Tag Archives: Athens

Euro Leaders Ready For Another Vacation.

Europe is on the brink again. The region’s debt crisis flared today, as fears intensified that Spain would be next in line for a government bailout.


A recession is deepening in Spain, the fourth-largest economy that uses the euro currency, and a growing number of its regional governments are seeking financial lifelines to make ends meet. The interest rate on Spanish government bonds soared in a sign of waning market confidence in the country’s ability to pay off its debts.

 The prospect of bailing out Spain is worrisome for Europe because the potential cost far exceeds what’s available in existing emergency funds. Financial markets are also growing uneasy about Italy, another major European economy with large debts and a feeble economy.

Stocks today,  fell sharply across Europe and around the world. The euro slipped just below $1.21 against the dollar, its lowest reading since June 2010. The interest rate on its 10-year bond hit 7.56 percent in the morning, its highest level since Spain joined the euro in 1999.

Spain’s central bank said today that the economy shrank by 0.4 percent during the second quarter, compared with the previous three months. The government predicts the economy won’t return to growth until 2014 as new austerity measures hurt consumers and businesses.

On top of that, Spain is facing new costs as a growing number of regional governments ask federal authorities for assistance. The eastern region of Valencia revealed Friday it would need a bailout from the central Madrid government. Over the weekend, the southern region of Murcia said it may also need help.

Spain has already required an emergency loan package of up to €100 billion ($121 billion) to bail out its banks. But that aid hasn’t quelled markets because the government is ultimately liable to repay the money. It had been hoped that responsibility for repayments would shift from the government to the banks. But that shift is a long way off — a pan-European banking authority would have to be created first and that could be years away.

Yet it is far more than Spain’s struggle that has unnerved markets.

Greece is still struggling with a mountain of debt and international creditors will visit the country tomorrow to check on the country’s attempts to reform its economy. There is concern that officials from the European Commission, European Central Bank and the International Monetary Fund will find that Greece is not living up to the terms of its bailouts and could withhold future funds.

Italy has also been caught up in fears that it may be pushed into asking for aid. Italy’s economy is stagnating and markets are worried that it may soon not be able to maintain its debt burden of €1.9 trillion ($2.32 trillion) — the biggest in the Eurozone after Greece. Interest rates on Italy’s government bonds rose steeply Monday while its stock market dropped 2.76 percent.

The collapse in stock prices in Italy and Spain prompted regulators to introduce temporary bans on short-selling — a practice where traders sell stocks they don’t already own in the hope they can make a profit if the stock falls in price.

Pascal Lamy, director of the World Trade Organization, said after a meeting with French President Francois Holland that the situation in Europe is ‘‘difficult, very difficult, very difficult, very difficult.’’

Ireland, Greece and Portugal have already taken bailout loans after they could no longer afford to borrow on bond markets. Yet those countries are tiny compared to Italy and Spain, the third- and fourth-largest economies in the Eurozone. Analysts say a full bailout for both could strain the other Eurozone countries’ financial resources.

Spain has already received a commitment of up to €100 billion from other Eurozone countries to bail out its banks, which suffered heavy losses from bad real estate loans. Eurozone finance ministers signed off on the aid Friday and said €30 billion would be made available right away. But that incremental step cuts little ice with investors. If Spain’s borrowing rates continue to rise, the government may end up being locked out of international markets and be forced to seek a financial rescue.

 ‘‘Events since Friday have been a clear wake-up call to anyone who thought that the Spanish bank rescue package had bought a calm summer for the euro crisis,’’ analyst Carsten Brzeski said.

The Eurozone’s bailout fund, the European Stability Mechanism, has only €500 billion in lending power, with €100 billion potentially committed to Greece. Italy and Spain together have debt burdens of around €2.5 trillion. And the ESM hasn’t yet been ratified by member states plus Eurozone governments have made it clear they won’t put more money into the pot.


That once again pushes the European Central Bank into the frontline against the crisis.

On Saturday, Spain’s Foreign Minister José Manuel García Margallo pleaded for help, saying that only the European Central Bank could halt the panic. But the ECB has shown little willingness to restart its program to purchase the government bonds of financially troubled countries. The central bank has already bought more than €200 billion in bonds since May 2010, with little lasting impact on the crisis.

The central bank has also cut its benchmark interest rates to a record low of 0.75 percent in the hope of kick-starting lending. Yet many economists question how much stimulus this provides as the rates are already very low — and no one wants to borrow anyway.

There has been speculation the ECB could eventually have to follow the Bank of England and the U.S. Federal Reserve and embark on a program of ‘‘quantitative easing’’ — buying up financial assets across the Eurozone to increase the supply of money. That could assist governments by driving down borrowing costs as well.

But so-called QE is fraught with potential legal trouble for the ECB — a European treaty forbids it from helping governments borrow.

In the case of Greece, the country is dependent on foreign bailout loans to pay its bills. A cutoff of aid over its inability to meet the loan conditions would leave it without any source of financing — and could push it to exit the euro so it can print its own money to cover its debts. Really?


Germany’s economy minister, Phillip Roesler, said the prospect of Greece leaving the euro was now so familiar it had ‘‘lost its horror’’ and that he was skeptical Athens would meet conditions for continuing rescue money.

