EST
[ Parent ]
Has anyone in Greece actually conducted an analysis of how the debt was added? In other words, does anyone know what the debt consists of?
by Upstate NY on Thu May 6th, 2010 at 01:40:42 PM EST
[ Parent ]
You mean what was it used for, or the actual debt structure?

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu May 6th, 2010 at 01:54:13 PM EST
[ Parent ]
How the debt was built.

How much of it is military armaments. Banks bailouts. Public works projects. Olympics, etc. Do we know that social spending is why the Greek debt exploded?

by Upstate NY on Thu May 6th, 2010 at 04:41:07 PM EST
[ Parent ]
Each year's government budget is a matter of public record, presumably? Thousands and thousands of pages of public record, but still I'm sure some people in Greece would know.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Thu May 6th, 2010 at 07:10:45 PM EST
[ Parent ]
Off the top of my head:

Military armaments are 5-6 billion Euros per year. Over the past decade that is 50 billion Euros... Banks' bailouts were at 26 billion total in the past two years. The Olympics seem to have cost according to some analysts in their broadest extent around 30 billion Euros.

Social spending is most definitely not the reason that the Greek debt exploded, spending on education is certainly under 4% GDP and has been there for ever it seems, while for public health it's 4,3% GDP with grotesque inefficiencies and corruption, and private expenditure on health at 6% + of gdp. Benefits such as unemployment are under 400 Euros / month maximum and 60% of pensioners received under 8.4k Euros per year (its under 600 Euros per month X 14 "months"). Now with the new cuts those numbers have further deteriorated.

Public servants are 14% of the workforce, 23% if one counts the part-time and temporary workers. Total labor costs for the public sector is, if I recall correctly 1-1,5% of GDP higher than the eurozone average, however tax revenue is something like 8% lower in Greece than in the EU15, and that is totally due to low direct tax rates and various forms of tax-evasion on direct and indirect taxes.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Thu May 6th, 2010 at 07:29:04 PM EST
[ Parent ]
So, 106 billion in arms, Olympics, bank bailouts.

Another say, 50 in tax evasion over a decade (I figured that out by taking the Greek average of 25% evasion, subtracting 19% which is the eurozone average and looking at the budget and its growth over a decade).

So, we're at 156 billion. Prior to last year with the worldwide recession, debt to GDP was 100%. So, it was about 245 billion. Without the screwups and tax evasion, Greece essentially racked up 90 billion in debt over a decade.

And people are losing their heads the world over.

I realize Greeks are pissed but they should use this crisis to somehow enact political changes at the top. I have no idea how they could do it.

by Upstate NY on Thu May 6th, 2010 at 07:50:04 PM EST
[ Parent ]
Don't forget interest on the debt, and other costs for funding it, as it was racked up.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Fri May 7th, 2010 at 08:16:17 AM EST
[ Parent ]
Actually the interesting thing is that, because of a history of high interest borrowing before the Euro, the interest on the debt was near a historical low as a percentage of GDP in January, as successive governments had gradually rolled-over  high interest drachma debt through much lower interest euro bonds.

This is one of the paradoxes of the debt crisis in Greece and gives some perspective of the real risks of bankruptcy had the market in its wisdom not blown up the spreads on Greek bonds.

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Fri May 7th, 2010 at 08:56:13 AM EST
[ Parent ]
by das monde on Thu May 6th, 2010 at 01:41:33 AM EST
Guardian: Greek bailout: Athens burns - and crisis strikes at heart of the EU

    * News
    * World news
    * Greece

Greek bailout: Athens burns - and crisis strikes at heart of the EU

The economic crisis enveloping the debt-stricken country not only claimed its first lives: it shifted from bewilderment into violence

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    * Helena Smith in Athens
    * guardian.co.uk, Wednesday 5 May 2010 20.41 BST
    * Article history

Greece mourns bank workers killed during riots
Link to this video

At 2.03pm today, on the third floor of a neoclassical building in the heart of Athens, three people died - and Greece changed. As the bank employees tried to beat back the flames, ignited by a firebomb tossed into the building by protesters, the economic crisis enveloping the debt-stricken country not only claimed its first lives: it shifted from bewilderment and disappointment into violence carried on an unpredictable current of rage.

