Greece: Next Failed State

[SaturnV]

As has been pointed out many times in this and other forums;
No one ever rioted for austerity

Striking Greeks fight back against austerity plan

Thousands take to streets as hostility against EU mounts and German pressure prompts 'Nazi' tirade by deputy prime minister

Helena Smith in Athens
24 February 2010 21.48 GMT

Greek riot police clash with protesters in Athens, where demonstrations against debt-relief measures were marked with sporadic violence. Photograph: Aris Messinis/AFP/Getty Images

Tens of thousands of striking Greek workers took to the streets today, some throwing stones at police, in a defiant show of protest against austerity measures aimed at averting the debt-plagued country's economic collapse.

Riot police responded with teargas when, in sporadic bursts, masked youths charged them in Athens city centre. The violence coincided with a general strike that shut down public services and closed off Greece to the outside world.

For trade unions the mass show of force was a warning shot to a government struggling to satisfy its eurozone partners with policies deemed vital for the nation's fiscal health while appeasing angry workers at home.

"This is the red line," said Nikos Goulas, head of a union that represents 20,000 workers at Athens international airport. "Greece is not Ireland. If the government does not back down there will be huge unrest," he added, holding a banner that proclaimed: "As much as you terrorise us, these measures won't pass."

The protests came against a backdrop of mounting Greek hostility towards the EU, with particular venom reserved for Germany, which has pressed for harder measures to be forced on Athens.

Greece's political elite has been outraged and hurt by hard-hitting German media coverage of the debt crisis. The cover of a German magazine, Focus, which showed the Venus de Milo making a less than complimentary finger gesture under the headline "Swindlers in the eurozone" has triggered widespread fury.

In an extraordinary tirade, the deputy prime minister, Theodore Pangalos, said Germany had no right to judge Greek finances after wreaking havoc on the economy during the four years that the country was under Nazi occupation in the second world war. Worse still, he said, Germany had failed to make adequate compensation.

"They took away the Greek gold that was at the Bank of Greece, they took away the Greek money and they never gave it back. This is an issue that has to be faced sometime," he told the BBC.

"I don't think they have to give back the money necessarily but they have at least to say thanks. And they shouldn't complain so much about stealing and not being very specific about economic dealings."

Pangalos, a former foreign minister who is widely seen as a father figure to the more mild-mannered Greek prime minister George Papandreou, said Greek public finances might never have reached such dire straits had the EU not had such weak leadership.

Italy, he added, had done much more to mask the true extent of its public debt and deficit than Greece when it entered the EU. "The quality of leadership in the union is very, very poor indeed," he said.

today, as the diplomatic row intensified amid growing demands that George Papandreou's Socialist government step up claims for war reparations, Berlin hit back with a tart reminder that Greece had received 115m deutschmarks in compensation by 1960.

"I must reject these accusations," said Andreas Peschke, a spokesman at the German foreign ministry. Greece, he said, had also received around €33bn in aid from Germany "both bilaterally and in the context of the EU".

"A discussion about the past is not helpful to solve the problems … facing us in Europe today."

Athens has barely three weeks to prove to its EU partners that the spending cuts and tax rises it has announced are working. With the euro severely undermined by the country's debt crisis, the government has announced an ambitious cost-cutting programme to reduce the public deficit from 12.7% of GDP to just under the permissible EU level of 3% by 2012.

This week, as an EU monitoring team visited Athens to examine the progress being made, finance minister Giorgos Papaconstantinou hinted at further measures, saying the government "will do whatever is needed" to solve the crisis.

But if Greek workers have their way such targets may be out of reach. For low- and middle-income earners, the policies, which include a public sector wage freeze, a rise in pensionable age and higher taxes, will be particularly painful.

"I already have to make do with €345 a month," said Kostantinos Doganis, a pensioner participating in the strike, the first mass walkout in Greece since the Socialists assumed power last October.

"These measures have not yet been passed. Once we start to feel their effect in our pockets there will be a downpour of protests, a social explosion in this country."