The deteriorating situation follows a summit June 28-29 that many hoped would convince markets political leaders were getting a handle on things. The summit agreed on easier access to bailout money and to set up a single banking regulator that could take the burden of bank bailouts off national governments. Yet many of those changes will take months or years to introduce — and there has been no increase in bailout money.

It is an echo of a similar summit in July 2011, when leaders agreed on a second bailout and debt reduction for Greece, only to see borrowing costs spike dramatically as leaders headed off for August vacations.

Stephen Lewis, chief economist at Monument Securites Ltd, said that ‘‘events are following a pattern often repeated in the course of the Eurozone’s troubles, in which the powers-that-be hail progress only to see confidence, almost instantaneously, plumb fresh depths.’’

Must be time for another vacation, I guess.


Greeks Work Things Out.

This amazing video shows us how the Greek government discusses their issues and the civilized way they sort out differences. Maybe the rest of Europe should take note.

This footage quickly prompted state prosecutor Eleni Raikou to order the immediate arrest of Ilias Kasidiaris. The 31-year-old, who was elected to the 300-seat Athens parliament in the country’s inconclusive election last month, is the most vocal opponent of suggestions that Chrysi Avgi is a violent organization with a history of attacks on Greece’s most vulnerable and burgeoning population of immigrants.

By early afternoon, the neo-fascist party had refused to condemn the incident despite Dimitris Tsiodras, a spokesman in the interim government, describing it as “an attack against every democratic citizen”.


Yeah – you guys keep working things out this way and the future is yours.

Voluntary as a Confession During the Spanish Inquisition.

No Winners in Ugly Greek Debt Deal, Only Lessons

Just a few hours ago, as I was starting this post, I came across this blog by Michael Casey at the Wall Street Journal, called “No Winners In Ugly Greek Debt Deal, Only Lessons.” It is very to the point, so let’s look as his opening comments:

“Technocrats in Athens, Berlin and Washington Friday are no doubt congratulating each other for designing a bond swap that slashed more than EUR100 billion off Greece‘s debt mountain.

“But let’s not kid ourselves: the two-year story behind this debt restructuring is an ugly one of politicking and wasted time. There are no winners here, and there are already more losers arising from its far-reaching ramifications.

“There are, however, lessons to be learned from this unseemly string of events. The most important is that our financial system is still trapped by the dilemma posed by Too-Big-to-Fail banks – four years since the U.S. mortgage crisis. Financial sector lobbyists who argue that now is not the time to fix that dysfunctional system should have a thorough reading of the Greece story.

“Officials will crow that a higher-than-expected 83% of Greece’s old bonds was voluntarily tendered into this debt swap and so claim justification for triggering the collective action clauses that will force the remaining holders of Greek law securities into the exchange. But without those CACs hanging like Damocles’ Sword over them, and without the pressure that governments and national central banks brought to bear on banks and pension funds from Greece, Germany and France, would so many have willingly accepted a 73%-plus write-off?

“As Commerzbank CEO Martin Blessing recently put it, this deal was as ‘voluntary as a confession during the Spanish Inquisition.’

“Truth be told, Greece can rightly argue it had no choice but to use coercion. Any less than 95% participation and the European Union would not have approved the latest EUR130 billion bailout, leaving the country unable to pay its bills and thrust into a more damaging, disorderly default.”

And, there’s more to come folks, much, much more.

Greece In The Red Zone.

Failure of Greek debt deal could cost $1 trillion!

Decision day for the Greek debt crisis is drawing near, and insiders are predicting that if things go awry it could cost the world economy $1 trillion.

Greece’s credit rating was cut to selective default by Standard & Poor’s after the bell on Monday, reflecting the implementation of collective action clauses (CACs) on its debt.  Greece is in the middle of one of the largest sovereign debt restructurings ever and needs to secure significant private sector participation rate; CACs are designed to forcibly increase that rate.

According to S&P, the Greek government retroactively inserted CACs into the documentation of certain series of its sovereign debt on February 23, two days after the Troika agreed on the terms for a second bailout package.  This retroactive implementation substantially changed the terms of the deal and diminished investors’ bargaining power in the face of a restructuring, causing the downgrade, S&P said.

Greece needs to fulfill certain conditions in order to receive the next tranche of money and avoid a disorderly default.  Among those is the successful implementation of the so-called PSI (private sector involvement) deal, which is supposed to be voluntary.  In practice, Greece is executing a bond restructuring that will see bondholders take an approximately 70% haircut on the net present value of their bonds while the average maturity will be significantly extended, reducing shorter-term funding requirements.

For the PSI to succeed, the Troika (made up by the EU Commission, the ECB, and the IMF) is expecting Greece to secure the participation of 95% of private bondholders.  Experts at Barclays believe Greece could come short, and thus would use retroactive CACs that could require a 66% participation rate to force all bondholders to take the deal.

“In our opinion, Greece’s retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring,” read S&P’s post-market release.

Consummation of the debt exchange would result in a credit upgrade, S&P announced, and would take Greece’s credit rating to CCC.  “In this context, any potential upgrade to the ‘CCC’ category rating would reflect our view of Greece’s uncertain economic growth prospects and still large government debt, even after the debt restructuring is concluded.”

