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Title: Greece Enters Death Spiral
Source:
http://globaleconomicanalysis.blogspot.com/
URL Source: http://globaleconomicanalysis.blogspot.com/
Published: Aug 18, 2010
Author: Mish Shedlock
Post Date: 2010-08-18 18:57:33 by Nebuchadnezzar
Keywords: None
Views: 10386
Comments: 26
Greece Enters Death Spiral Spiegel Online International reports 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. This dire prognosis comes even despite Athens' massive efforts to sort out the country's finances. The government's draconian austerity measures have managed to reduce the country's budget deficit by an almost unbelievable 39.7 percent, after previous governments had squandered tax money and falsified statistics for years. The measures have reduced government spending by a total of 10 percent, 4.5 percent more than the EU and International Monetary Fund (IMF) had required. The problem is that the austerity measures have in the meantime affected every aspect of the country's economy. Purchasing power is dropping, consumption is taking a nosedive and the number of bankruptcies and unemployed are on the rise. The country's gross domestic product shrank by 1.5 percent in the second quarter of this year. Tax revenue, desperately needed in order to consolidate the national finances, has dropped off. A mixture of fear, hopelessness and anger is brewing in Greek society. Unemployment Rates of up to 70 Percent Unemployment in the city [the shipbuilding district of Perama] hovers between 60 and 70 percent, according to a study conducted by the University of Piraeus. While 77 percent of Greek shipping companies indicate they are satisfied with the quality of work done in Perama, nearly 50 percent still send their ships to be repaired in Turkey, Korea or China. Costs are too high in Greece, they say. The country, they argue, has too much bureaucracy and too many strikes, with labor disputes often delaying delivery times. Barely any of the country's industries can keep up with international competition in terms of productivity, and experts expect the country's gross domestic product to fall by 4 percent over the course of the entire year. Germany, by way of comparison, is hoping for growth of up to 3 percent. Sales Figures Dropping Everywhere A short jaunt through Athens' shopping streets reveals the scale of the decline. Fully a quarter of the store windows on Stadiou Street bear red signs reading "Enoikiazetai" -- for rent. The National Confederation of Hellenic Commerce (ESEE) calculates that 17 percent of all shops in Athens have had to file for bankruptcy. No Way Out The entire country is in the grip of a depression. Everything seems to be going downhill. The spiral is continuing unabated, and there is no clear way out. The worse part, however, is the fact that hardly anyone still hopes that things will improve one day. 'Things Are Starting to Simmer' Menelaos Givalos, a professor of political science at Athens University, has appeared on television, warning viewers that the worst times are still to come. He predicts a large wave of layoffs starting in September, with "extreme social consequences." "Everything is getting more expensive, I'm hardly earning any money, and then I'm supposed to pay more taxes to help save the country? How is that supposed to work?" asks Nikos Meletis, the shipbuilder. He predicts the situation will only become more heated. "Things are starting to simmer here," he says. "And at some point they're going to explode." How Long Can Greece Hold On? Inquiring minds just might be asking "How long can Greece hold on?" I do not have the answer to that, besides it's not the important question. A far more worrisome question is "When does similar strife spread to Spain, Portugal, and perhaps even Italy?" Part of the blame for this goes to the bailout plan itself. France and to a lesser extent Germany would not take haircuts on Greek debt. Aid to Greece by the IMF and European banks simply threw good money after bad. The problem did not go away. Instead, terms of the bailout made the situation worse. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Well, we've heard this before that Greece's explosion was "days away", but 70% UE in some areas? WOW!
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#1. To: Nebuchadnezzar (#0)
Do you think the Tea Party crowd will learn a lesson from this? Add Greece to the list that includes Ireland and the Baltics as countries who adopted austerity programs and saw greater economic hardship as a result.
It's called,"Taking your medicine." Of course there is "hardship" as you call it. Why the fuck do you think it's called "austerity"???? Or do you suggest they continue the ponzi scheme that they used to do and the US is hell-bent on doing??? Isn't it funny that the private sector sheds jobs in the US in bad times, but not the US government????
You didn't read the article either. Greece isn't the U.S., but I would suggest, and the evidence shows, that cutting government spending during a recession is going to make a bad situation worse. The reality is that if the GOP does the things it now says it wants to do, such as cutting off the rest of the stimulus money, that several million more people will lose their jobs. If you don't see a problem with increasing unemployment (after all, the unemployed are just lazy, right?) then at least have the balls to stand up say it. The U.S. government shed jobs last month, as did many state/local governments. Meanwhile, private sector jobs grew. Is this not a positive trend?
Earth to GO65....the government got us into this mess, it's the problem. You can't expect "the problem" to be the solution. And yes, many, not all, but many on UE refuse to work the jobs that are "beneath" them. That constitutes lazy. And you guys just keep on enabling them. Why is that? All in the name of votes?
I keep hearing these arguments from the tea party folks: 1. the unemployed are lazy and can find jobs if they really want to work 2. Mexican illegal immigrants have taken all our jobs 3. It's Obama's fault that there aren't any jobs 4. It's the union's fault that there are no jobs Do you guys not realize that those arguments are mutually exclusive?
So in your bizzaro-world Obama never ever has to atone for spending $900,000,000,000.00 and failing to keep UE below 8%. Sorry, it is his fault, given he promised that if we passed his stimulus unemployment would remain under 8%. Sorry GO, he broke it so he owns it.
yep: Why do you want to go back to the red?
#22. To: go65 (#20)
Obama PROMISED us that if we passed the stimulus that we'd see the economy keep UE below 8%. He failed. He owns it now. If he had done nothing you could continue to blame Bush, but he said HIS POLICY would make things better. THEY GOT WORSE.
Top • Page Up • Full Thread • Page Down • Bottom/LatestThe austerity measures that were supposed to fix Greece's problems are dragging down the country's econom
#7. To: go65 (#1)
Do you think the Tea Party crowd will learn a lesson from this? Add Greece to the list that includes Ireland and the Baltics as countries who adopted austerity programs and saw greater economic hardship as a result.
#9. To: Nebuchadnezzar (#7)
(Edited)
It's called,"Taking your medicine." Of course there is "hardship" as you call it. Why the fuck do you think it's called "austerity"????
Or do you suggest they continue the ponzi scheme that they used to do and the US is hell-bent on doing???
Isn't it funny that the private sector sheds jobs in the US in bad times, but not the US government????
#11. To: go65 (#9)
Greece isn't the U.S., but I would suggest, and the evidence shows, that cutting government spending during a recession is going to make a bad situation worse. The reality is that if the GOP does the things it now says it wants to do, such as cutting off the rest of the stimulus money, that several million more people will lose their jobs. If you don't see a problem with increasing unemployment (after all, the unemployed are just lazy, right?) then at least have the balls to stand up say it.
#15. To: Nebuchadnezzar (#11)
(Edited)
And yes, many, not all, but many on UE refuse to work the jobs that are "beneath" them.
#16. To: go65 (#15)
3. It's Obama's fault that there aren't any jobs
#20. To: Nebuchadnezzar (#16)
Sorry GO, he broke it so he owns it.
Replies to Comment # 20. Why do you want to go back to the red?
End Trace Mode for Comment # 20.
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