The young bank employees, a man and two women, one of them four months pregnant, died in the fire which came within an hour of irate protesters laying siege to the Greek parliament.

"All of us are angry, very, very angry," bellowed Stella Stamou, a civil servant standing on a street corner, screaming herself hoarse, a block away from where the bank had been set alight.

"You write that - angry, angry, angry, angry," she said, after participating in one of the biggest ever rallies to rock the capital since the return of democracy in 1974. "Angry with our own politicians, angry with the IMF, angry with the EU, angry that we have lost income, angry that we have never been told the truth."

[...]

What had started as a general strike called by unions to protest against deeply unpopular austerity measures turned into a tidal wave of fury as an estimated 100,000 private and public sector workers took to the streets screaming "let the plutocracy pay".

By midday that rage had assumed a new and determined dynamism as demonstrators - including once-stalwart supporters of the governing socialist Pasok party - began to shout "thieves, thieves".

Their venom soon turned towards the large sandstone building that is the Greek parliament. After scuffling with police, chasing the ceremonial guards away from the Tomb of the Unknown Soldier and taking axes to the monument, hundreds tried to storm the building, screaming "let the bordello burn".

by IdiotSavant on Thu May 6th, 2010 at 10:09:56 AM EST
Oh were they angry...

I haven't seen anything like it. The Iraq demos were as big maybe, but not as intense. There was palpable outrage in the air. I mean calls for burning the parliament building dominated the demo, chanted not by hard-core black-block anarchists by by pensioners and mothers with baby-carts.

The situation is unstable. Imagine what happened here in December 08, but on a much larger scale - that is the mood. Perhaps a bit more desperate. Tens of thousands of young people, at the same time, are looking for opportunities to emigrate. Shops are closing at an impressive rate.  

I'm writing a diary about the situation in Greece for about a week now, and I keep postponing it because new developments make previous summaries obsolete. A few hours ago the Greek parliament voted to accept the IMF package and the resulting transfer of sovereignty. But both major parties had leaks. 3 socialist MPs abstained, and one major cadre of the conservative party (a candidate for its presidency a few months ago) voted for the agreement. All were banned from their parties. The far-right supported the socialist government for "patriotic" reasons: for the survival of our homeland.

It's a mess. And the only hope, I can see, is some sort of large scale euro relaunch in the framework of a tighter political union. Otherwise there will be a European Union in the street protests, because it seems from here that Portugal and Spain are not far behind where we are now... But that is a wider discussion.

I'll try to post the diary by tomorrow (I hope :-) )

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Thu May 6th, 2010 at 01:53:16 PM EST
Is there anybody, or any party, out with an alternative plan to the IMF take-over?  If there is, are they out there letting people know what it is?

If not, these protests are futile.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu May 6th, 2010 at 02:11:55 PM EST
[ Parent ]
Is there anything Greece could do in isolation?
by generic on Thu May 6th, 2010 at 02:37:24 PM EST
[ Parent ]
I don't know.  If I understand the underlying causes correctly, the situation was created by a combination of a corrupt ruling class, international financiers, and external -- mostly German? -- banks.  So Greek internal actions are only part of the problem suggesting, to me, a purely internal solution is problematical.  But note the first sentence of this paragraph!  :-)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu May 6th, 2010 at 03:13:52 PM EST
[ Parent ]
What could the EU really to do to Greece if they default? Not much that mattered...

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Thu May 6th, 2010 at 07:08:44 PM EST
[ Parent ]
Not after Greece spent 50 billion euros on military hardware during the last decade.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri May 7th, 2010 at 08:36:36 AM EST
[ Parent ]
An alternative plan would possibly involve an orderly restructuring a couple years from now after some political cleansing in Greece.