A failure to secure a high enough participation rate could well lead to an outright default, S&P warned, given the Hellenic Republic’s lack of access to capital markets.  Bondholders have until about March 12 to participate, according to S&P.

Greece faces a hard deadline of March 20, date when it is scheduled to pay €14.5 billion in bond redemptions.  On Monday, German members of parliament passed a bill approving the second Greek bailout.  After Angela Merkel’s victory at the polls, investors will have to keep their eyes on Dutch and Finnish parliamentary votes on the bailout.

In a confidential memo that has just surfaced, the industry group representing bond holders has said that the consequences of such a default could be $1 trillion in losses. “When combined with the strong likelihood that a disorderly Greek default would lead to the hurried exit of Greece from the Eurozone, this financial shock to the [European Central Bank] could raise significant stability issues about the monetary union,” the International Institute of Finance’s memo said, according to a copy posted on a Greek news website.

Even with the potential damage, it is not clear if all the bond holders will sign on, and Greece said it will only go ahead if it gets 75% participation. Many of the bonds are currently held by hedge funds who bought them up on the cheap and who are now disappointed with the level of the cuts that Greece is insisting they take. The IIF put out a statement Monday listing all the bond holders who are willing to take the deal.

Bloomberg estimated that they only account for 20% of the total participants needed. Greece’s finance minister told Bloomberg Television this is the only chance bond holders will get. “This is the best offer because this is the only one, the only existing offer,” Evangelos Venizelos said.

If they don’t take it, today’s stock market declines are going to look like small potatoes.

The Shitzel Is About To Hit The Fan.

‘Greece could be utterly destroyed by infighting in the Eurozone,’ warns Foreign Office minister

Lord Howell, father-in-law to the Chancellor George Osborne, told peers that Britain was pressing for a ‘realistic and sustainable’ solution to Greece’s debt crisis, which he warned was having a ‘chilling effect’ on the British economy.

He said ‘uncertainty in Greece must be brought to an end… without utterly destroying that noble country’.

A woman sweeps in front of a graffiti-covered wall in Athens, Greec,e after the riots over cuts demanded in return for a bailoutA woman sweeps in front of a graffiti-covered wall in Athens, Greece after the riots over cuts demanded in return for a bailout

His comments came amid mounting fury in Athens at the draconian austerity measures demanded by Germany in return for a second £110 billion bailout by the 17-strong Eurozone.

In an alarming development there were also fresh signs of economic ‘contagion’ in Europe, with unemployment in Spain topping five million as its economy went into reverse. Official figures showed Spain’s economy shrank by 0.3 per cent in the final quarter of last year, with unemployment jumping by 400,000 to 5.3 million.

Leading ratings agency Moody’s added to the bleak outlook by threatening to downgrade more than 120 banks, including several major British institutions, because of concerns about the Eurozone.

A mannequin of a child stands behind the damaged window of a fashion store in the centre of the capitalA mannequin of a child stands behind the damaged window of a fashion store in the centre of the capital as resentment grows over euro zone treatment of Greece

In a gloomy assessment the former Tory Chancellor Lord Lamont described Greece as the ‘canary in the mine’ warning of the dangers ahead for the Eurozone.

Lord Lamont said Greece was being forced to choose between the ‘utterly impossible and utterly incredible’.

He warned it now seemed a ‘certainty’ that Greece would be forced to leave the single currency, leaving the Eurozone facing a ‘bleak future’.

During angry exchanges in the Lords a UK Independence Party peer suggested that German economic policy recalled slogans used by the Nazis.

Lord Willoughby said the German ‘remedy’ in Greece was ‘austerity macht frei’ – echoing the German phrase arbeit macht frei, meaning ‘work sets you free’. The slogan was placed over the entrances to several Nazi concentration camps, including Auschwitz.

Liberal Democrat Lord Teverson intervened on the UKIP peer to label the remark ‘offensive’.

The former Tory European commissioner Lord Tugendhat said Germany’s overwhelming economic dominance following the crash was ‘dangerous’ for the EU. He said anti-German feeling was now ‘rife in many European countries’ – a development he described as ‘very worrying and disturbing’.

Anti-German feeling is running particularly high in Greece after Berlin’s finance minister Wolfgang Schaeuble suggested the country was becoming a ‘bottomless pit’. Some other northern European countries are also now thought to favor Greece leaving the euro.

Greece’s 82-year-old president Karolos Papoulias, a veteran of Greece’s resistance struggle against the Nazi occupation, hit back angrily on Wednesday night, saying: ‘Who is Mr Schaeuble to insult Greece? Who are the Dutch? Who are the Finnish?’

Despite the row there were tentative signs last night that the Eurozone was moving closer to agreeing a bailout deal for Greece.

Employees of the Labour Housing Organisation shout slogans during a protest outside the Labour Ministry in Athens today

Employees of the Labour Housing Organisation shout slogans during a protest outside the Labour Ministry in Athens today

Some senior officials suggested a deal could be struck as early as Monday. But it remained unclear whether the deal will amount to more than a temporary fix, with a final package delayed until after the Greek elections expected in April.