[Sololeum]

Thanx for the update Tony,

It is readily apparent that huge aggregations like the EU are only viable during a growth economy - on the backslope it will collapse....

Cheers,

[SaturnV]

Thanx for the update Tony,

It is readily apparent that huge aggregations like the EU are only viable during a growth economy - on the backslope it will collapse....

Cheers,

It's heartening to note that the European Central Bank is as in tune with reality as the US Federal Reserve, with the release of their totally bogus European Banking Stress Tests results last week. It gave even the Bank of Greece, which, last time I recall, was insolvent nearly two and a half times-fold, a glowing pass! Glowing! Unsurprisingly, the market rallied (melted-up) solidly on the basis of this "out of sight, out of mind" report, though nothing has changed regarding Greece's situation - nothing, since I last posted. We are told that the situation has now been stabilised, but how? What measures have been taken to address the structural problems of not only the Greek, but all other EU member country (including Germany), economies? None, nada, zilch, μηδέν. Just more fantasy, denial and money wasting, which only sets them up for a very hard, very tragic - as in Shakespearean tragic, fall.

EDIT: Greek PM Calls the Crisis "Over"; Debt induced Economic Slaughter Averted by Renewed Bout of Credit Binging! (see link above for amazing details!!)

[Sololeum]

I heard on Radio National yesterday the truck drivers and opening up in arms about changes that will undermine their wages / conditions / even jobs, and the government has passed legislation that allows for the arrest of any striker!

Should they bring it on - another national strike - not enough police and or gaols - you just might get the army to intervene!

[SaturnV]

I heard on Radio National yesterday the truck drivers and opening up in arms about changes that will undermine their wages / conditions / even jobs, and the government has passed legislation that allows for the arrest of any striker!

Should they bring it on - another national strike - not enough police and or gaols - you just might get the army to intervene!

Well that didn't work, so the State is resorting to using tear gas as a way of cajoling Greek truckers to bend over and take one for the team, so to speak. Naturally this went down like a lead balloon with the truckers, who are refusing to budge in their demands, that led to the latest strike which has effectively paralyzed the country, as fuel is not reaching petrol stations. The nation lurches towards the precipice once more;

With fuel shortages stranding thousands of tourists and disrupting supplies of food and medicines nationwide, prime minister George Papandreou resorted to emergency legislation, more usually used at times of war or great natural disaster, to end the walk-out.

But hopes of a return to normal were quickly dashed when riot police fired tear gas at thousands of truckers gathered outside the transport ministry this morning.

"The order is coming through to [drivers] but I have no idea how they are going to react to it," said Giorgos Stamos, a member of the truck drivers' union. "It is highly unusual that after just three days of going on strike we should be mobilised in this way."

The ruling socialists called for the mobilisation – the fourth time since the collapse of military rule in 1974 that such an order has been issued – as it became clear that Greece was facing a public health crisis because of the strike.

On islands, where fuel supplies have totally run out, tourists could be seen abandoning rented cars by the side of the road while yachts remained docked in harbours or drifted out at sea.

Under the order – which followed a plea by the Greek Tourist Association to stop the strike – authorities were given the go-ahead to requisition vehicles and services, with the owners and drivers of trucks being told they had to resume work or face stiff fines.

"To allow the strike to continue would threaten the normal functioning of health and welfare services and public order," the government announced.

The mayhem began on Monday when some 33,000 licensed truck drivers walked off the job in protest at government plans to open up the freight industry, one of many 'closed–shop' professions blamed for keeping the Greek economy isolated and uncompetitive.

The debt-stricken country is under intense pressure from the EU and IMF to make the changes – a condition of the €110bn (£92bn) of emergency loans it received from eurozone nations and the Washington-based body in May.

With officials from both organisations visiting Athens to prepare a first assessment of the progress made under the €30bn austerity program that the government has also been forced to implement, the Greek finance minister insisted that "every closed profession" would soon be opened up.

In the case of truckers, the first group to be tackled, it will mean that new licences will be issued at lower costs and in greater number. The sector wants the government to delay the introduction of a bill to allow for more talks with the industry.