But there are other silver bullets, such as state asset sales, land sales (250 billion worth of land), huge reduction in military expenditures, etc.

The best thing for the country would be for the ministers to resign en masse. That would create the political will to get Greece on the right track. The protests would not be futile at all if they simply focused on one of the main messages of the protest: "Thieves, Thieves."

Other than Papandreou and the financial team, the entire party structure has to go, and one of the best signs visible today is that New Democracy kicked out Dora Bakoyannis or her supporters. This is the kind of bloodletting that Greece needs. Factions within the parties tearing at one another. (I am not criticizng Bakoyannis and I suspect that she'd be more resolute on some issues than those who kicked her out).

Force the ministers out, establish a unity gov't with totally new clean leaders, and start building jails for white-collar criminals.

If I were Greek, I wouldn't care what comes next. I would gladly accept austerity measures if the following was accomplished.

by Upstate NY on Thu May 6th, 2010 at 04:48:43 PM EST
[ Parent ]
Any way to import some to the US?  Long overdue!

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Thu May 6th, 2010 at 04:56:23 PM EST
[ Parent ]
At this point not exactly (although there are academic opinions that some part of the left endorses - see final paragraphs).
I mean apart from protesting: The productive thing about protests is that although the government admitted that it can draw no "red lines" with the IMF, meaning its veto powers are limited, I sense (and this might be wishful thinking but there are indication that it is probably true), that massive protests and the threat of chaos in an EU member-state (as other EU-states are at the precipice of IMF peonage themselves) might temper IMF demands AND provide enough incentive for pushing the brunt of the measures a little bit more toward our oligarchs and corrupt elites, and a little less towards the peasants.

As Upstate NY said one could, for good measure, start with the military budget. Freeze all military purchases (at 2,3 billion Euros/year currently - that's after a recent 25% cut). Take a serious look into church and monastery wealth - tax it, hard, heck confiscate most of it. Chase large scale tax evasion seriously. Reform the tax system. Do something with the banks and with eschewing corporate taxes legally. A moratorium on small housing and consumer loan payments for those who lose their jobs would be nice. A confiscatory tax on anything over 100k Euros/year personal income... etc.

I should note that the IMF recipe is neoliberal economics writ large: a condemnation to a Latvia-style depression which, in the best case scenarios lead to some sort of rebound only under ideal global economic conditions. Otherwise a whole generation is screwed for life. I mean in 2014 the IMF's estimates is that Greek public debt would be at 150% of GDP, unemployment over 20% and most of the higher qualified working force will be working abroad. And then they say that the economy would rebound - from Vietnamese wages and rampant child malnutrition I guess.

In these circumstances, I note, destruction becomes enjoyable for its own sake for an ever widening part of the impoverished populace.

There is of course the opinion, that even if Greece rejected (or insisted in negotiating harder) the IMF bail-out, the consequences of its default would be such to the global monetary system (not to mention the european banking system) that some sort of less destructive solution would be necessarily offered. This might be true, but some of these same people insisted that Merkel was bluffing, that she couldn't risk destabilizing the euro for some local elections in Germany...
And there are those that reckon that a quick default/restructuring (some say within the euro, and some say after leaving the eurozone) would be the better option. Again there are those that say this because they think that debt restructuring is unavoidable even with the IMF/EU package (and say that restructuring/partially defaulting on 300 billion Euro now is better than restructuring/partially defaulting on 400 billion Euro in 2-3 years time - and Krugman seems to move toward this camp) and others who are saying that this (or even a total default) coupled with a return to the drachma (something that they acknowledge would be disastrous, but they claim less disastrous than the alternative) might offer a chance for some Argentine-style lightning recovery.