European Commission president Jose Manuel Barroso yesterday sought to soothe tensions with Greece by praising the country’s attempt to deal with an economy in freefall.

Mr Barroso said: ‘I would like to salute the courage of the Greek government and the Greek people in these very demanding, challenging times.

‘And I would hope that the member states, the members of the European Union will accept the commitments given by Greece.’ But several European capitals retain severe doubts about whether Greece is willing or able to impose the level of cuts needed to tackle its debts and remain within the euro.

In one small symbol of the scale of the challenge facing Greece it was reported yesterday that virtually every traffic light in central Athens was smashed during anti-austerity riots at the weekend. But the transport department is so strapped for cash that it cannot afford to replace them, leaving to disastrous congestion in the Greek capital.

‘I am not sure even now whether all in the political parties in Greece are aware of their responsibility for the difficult situation of their country.’

‘Schaeuble Junta’, ran a headline in the conservative Eleftheros Typos newspaper, harking back to Greece’s painful spell under military rule during the 1960s and 1970s.

The front pages of three Greek newspapers, depicting German Finance Minister Wolfgang Schaeuble, from left to right, Dimokratia The front pages of three Greek newspapers, depicting German Finance Minister Wolfgang Schaeuble, from left to right, Dimokratia “In the gas chamber,” Eleftheros Typos ”Schaeuble’s Junta” and Ta Nea ”What the Germans want” in Athens


The banking sector faces being broken up unless it shows a ‘step change’ in competition, the head of the Office of Fair Trading warned today.

In a speech to bankers, John Fingleton said banks must provide the ‘right prompts’ to help customers decide whether or not they should switch account provider.

The issue of bank account switching was flagged last year by the Independent Commission on Banking, which made several recommendations designed to make switching accounts more easy for customers.

Mr Fingleton said: ‘It is not enough to make it easy to switch. Customers also need the right prompts to exercise their choice of provider.
‘In banking markets consumers frequently face difficulties in understanding the true cost of running their account and comparing deals from alternative providers.’

He said the sector was at a ‘turning point’ with the emergence of new banks such as Virgin Money, Metro Bank and Tesco but said if ‘real change’ is not seen, a ‘radical approach’ must be considered.

The OFT chief executive said he was prepared to hand the sector over to the Competition Commission and warned the industry could face the same outcome as airports operator BAA – a forced break-up.

As uncertainty lingers, investors are reassessing their assumption that Greece will get the money, prompting big market movements today. 

While the euro slipped by 0.5 per cent to below $1.30, stocks across Europe fell, with Italy’s main market underperforming its peers, trading down 1.9 per cent.

Meanwhile, the yield on Italy’s ten-year bond has risen by 0.18 percentage points to 5.81 per cent while Spain’s rate has risen another 0.07 percentage points to 5.46 per cent, a little down from earlier.

Italy is a particular worry because it is the eurozone’s third-largest economy and its debt mountain stands at around 1.9trillion euros, way more than anything Europe has committed to its bailout facilities. 

Though the rates of both countries are still down from the end of last year – when lack of confidence in Italy’s ability to pay its debt saw its yields bust the 7 per cent mark while Spain hovered around 6.67 per cent – the increases have triggered concerns that Europe’s debt crisis is a long way from being solved.

The pressure on the two countries had eased in recent weeks, primarily because the European Central Bank offered unlimited amounts of super-cheap long-term loans to banks.

The mood was further darkened after a leading ratings agency threatened more than 100 lenders with downgrades in a sign that the single currency crisis is infecting the banking system.

Barclays, Royal Bank of Scotland and HSBC were among 122 financial institutions to have their ratings placed under review by Moody’s. Shares in the banks fell more than one per cent.

A homeless man sleeps rough beneath a graffiti-covered wall in a train station in Athens todayA homeless man sleeps rough beneath a graffiti-covered wall in a train station in Athens today

 Louise Cooper, markets analyst at BGC Partners, said: ‘The language between those writing the cheques and those cashing them is becoming increasingly critical and untrusting. This bailout deal is by no means assured, there are just so many details missing and time and tempers are running short.’

Simon Denham, chief executive of Capital Spreads, said: ‘You’d be forgiven for thinking that parts of Europe were gearing up for a war after the comments that have been made flung around the continent in recent days…

‘The lack of trust from the likes of Germany, France and other countries that Greece will not actually implement the agreed austerity measures is fuelling a loathing amongst the Greeks, especially against the Germans.

‘The bail-out funds are still not guaranteed and this is rattling markets this morning.’

Chafing at Insults, Germany Loses Patience with Greece.

Two thirds of Germans surveyed said they doubted Greece’s determination to make savings.

Germany is running out of patience with throwing money into the “bottomless pit” of Greece’s debt crisis and any lingering sympathy in Berlin is being undermined by anti-German slogans on the lips of politicians and austerity protesters in Athens. It should be noted however, that Germany and her investors has profited deeply from the euro at the expense of their Mediterranean neighbors.

Without the euro, Italy and Greece could have indulged their workers with higher and higher bonuses while sporadically devaluing their currencies and making their countries more competitive. The euro prevented that. The only benefits from the euro went to Germany, where a low performing periphery weakened the currency, which made German exports extremely attractive abroad. Like China, Germany’s competitive edge had currency manipulation at its heart. 

