Mired in what economists are calling a "great depression", with its GDP set to contract for a sixth straight year, Greece is projected to see unemployment exceed 30% by the year's end as a growing number of businesses file for bankruptcy. Over 60% of those without work are under 25.
Public-sector firings are among a series of neuralgic points likely to be raised by the troika. Representatives, who indicated they would not be visiting Athens "to renegotiate its rescue package but supervise its economic performance", are also expected to address the thorny issues of progress on privatisations, tax administration reforms and bank recapitalisation.
Paitence is in short supply. Creditors have committed more funds to Greece – at €240bn, the biggest bailout in world history – than any other troubled economy since the tiny nation, revealing the unsustainable level of its public debt, triggered the eurozone crisis in late 2009.
Piling on the pressure ahead of the monitors' visit, the Euro Working Group chief, Thomas Wieser, emphasised that Athens had to keep its side of the deal. "All that was agreed in the bailout plan has must be implemented. These reforms were agreed to make the Greek economy stronger, flexible and more competitive," he told the Greek newspaper Realnews.
Although the IMF has publicly admitted that it seriously underestimated the impact of Greece's recession on its ability to deliver, there are growing concerns over the government's determination to crack down on tax collection – the single biggest drain on the country's economic performance.
A confidential report prepared by the EU and IMF and leaked to the Greek media last week showed that the nation was lagging severely in key revenue targets, with Athens' tax collection mechanism being singled out for particular criticism.
While Greece had managed to rein in public spending – pulling off the biggest fiscal consolidation of any OAED country – tax avoidance, particularly among high earners, remained "astounding", said the report, estimating that at €55bn unpaid tax amounted to nearly 30% of GDP.
10 comments:
One can criticise the Guardian and this blog for a bit of a unilateral focus on the "eurozone" crisis where of course it has been a global crisis caused by US and UK banks.
Nevertheless, the underreporting of protest in Europe in their mainstream media is very obvious - but Graeme does and excellent job of bringing the public protest like the 800.000 saying f*** the troika in Portugal. And it's not an isolated case - it's very often that I can only find it here. Congratulations and thanks Graeme.
I will not speculate on the reasons of highlighting such protest - but at least one of the effects is letting people know it IS possible to resist, and that one is not alone if you'd think the economy and the governments have gone bonkers.
Another case of underreporting elsewhere, and misrepresentation, is about M5S and Beppe Grillo. Here is a very interesting recording of Grillo, in 1998 no less, about the scam that central banking is and money as debt.
"If it is our money, why are THEY lending it to us?"
No wonder he has the elites having a hissy fit.
Less over the top, but very thorough, is the interview of economist Richard Wolff by Bill Moyers about the failure of capitalism, here. If you wonder why there is no government proposing a New Deal just yet, this explains why.
Good luck to all our brothers and sisters in Portugal in their struggle to be heard. Our hearts and minds were with you this weekend.
But how many people have to get out on the streets before our elites actually start listening? Mass protests in Greece/Spain and let's not forget Ireland have fallen on deaf ears. Never mentioned publicly by our politicians and - as you point out - rarely in the media either. The Occupy protests in the US and the UK have been crushed or fizzled out. Many workers no longer have the right to strike in Greece. All the traditional forms of ventilation seem to lead to dead ends.
Our elites are now completely disconnected from the people. And history tells us this is usually the turning point - they can keep slapping the lid right back on the pressure cooker but at some point it will blow. Some sort of direct reaction is needed to avert disaster - Merkel on a Portuguese morning chat show for example answering ordinary people's tweets would be a start. Why not?
No I'm not, or i wouldn't have been at Dexia's shareholder meeting voting no on a capital injection using taxpayer money. Yes, other banks were complicit. To which degree, I'm unsure - which is why we need big-time prosecution of bankers - or an audit of the debt, if you will.
I am however convinced that is was the total abolishment of decent lending practices, to keep the securitization process going, that was at the heart of the crisis. I have never heard of liar's loans in Europe. Standards did relaxe to some point, like you could get close to 100% mortgages, but I mean loans based on "stated", not proven income and the like? We didn't start that.
But your point is fair - I don't think banks in continental Europe are innocent, at all.
And your other points - didn't and don't governments overspend - o yes they did. I wouldn't be, and am not, against cutting government spending. The local government in Parma, by M5S, has actually been pretty austere - starting with cutting politicians' pay check.