Me, I expect that the crisis spreading to Iberia and beyond, might change the rules of the game considerably. So I protest and I persevere, and I froth in anger at the injustice of measures which reward the most egregious villains in the Greek economic saga - the kleptocracy (...And I'm semi-seriously starting to check abroad for job opportunities)...

[I'll put up a diary soon, BTW, I know I will]

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Thu May 6th, 2010 at 06:40:39 PM EST
[ Parent ]
First of all, things for your contributions.  This kind of information from actual Greeks is hard to come by in the mass media (in the US at least).

I agree entirely that the political change is what is most important here.  There are options for dealing with the economics and I think there is will to take "austerity measures" but only if the responsible parties have first been deposed and the people feel like they have control of their government again.

Germany suggested selling some land and many scoffed but I think that in a situation like this, fuck it, here's an island, now go away.  I don't think the Greek people would have a huge problem with that either. As an American I know that if we could sell Montana to get out from under our debts we'd all do it in a second, as nice as the place may be.

by paving on Thu May 6th, 2010 at 09:44:28 PM EST
[ Parent ]
They might sell gov't land to private buyers but they won't selling islands to countries any time soon.

That would be like much like the USA selling Hawaii to Japan.

by Upstate NY on Thu May 6th, 2010 at 11:04:23 PM EST
[ Parent ]
Hawaii has strategic/unique importance, it's value in a straight transaction would probably be ridiculous, in the trillions.

That and we don't rightfully own it haha.

by paving on Thu May 6th, 2010 at 11:07:07 PM EST
[ Parent ]
Many of those Greek islands are a kilometer way from the Turkish border.

That's what I was referring to.

by Upstate NY on Fri May 7th, 2010 at 12:26:41 AM EST
[ Parent ]
Two birds, one stone.  I would think the Germans would love to have their island next to Turkey.
by paving on Fri May 7th, 2010 at 01:25:25 AM EST
[ Parent ]
If Turkey realizes the Greek islands are for sale, then do you really imagine the Germans could sun in peace with missiles flying over their heads?
by Upstate NY on Fri May 7th, 2010 at 09:56:15 AM EST
[ Parent ]
That would be like selling Miami to the Fidel Castro...

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Fri May 7th, 2010 at 04:08:55 AM EST
[ Parent ]
it is just this sort of thinking that holds back all progress.

that said, Fidel doesn't want Miami, that's where he sends all of his undesirables.

by paving on Fri May 7th, 2010 at 05:59:18 AM EST
[ Parent ]
This thing will definitely spread like epidemic...First Europe, then elsewhere... We haven't seen anything yet.
Yesterday they said on TV here that Australia is in 2/3 of Greek's debt. The difference they claim is that we can pay for our debts. For how long? What if China goes down the drain as some predicted maybe even this year?
Not to mention what if USA at some point drop down? The mess is going to be global...
Here PM is now trying to tax big miners and energy billionaires with 40 % tax on super profit.It would look like a great idea if I am not aware that for that tax we, regular people are going to pay one way or another...And because "market" is a magic word here ( as in USA) nobody can regulate prices (especially energy prices) that are already going trough the roof. Those billionaires are already preparing adds calling PM communist for introducing those taxes.Well billionaires are not ready to pay for what this country needs ( or any country for that matter) so we people (and our children and grandchildren) will have to pay the bill.When it becomes unbearable we'll all have Greece and worse on our streets.
My memories are still fresh of Serbian events...people can put up with a lot. But there are limits.
I wish you luck my Greek friend with looking for a job abroad but as we all know there is not a lot of opportunities.While here for example unemployment did not reach any critical point everybody is in fear what awaits us around the corner.
We haven't seen anything yet...        

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Fri May 7th, 2010 at 09:28:08 AM EST
What if China goes down the drain as some predicted maybe even this year?

If China goes down the drain, all bets are off. But I think China will keep growing at a good clip until energy issues starts limiting it.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri May 7th, 2010 at 11:45:59 AM EST
[ Parent ]


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