While officially hailing the Greek parliament‘s approval of the savings package required for a new 130 billion-euro bailout, Berlin signaled this would not automatically mean more aid, as the feeling grew that Greece should not be saved at any cost.

With Finance Minister Wolfgang Schaeuble warning “Greek promises aren’t enough for us anymore”, and Economy Minister Philipp Roesler saying “fear of Day X (a Greek euro exit)” is fading, Germany seems to have tired of issuing threats that it would never follow through.

“Berlin threatens Greeks with end to aid,” read the front page of the Sueddeutsche Zeitung newspaper, while Die Welt wrote: “Schaeuble warns Greeks: no savings, no money.”

The sight of Greek anti-austerity protesters and politicians blaming Chancellor Angela Merkel for their plight provoked anger in the patriotic pages of Germany’s best-selling daily, Bild.

Greeks and other European recipients of aid to which Germany is the biggest single contributor “should put flowers outside our embassies and send the chancellor thank-you notes.”

“Instead the demonstrators insult their German helpers and liken our government to Nazis, which is intolerable,” it said.

Officially, Merkel’s government remains committed to enabling another aid package for Greece and doing what it can to avoid the first sovereign default in the euro zone.

“The chancellor knows her place in history is tied to Greece and she won’t want to be remembered as the one responsible for a default,” said a conservative lawmaker, asking not to be named.

But the MP said the Greek parliament’s approval of the unpopular savings plan, including a 22 percent cut in the minimum wage, did not arouse much interest in Berlin “because nobody really believes any more that Greece will deliver.”

Greece has an interesting history of sovereign defaults which began with Dionysius, the ruler of Syracuse in Greece during the fourth century B.C., who had an entertaining habit of stamping a two-drachma mark on one-drachma coins to pay off his debts. Around the same time, thirteen Greek city states defaulted on their loans from the Temple of Delos — the first recorded default in history. In the modern era too, Greece never enjoyed sound finances; it defaulted at least five times (1826, 1843, 1860, 1894 and 1932), and the messiest default in 1826 shut it out of international capital markets for 53 years. So, this is a country that is used to this sort of mess, and as I have stated several times in previous posts, Greece would be far better off by taking whatever it can get from Germany and the IMF/ECB and running. If they default on all of their debt, drop out of the euro and devalue their currency, Greece would be in wonderful shape and it would not have to implement any of these austerity measures that all of its citizenry hates.


While Merkel’s own Christian Democrats (CDU) remain largely on message with the chancellor and European Commission on the need to keep Greece in the euro, more eurosceptic allies from the Christian Social Union (CSU) and Roesler’s Free Democrats (FDP) are taking a more aggressive line with the Greeks.

“There can be no more concessions. Now only deeds count,” said the FDP Foreign Minister Guido Westerwelle while CSU leader Horst Seehofer spoke of German referendums on future bailouts – something Merkel’s spokesman Steffen Seibert ruled out.

Hans Michelbach, an MP on the budget committee in the Bundestag (lower house) which exerts some control over the bailout payments, said Athens should not be under any illusion that its parliament’s vote meant the release of fresh aid would be automatic.

“Even the best agreements are no use without an efficient administration. Unfortunately so far we don’t get the impression that the governments in Athens have really made a serious commitment,” said Michelbach, a CSU deputy.

Schaeuble reinforced this impression by telling lawmakers last Friday that even the latest Greek savings plan would not put the country on track to cut public debt to 120 percent of gross domestic product by 2020 – its chief condition for aid.

Such dogged insistence on strict terms for aid is one of the reasons Merkel has kept a lid on growing skepticism in Germany about how deserving Athens is of such largesse. In one recent opinion poll, two thirds of Germans surveyed said they doubted Greece’s determination to make savings.

For Erik Nielsen, global chief economist for Unicredit, an Italian bank, the chancellor’s unmatched success in preventing the rise of a major eurosceptic backlash is down to her heeding the “German public’s sensitivities to lending their tax money to a country that does not implement very many of its promises.”

But with her finance minister talking of Greek aid as “a bottomless pit” and growing incredulity about Athens meeting such conditions, Merkel must be worried about the Bundestag’s special session on the second Greek bailout due on February 27.

Merkel narrowly avoided disaster – for the euro and her own political fortunes – in September’s vote in the Bundestag on the current bailout mechanism (the European Financial Stability Mechanism). She cannot afford more lawmakers to start thinking like CDU MP Christian von Stetten, who told one paper: “A Greek exit from the euro zone would not be the end of the world.”

Painful Cuts Strike Greek Elderly.


Four years ago, Sotiria and Vangeli, a couple in their mid-60s, helped their son pack up his possessions and move out of the family apartment in Kypseli, a middle-class Athens neighborhood.

“He changed jobs, he got married and started a family. We thought our role as parents was pretty much over,” says Sotiria, a retired local government worker. “Then the crisis started and we had to help out.”

So now the couple’s apartment, filled with mementoes of trips abroad and silver-framed family photos, is strewn with a toddler’s toys.

“Our son and his wife both lost their jobs, so they came to live with us. Our two small pensions support all five of us,” says Vangeli, who closed his vehicle repair business when he retired.

