Tag Archives: Austerity

Elite Financiers Speak. No One Listens.

If anyone thinks for one minute that there isn’t a private competition among the elite financiers and investment bankers, about who can speak in the most arcane, cultivated, scholarly and lettered style, you haven’t been listening to Goldman-Sax bankers lately:

Goldman’s Themos Fiotakis and Huw Pill, doing their best Bernanke and Greenspan imitations, made the following comments yesterday about the Greek election:

“Overall, Greece will remain a source of uncertainty due to its macro-dynamics. The country is undergoing extreme economic pressures that are likely above and beyond austerity; prolonged uncertainty have led to a multi-year suppression in confidence and a collapse in credit growth, which has helped compressed the private sector, create supply shortages and has contributed to the lack of investment or privatization efforts, higher structural unemployment and persistent inflation currently observed. Unless this uncertainty of tail events is lifted over Greece, moderate solutions will be prone to marginalization, while extreme and populist views could become ever so prevalent.”

Let me translate:

Greece is screwed. Their economy is worse than any austerity measures can fix. Greeks have no confidence. Investors have no confidence. There is no credit available to Greece. Businesses are failing because they can’t borrow money. Because businesses are failing, there are shortages. Because no one has confidence, no one will lend any money. Unemployment is really bad and getting worse, because there are no jobs. Money is worth nothing, so things aren’t really worth what they cost. All of these conditions result from poor fiscal and political leadership and corrupt banks. If no one can fix these conditions quickly, austerity (meaning going without) will not work. If it continues or gets worse, extremists and fascists could take over the government. The end.

It doesn’t surprise me that when people are exposed to that kind of Sax-speak, they tune out. I had to read that first paragraph like, five times before I understood what they were saying. Bernanke, while an improvement over Greenspan, talks like this all the time. No wonder Congress has no idea what’s going on. And, God forbid any of them from whispering to the next guy with a “Huh?” These guys don’t roll out of bed really smart to begin with, so we should not be amazed, I guess.

I wonder whether the G-Sax boys will be as eloquent and arcane when they try to describe the financial disaster after it hits next year, or will they simply say, “Oh. Holy Shit!”

No. I forgot. They will all be in St. Barts.


Put A Fork In Them.

Greece is done.

The anti-austerity folks have voted, and it ain’t pretty.  The big winner of the day was the leftist anti-bailout coalition, Syriza. In the last election in 2009, it scored just 4.6%. This time it took second place with almost 17%, beating Pasok whose support base all but collapsed. This nation, punished by two years of the most drastic austerity measures in modern history, has hit out against the bailout, the political mainstream and the painful cuts that have brought Greece to its knees.

A majority has spoken and the message is clear: Rip up the “memorandum” (the bailout agreement with the IMF and the EU) read, Germany, and get rid of all immigrants. The radicals and the neo-Nazis now have the country.

So, in the next three days, the various parties have to form a new government or put on new elections and do it all over again. If anyone doesn’t see that this is a government falling into fascism without hope of civilized central discourse, then they are in denial.

And without a government in place, the next installment of Greece’s international bailout money would probably be put on hold, raising the specter of the country’s bankruptcy within weeks.

In reality, any future government here will have to – at the very least – renegotiate parts of the bailout, following the will of the majority. But the challenge will be to do so, while still ensuring Greece’s membership of the euro – something a large majority of Greeks want, according to opinion polls. That doesn’t seem possible. The opinion polls have been like this for years now, signaling a complete inability to grasp the reality of the situation. Greece needs to abide by the austerity measures of the bailout, or the Germans will withdraw and Greece will have no choice but to default and drop out of the Eurozone.

The fervor among Greeks to throw out any additional austerity measures is being fanned by  the election of France’s new Socialist President, Francois Hollande. He is openly skeptical of austerity, favoring pro-growth policies instead – the winds of change may be blowing from Paris to Athens – and may further embolden those fighting the cuts there.

Greece is where the Eurozone debt crisis began back in 2009. It remains where the problems are most acute. And now this country has been plunged into yet another period of intense instability that it – and Europe – can ill afford.

There really is no way out and the sooner Greece accepts the inevitable and cuts their losses, the better off they and the rest of Europe will be.

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.”