And that's the interesting bit - you and me may be miles apart politically, but people on the left and right are starting to see the system has failed and is unjust, and basically want "the people" to take the power back. Richard Wolff, in the video I linked, actually discusses the confluence of interest of both the Tea Party and Occupy Wall Street at some point in the protest.
I've seen you rail against government interference and spending - but don't you agree that democracy has been highjacked by special interests, and that they are no longer working "for the common good"?
Well, it might not be a crisis for you, but it certainly is for a good part of the population of southern med countries like here in Greece... You might have a very comfortable western lifestyle, but many here do not.. some of them.. no small proportion, never did have the level you see in Blighty. Now many many have lost their livelihoods and that's a big problem in a country where welfare benefits are only temporary... there's a growing number of people in this country (not least the young) with no income at all.. surviving on the diminishing support of relatives or joining the growing numbers of homeless.
Nope, the US and UK (and German, French and Dutch banks come to that) did many stupid things but they didnt design a dysfunctional monetary union that was a bomb waiting to go off. That would be the EU.
Are you saying the eurocrisis predates the 2008 crash? What caused what? I mean, did you miss EU governments rescuing their banks and thereby significantly increasing their debt (which, arguably was already high in some cases through debatable govt spending)? I mean, Spain had one of the lowest debt/gdp ratios pre-crash, and was a much better pupil than both Germany and France.
And these governments are then downrated by the anglosaxon rating agencies who are paid for by banks, and who failed the world miserably? And then these governments allow the troika to come in and bring more deregulation/privatization/welfare cuts along the neoliberal doctrine which brought us the mess in the first place.
It's all to incredible to make up, yet here we are.
Anyway, false dichotomy - both are true. The US and UK banks started the crisis, the other big banks colluded, and the euro is a flawed system. No argument from me. Just keep the causality straight.
Nope, the US and UK (and German, French and Dutch banks come to that) did many stupid things but they didnt design a dysfunctional monetary union that was a bomb waiting to go off. That would be the EU.
Are you saying the eurocrisis predates the 2008 crash? What caused what? I mean, did you miss EU governments rescuing their banks and thereby significantly increasing their debt (which, arguably was already high in some cases through debatable govt spending)? I mean, Spain had one of the lowest debt/gdp ratios pre-crash, and was a much better pupil than both Germany and France.
And these governments are then downrated by the anglosaxon rating agencies who are paid for by banks, and who failed the world miserably? And then these governments allow the troika to come in and bring more deregulation/privatization/welfare cuts along the neoliberal doctrine which brought us the mess in the first place.
It's all to incredible to make up, yet here we are.
Anyway, false dichotomy - both are true. The US and UK banks started the crisis, the other big banks colluded, and the euro is a flawed system. No argument from me. Just keep the causality straight.
There are reasons why it's Ireland, Italy, Spain, Greece and Portugal who are suffering the most. They're not just the "unlucky 5".
Yes. They were the poorest.
When were they the poorest?
Not, as Bogoas81 pointed out, in 2007.
They were the countries that lived it large thanks to property bubbles... or countries that lived it large through government debt.
Of course, there'll be people like BelgianBmc who believe the Greek people were forced by the UK/US banks to elect governments that massively increased public sector wages and allowed widespead tax fraud.
But, seriously...
The banks cannot be absolved of blame but the reason they provided more and more credit was because they were encouraged to do so by the central banks who lowered base rates to prop up GDP growth in the Western democracies at a time the industry was moving to China and the East. Our economies were not competitive and productive enought to just the vastly higher wages and state expenditure but our policy makers prefered to live in a dreamland.
In the UK we saw state expenditure balloon out of control funded largely by taxes on the financial bubble caused by low base rates. Now we have to come to terms with this.
don't forget the politicians who let them off the leash, Glass-Steagall act, the remnants were disposed off by Clinton & Brown. Freeing the bankers to increase leverage by combining retail & investment banking. An act that was specifically brought in to stop anything like the Great Depression happening again. Great way to get re-elected admittedly but not very fiscally responsible.................
don't forget the politicians who let them off the leash, Glass-Steagall act, the remnants were disposed off by Clinton & Brown. Freeing the bankers to increase leverage by combining retail & investment banking. An act that was specifically brought in to stop anything like the Great Depression happening again. Great way to get re-elected admittedly but not very fiscally responsible.................
Post a Comment