For some, having a family member with a pension has become a financial lifeline.

Aspasia and her husband Tassos, both jobless and in their 50s, decided to take over caring for her 80-year-old mother, a former schoolteacher who was in a residential home for the elderly.

“The way things are, neither of us are likely to work again,” says Aspasia. “We have a comfortable spare room and plenty of time on our hands – and my mother’s pension gives us a secure regular income.”

Greece’s deepening recession, now in its fifth year, cuts across the generations, forcing families to fall back on their own resources. But these are fast diminishing following cuts of 15-30 per cent in wages and pensions, leading to a steady erosion of household savings.

Greece’s latest austerity package, due to be approved by parliament on Sunday, calls for further pension cuts of at least 10 per cent, although pensions below €1,000 a month are not likely to be affected. For several days this week, the pensions issue deadlocked negotiations in Athens over the cuts demanded by international lenders.

The social safety net is already strained, with official unemployment at 21 per cent and benefits available only for a 12-month period. A streamlining of the healthcare system launched last year means that state clinics now charge for medicines that used to be free.

During Greece’s boom years, the government doubled social spending to about 25 per cent of national output, but higher-paid workers – civil servants, university teachers and the judiciary – saw the biggest increase in pensions and allowances.

“The system was stacked in favour of people at the top and there was a considerable amount of wasteful spending,” said Yannis Stournaras, director of Iobe, an Athens think-tank.

“We are now seeing the consequences – a growing percentage of the population having to get by on an income of €600 a month,” he says.

Many pensioners themselves find it hard to make ends meet as prices have risen steadily during the crisis. Contrary to forecasts of rapid deflation as the economy contracts, inflation has persisted at about 2-3 per cent annually. Several sharp increase in taxes on heating fuel, imposed as the government tries to meet revenue targets, have added to the problems.

Andreas, a retired metalworker in his late 70s, finds it difficult to pay household bills since his wife died last year.

“It’s very hard to manage on only one pension,” he says. “I swallowed my pride a few weeks ago and started going to a church soup kitchen for a midday meal.”

He spends much of the day in a neighbourhood café with other retirees, playing backgammon and reading shared newspapers.

“It’s not just for company – my apartment is chilly because everyone who lives in the building agreed that we couldn’t afford to buy fuel this winter.”

Yet, like regulars in the café, Andreas says that things could be much worse, compared, for example, with his childhood in Athens during the second world war, “when I used to see people lying dead of starvation in the streets”. Afterwards his father went to work in Germany, and the family relied on the money he sent home.

For the young unemployed, facing a bleak future with an official jobless rate of 48 per cent, the resilience of the elderly is a quality to be envied.

Amalia, in her early 30s, who has two economics degrees from UK universities but works part-time as a book-keeper after failing to find a job with a bank, said the crisis had increased her respect for the older generation.

“Our grandparents grew up in poverty and endured a lot of hardship,” she says. “It is ironic, but they’re probably better at coping than we are.”

Greece Warns Bailout Rebels of Unknown, Dangerous Path.

Riot policemen walk in front of the parliament during an anti-austerity rally in Athens February 11, 2012.   REUTERS-Yiorgos Karahalis
A man walks in front of a closed bank branch in central Athens February 11 2012. REUTERS-John Kolesidis

The Greek government told rebellious lawmakers on Saturday to back a deeply unpopular EU/IMF rescue in parliament or send the nation down “an unknown, dangerous path” to default and international economic isolation.

Conservative leader Antonis Samaras, who has attacked austerity policies for driving Greece ever deeper into recession, still told his party to back the 130 billion euro deal or be dropped as candidates in the next general election.

With voters deeply hostile to the bailout’s tough conditions, former socialist Prime Minister George Papandreou admitted that backing austerity had cost him the premiership and even some of his friends, but the alternative was a collapse in living standards and further “unforeseeable consequences.”

The coalition of Prime Minister Lucas Papademos has a huge majority, which should ensure parliament approves on Sunday a package including a further 3.3 billion euros in budget cuts this year, needed to secure Greece’s second bailout since 2010.

But six members of his cabinet have already resigned over the heavy pay, pension and job cuts which the European Union and International Monetary Fund are demanding as the price of the funds, which Greece needs by next month to avoid bankruptcy.


Officials hammered home the message that Greece’s future in the euro was at stake.

“The consequences of disorderly default would be incalculable for the country – not just for the economy … it will lead us onto an unknown, dangerous path,” Deputy Finance Minister Filippos Sachinidis said.

In an interview with the newspaper Imerisia, he described the catastrophe he believes Greece would suffer if it failed to meet debt repayments of 14.5 billion euros due on March 20.

“Let’s just ask ourselves what it would mean for the country to lose its banking system, to be cut off from imports of raw materials, pharmaceuticals, fuel, basic foodstuffs and technology,” he said.

Late on Friday the cabinet approved the draft bailout bill and a plan to ease the state’s huge debt burden which has deepened the nation’s political and social crisis and brought thousands out on the streets in protest.

As a 48-hour protest strike went into its second day, about 50 Communist party activists draped two huge banners on the ramparts of the Acropolis on Saturday, reading: “Down with the dictatorship of the monopolies (and the) European Union.”