The truckers have shown this week that such reforms will not be easy.

In a culture where workers' rights are seen as sacred, militant unionists have reacted furiously to the mobilisation.

"The government is aiming to smash every striker's right," Rizospastis, the newspaper of the KKE communist party proclaimed on its front page. "There is nothing but to gather forces and fight."

The strike has further dented tourism – widely seen as the linchpin of the country's economic recovery this summer. With one in five Greeks working in the sector, tourism accounts for almost 20% of GDP.

The trucker's strike "is a huge problem for bookings that our country needs, to cover part of the losses that have occurred in recent months," said Andreas Andreadis who heads the Greek Hotel Federation.

[SaturnV]

Well summer holidays are now over, so it's back to the barricades;

Tensions Rise in Greece as Austerity Measures Backfire

The austerity measures that were supposed to fix Greece's problems are dragging down the country's economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.

That dreadful slurping, sucking sound, no, not Goldman Sachs, aka the giant vampire squid,

is the sound of deflation drawing the life out of Greece, the other PIIGS, the UK, the US. Hell probably the whole world. But it starts small. Let's watch the explosive action unfold over the next few months and years. First Iceland, then Estonia, Greece, Spain, Britain, America. The sovereign debt crisis is still haunting the halls of power and sooner rather than later, the bond vigilantes will strike back!

[SaturnV]

"This tragedy does not have a solution"

Greece’s austerity measures cannot prevent default and will lead to a breakdown of the political order if continued for long, a leading German economist has warned.

“The policy of forced 'internal devaluation', deflation, and depression could risk driving Greece to the edge of a civil war. It is impossible to cut wages and prices by 30pc without major riots,” he said, speaking at the elite European House Ambrosetti forum at Lake Como.

“Greece would have been bankrupt without the rescue measures. All the alternatives are terrible but the least terrible is for the country to get out of the eurozone, even if this kills the Greek banks,” he said.
Dr Sinn said Greece is an entirely different case from Spain and Portugal, which still have manageable public debts and can bring their public finances back into line with higher taxes.

“Greece would have defaulted in the period between April 28 and May 7, had the money not been promised by the European Union,” he said, describing the failure of the EU’s bail-out strategy to include a haircut for the banks as an invitation to moral hazard.

“There should be a quasi-insolvency procedure for countries. Creditors have to accept a haircut before any money flows for rescue plans, otherwise we’ll never have debt discipline in the eurozone,” he said.

Greek society has so far held together well, despite a wave of strikes and street violence in the early months of the crisis. However, unemployment is rising fast and political fatigue with such austerity policies typically sets in the second year.

Under the rescue deal, the eurozone pledged €80bn of new loans at 5pc interest and the International Monetary Fund offered a further €30bn.

The joint bail-out was hoped to safeguard Greece against the pressure from global capital markets for two and half years, but the relief rally proved short. Spreads on longer-term Greek government debt have surged back to crisis levels of about 800 basis points, implying a high risk of default.

“We are in the second Greek crisis right now, today,” said Dr Sinn.

Greece is undergoing what amounts to an IMF austerity package but without the IMF cure of debt restructuring or devaluation that usual for a country with a spiralling public debt and a chronic loss of competitiveness.

The IMF says Greece’s debt will rise to 150pc by 2013-2014 even if Athens complies fully, a strategy viewed as self-defeating by several ex-IMF officials. There is a strong suspicion that the real objective is to bail-out North European banks with heavy exposure to Southern Europe, rather (than) help Greece.

Dr Sinn said the Germany is now was super-competitive after clawing back 18pc in competitiveness during its long slump. “We’re in a new phase of history. The toggle switch has turned and we are going to see a mirror image of the last 15 years. This time it is Germany that will have an internal boom,” he said.

Germans will not recyle their savings in the Club Med region. They will invest at home.

There you go sports fans. Although somehow, Germany and the rest of the EU will be spared the coming convulsions brought about by the end of economic growth...

[Sololeum]

Thanx once again Tony for keeping us informed about Greece....