About 7,000 demonstrators gathered in central Athens, police said, but there was no repeat of trouble on Friday when police fired teargas at protesters throwing petrol bombs and stones.


Members of the conservative New Democracy party, which has a big lead in opinion polls before elections expected as early as April, are likely to back the deal solidly.

Samaras still warned his party, the second biggest in parliament, against stepping out of line. “This is obviously an issue of party discipline,” he told New Democracy lawmakers in parliament, warning anyone who opposed the bailout “will not be a candidate in the next election.”

However, the smallest party in the coalition, the far-right LAOS, quit the government in protest at the package on Friday, ordering its four cabinet members to resign. Two members of the Socialist PASOK party have also left the cabinet.

Papandreou, who negotiated the first bailout before his government collapsed in November, acknowledged the huge pressure on any politician backing the second rescue.

“I’ve lost friends, my family suffered, I gave up my office, I was insulted, vilified, like no other politician ever was in this country,” he told PASOK’s parliamentary group.

“Still, all that is nothing compared with what our people will suffer if we fail to do the right thing… Despite all the anger we are feeling inside, we must persevere.”

Party discipline is much weaker at PASOK, whose support has dived to eight percent in the latest opinion from the nearly 44 percent it commanded when Papandreou led it into power in 2009.


Despite the whiff of rebellion, analysts expect parliament to pass the package, which also includes a bond swap which will ease Greece’s debt burden by cutting the value of private investors’ bond holdings by 70 percent.

Some economists suggest that if Greece defaulted and left the euro zone, its new national currency would dive in value and allow the Greek economy to become internationally competitive.

But government spokesman Pantelis Kapsis dismissed this notion. “We’ll have to reduce the deficit, regardless of whether we have the euro or not.”

Euro zone finance ministers have told Greece that it must explain how 325 million euros ($430 million) out of this year’s total budget cuts will be achieved before it agrees to bailout.

Bailout documents released on Friday left blank the amount of the rescue but even 130 billion euros may not be enough.

Finance Minister Evangelos Venizelos said on Saturday 15 billion euros more might be needed to rescue the country’s banks, confirming estimates from EU officials.

The banks are up to their necks in Greek government debt, the value of which will be slashed under the bailout, and have suffered huge losses of deposits as Greeks have either shipped their savings abroad or stuffed them under the mattress.


The European Union and the IMF have been exasperated by a series of broken promises and weeks of disagreement over the bailout. They will not release the aid without clear commitments by the main party leaders that the reforms will be implemented, regardless of who wins the next elections.

The uncertainty has upset world financial markets, with stocks snapping a five-day winning streak on Friday and the euro tumbling.

The bill, approved by the cabinet along with hundreds of pages of accompanying documents, sets out reforms including a 22 percent cut in the minimum wage, pension cuts worth 300 million euros this year, as well as health and defense spending cuts.

“The government believes that sustained implementation of this policy program, complemented by debt restructuring, will put the public debt on a clear downward path,” it says in a draft letter to EU and IMF chiefs, attached to the bill.

In the same letter, the government promises to speed up implementation of reforms in the labor, product and services markets, cut spending, and push through a privatization plan.

One of the attached documents, which spells out the reforms Greece will have to undertake in return for the aid, says the target of cutting the debt to “about” 120 percent of GDP by 2020 from about 160 percent now will be achieved.

Greeks Call for Solidarity in Strikes Against Austerity.

Sounds like the Occupy Movement has gone Global!

athens greece

Under pressure from creditors, the International Monetary Fund, the European Central Bank, and the EU, the Greek government is forcing through unpopular austerity measures. The Greek Prime Minister threatened to remove any government minister who objected to the policies.

“Wages are to be cut by more than 20 percent, thousands of civil servants will be laid off, and vital social programs will be severely cut. These laws punish the Greek 99% to repay the debts of the ruling class. The government has sold out sovereignty, the poor, and the working class in the interest of foreign creditors and the demands of the 1%. Bankers continue to make millions and corporations pay fewer taxes.”, say the Occupiers.

In response, thousands have taken to the streets and occupied the square in front of Parliament. For the second time this week, Greek workers began a general strike for today and tomorrow. Most transportation has been shut down – limited-service trains will allow protesters to attend demonstrations in Athens. Protesters around Parliament have been attacked with stun grenades and teargas by riot police. Similar protests and strikes are underway across Europe, including in Belgium, where firefighters opposed to cuts in their retirement plan broke through police lines with water hoses. It’s getting interesting.

Students also occupied a school and held General Assemblies for protesters. The occupiers released a statement:

The health structures, the educational spaces, the “welfare” benefits and anything making us productive in the dominant system are now a thing of the past. After squeezing everything out of us, they now throw us straight into hunger and impoverishment.


Greece Shilly-shallying While the Parthenon Burns.

Thousands took to the streets of Athens as unions launched a two-day general strike against planned austerity measures on Friday, a day after Greece‘s crucial international bailout was put in limbo by its partners in the 17-nation eurozone.

Clashes broke out in Syntagma Square, outside Parliament, as dozens of hooded youths threw fire bombs and stones at police, who responded with tear gas. No arrests or injuries were reported.

Police said some 7,000 people took part in the demonstration. Another 10,000 Communist supporters held a separate, peaceful march, chanting slogans against cutbacks that include reducing the minimum wage by 22 percent and cutting one in five government jobs in a country which is in its fifth year of recession.

Bailout creditors say Greece has not yet met demands for all the required austerity measures and, frustrated by days of dithering, have given political leaders in Athens until the middle of next week to do so. Otherwise, the country will lose its rescue loan lifeline, go bankrupt next month and likely leave the euro.

“We are experiencing tragic moments,” Deputy Prime Minister Theodoros Pangalos told Parliament Friday. “These days are the last acts of a drama that we all hope will lead to a happy conclusion with a voluntary reduction in our public debt and implementation of a framework by 2015 that will allow the economy to stabilize.”

The Greek coalition government, led by Prime Minister Lucas Papademos had hoped some of the heat had been taken out of the crisis after leaders agreed Thursday to a raft of austerity measures they hoped would pave the way for the euro130 billion ($173 billion) bailout package.

Greek Prime Minister Lucas Papademos ahead of a confidence vote on November 16, 2011 in Athens, Greece. Prime Minister Lucas Papademos and his government won a confidence vote in parliament today. The vote means that budgetary measures can now be pushed through, measures which are essential if Greece is to receive a bailout from Euro partners.

However, finance ministers from the other 16 eurozone states put up a roadblock later in the day by insisting that Greece had to save an extra euro325 million ($430 million), pass the cuts through a restive parliament and guarantee in writing that they will be implemented even after planned elections in April.

A Cabinet meeting has been called for the afternoon, while the majority Socialists and the conservatives were later to hold party meetings to discuss the cutbacks.

The new hurdles Greece has to clear to avoid a default that could send shockwaves around the global economy dented sentiment in the markets Friday. Stocks were down all over Europe, with the benchmark index in Athens 1.8 percent lower in early afternoon trading.

While facing intense pressure abroad, Greece is having to deal with another strike. The country’s two biggest labor unions stopped railway, ferry and public transport schedules, and hospitals worked on skeleton staff while most public services were disrupted. Unions were planning protests in Athens and other cities around midday.

Prime Minister Papademos and heads of the three parties backing his government have already agreed to deep private sector wage cuts, civil service layoffs, and significant reductions in health, social security and military spending.

But the party leaders balked at demands for more cuts to already depleted pensions, later issuing nebulous assurances that a solution had been found.

“Unfortunately, the eurogroup did not take a final, positive decision,” Finance Minister Evangelos Venizelos said after Thursday’s talks in Brussels. “Many countries expressed objections, based on the fact that we did not fully complete the list of additional measures required to meet our targets for 2012.”

“The choice we face is one of sacrifice or even greater sacrifice — on a scale that cannot be compared,” Venizelos added.

Once all the demands have been fulfilled, the eurozone will give Greece the green light to start implementing a separate bond swap deal with banks and other private investors designed to slice some euro100 billion ($132 billion) off Greece’s debt load.

EU Commission President Jose Manuel Barroso on Friday offered hope a deal could still be struck.

“I am confident that a solution will be reached next week as this is critically important for Greece and the Greek citizens first and foremost but also for the whole euro area,” he said, during a visit to India. “I therefore call on the responsibility and the leadership of the Greek leaders and all members of the eurozone so that we can obtain this goal that is important for the euro area and indeed for the global economy.”

France’s central bank chief Christian Noyer also urged Greece to accept the “reasonable and indispensable” austerity plan.

“Greece needs to do what other countries are doing, countries that have been in difficulty but are completely in line with the recovery plans,” Noyer said on Europe-1 radio Friday. “Greece has to accept all of this.”

But on the streets of Greece, the mood is grim, after two years of severe income losses, repeated tax hikes and retirement age increases that failed to signally improve the country’s finances. Unemployment is at a record high of 21 percent — with more than a million people out of work — while the economy is in its fifth year of recession and is expected to contract up to 5 percent in 2012.

The country’s politicians have taken a lot of criticism for the situation, and polls show the majority Socialists, elected in a 2009 landslide are now languishing at around an 8 percent approval rating. Yeah, I’d like to meet the 8%.

A Greek Socialist lawmaker resigned his seat Friday to protest the new austerity, a day after the country’s deputy labor ministry stepped down from his position for the same reason. But the resignation of Pavlos Stasinos will not affect the party balance in Parliament, as he will be replaced by another Socialist deputy.

“It is unacceptable that right now our politicians’ petty political and public relations maneuvering should be leading the country to bankruptcy,” respected Kathimerini daily said in an editorial. “The country is tumbling towards a cliff-edge, and a tough European establishment is putting out the view that Greece cannot be saved and lacks credible politicians. Our politicians back that view with their carryings-on.”

Ta Nea daily accused Greek politicians of “theatrics and shilly-shallying,” and urged lawmakers to back the new measures in the Parliamentary vote, tentatively planned for Sunday.

“Nobody can happily back the painful agreement with the troika,” it said in an editorial. “But neither can anyone shoulder the burden of the consequences, if the agreement is not completed.”