We begin with a spat between two key figures in the austerity game, the IMF boss and the German money minister — with the issue not how much austerity, but how soon — followed by a firm Nein from the Iron Chancellor.
The Men in Black and the coalition government are nearing the final pact on the next round of cuts, and Greek anger at the austerity lash has sent the radical Left coalition to the top of the latest public opinion polls while the neofascist Golden Dawn Party steps up its xenophobic violence.
The latest jobless numbers paint a grim picture as unemployment continues to rise and Greek cut down on medical care because they can’t afford it. German economists are calling for yet another Greek debt haircut, while the latest predictions show an even greater economic contraction than previously estimated.
Increased sales taxes have shuttered thousands of restaurants and killed at least 30,000 jobs, whiule one Greek’s job loss proved richly rewarding, both to the man and his former employer, Meanwhile, strikes continue and one of the country’s biggest business makes its own Grexit.
And we close with a bit of good news.
The Tussle in Tokyo: Lagarde v. Schäuble
The IMF boss and the German finance minister tangled over Greek austerity during the International Monetary Fund assembly in Tokyo Thursday. The sticking point wasn’t how much austerity should be inflicted on Greece, but how long the country has to comply.
First, a video report from euronews:
And the story, first from Jan Strupczewski and Koh Gui Qing of Reuters:
Germany held firm on Friday in insisting it was too soon to say Greece deserved more time to meet its budget-cutting goals even as the head of the IMF laid out the case for leniency.
Greece, Spain and the euro zone’s slow progress toward debt reform was centre stage at International Monetary Fund meetings despite Europe’s best effort to step out of the spotlight.
IMF Managing Director Christine Lagarde, sitting next to Germany’s finance minister, said Athens needed more breathing space. “Given the… lack of growth, given the market pressure, given the efforts that have been undertaken, a bit more time is necessary,” she said, amplifying on remarks made on Thursday.
In a softening of earlier advice, the IMF has argued that forcing Greece and other debt-burdened countries in Europe to reduce their deficits too quickly is counter-productive because it hurts the economy.
The shift was welcomed by some emerging market countries as well as long-time critics who say that the tough conditions attached to IMF loans inflict undue economic pain and make it harder for countries to grow their way out of debt.
More from Benjamin Fox of EUobserver:
Schaeuble hit back, saying Lagarde is contradicting the IMF’s stance on austerity.
The fund had warned “time and again” that Western economies needed to prioritise debt reduction, he said.
“When there is a certain medium-term goal, it doesn’t build confidence if one starts going in a different direction,” he added.
Finally, this from Holly Ellyatt of CNBC:
Lagarde said that heavily “frontloading” Greece with austerity measures too fast could undermine Greece’s reform program and recovery.
“It is sometimes better to have a bit more time,” Lagarde told a news conference in Tokyo on Thursday. “This is what we advocated for Portugal, this is what we advocated for Spain and this is what we are advocating for Greece.”
The Germanator declares Nein!, Nein!, Nein!
Following the clash between Lagarde and Schäuble, Chancellor Angela Merkel made it clear that Germany’s not willing to show the country any temporal mercy.
From Deutsche Presse-Agentur:
German Chancellor Angela Merkel rebuffed Friday a call by the International Monetary Fund to give cash-strapped Greece more time to clean up its state finances.
“We have agreed on a procedure that makes sense and to which we will adhere to,” Merkel spokesman Steffen Seibert told a regular press briefing in Berlin.
The comments from Merkel came after Germany’s finance minister, Wolfgang Schaeuble, clashed with IMF head Christine Lagarde at the IMF annual meeting in Tokyo.
Lagarde said Athens could require two more years to get its budget under control.
But said Seibert: “We are working on the implementation of the present on-going program and within the timeframe, that this program provides for.”
Cuts almost ready to roll
The long, painful sessions between Prime Minister Antonis Samaras’ coalition government and the Troika’s Men in Black are nearly done.
From Athens News:
A meeting between Finance Minister Yannis Stournaras and the EU-ECB-IMF troika representatives ended Thursday evening with sources indicating that the two sides were close to agreement on austerity measures for 2013-2014.
The total cost of the measures the government would take as part of the country’s austerity programme for the next two years would amount to 13.9 bn euros. Of that, 7.8 bn euros would come from further cuts to salaries, pensions and benefits.
According to sources, Stournaras and the troika have also reached agreement on taxation system reforms, expected to bring the state revenues of two bn euros.
A likely breakthrough was also achieved on the controversial issue regarding whether or not Greek banks should pay the state the amount of 555 bn euros owed as part of 2008′s bank recapitalisation. The troika had proposed that the amount should be raised by further cuts in pensions and incomes, but eventually the two sides agreed that further talks be held with the banks. A finance ministry official said that banks do not object to pay the state the above amount.
But there’s at least one sticking point still on the table.
Keep Talking Greece reports:
Greek Finance Ministry and the Troika are at odds over a 555-million payment that Greek banks are due to make to the state by the end of the year. The Troika discovered a hole of 500 million euro plus 55 million euro in interests rates in the budget 2012. This hole was dug from the aid the banks received in 2008.
The Troika demanded that the banks won’t give back this amount, but that equivalent measures such a new emergency taxes or scrap the holiday bonuses of 1,000 euro for civil servants will be imposed.
Talks between the Greeks and the Troika ended on Thursday morning in a deadlock with “Alternate Finance Minister Staikouras threatening with resignation,” as Greek media reported.
Syriza soars in popularity
A new poll shows the lefitist coalition is rising rapidly in public esteem, while the coalition’s obeisance to the Troikarchs is stirring increasing anger.
But the same poll also shows that conservative New Democracy Prime Minister remains the public’s number one choice to fill the office.
From Keep Talking Greece:
80% of the Greeks believe the country goes to the wrong direction, while 48% are convinced that left-wing and main opposition party SYRIZA will win the elections should they take place tomorrow. In a public opinion survey (Political Barometer October 2012) conducted by Public Issue for Skai TV and Kathimerini, the citizens’s anger and outrage continue to increase (25% in September, 28% in October).
It’s also interesting to see the profile of Chrysi Avgi (Golden Dawn) supporters:
majority of them are men, 18-24 years old, with medium education and without work.
72% are against the Memorandum of Understanding, the bailout agreement between Greece and its lenders, while 19% are in favor.
An equal percentage of respondents, 72%, states that it has difficulties to come along with their income: 42% big difficulty, 30% difficulty, 25% they manage, 3% no problem.
Prime Minister Antonis Samaras is still ‘the best suitable PM’ with 43% (three units more than September), while main opposition party leader Alexis Tsipras get 28% (one unit less than in September).
More on the numbers via from a greek angle:
The Golden Dawn percentage is 21%, the Communist Party of Greece has collected 20% of the people’s preference and PASOK, the socialdemocratic party member of the present Government 19%. Ms. Aleca Papariga, Secretary General of the Communist party of Greece received 39% of the vote, while Evangelos Venizelos of PASOK and Nikos Mihaloliakos each received 20%.
Golden Dawn takes another page from the Nazi script
Years ago we had the chance of spending an afternoon with Lew Ayres, a marvelous actor who starred as a young German soldier in a classic Hollywood World War I film, All Quiet on the Western Front.
The film’s pacifist sentiment and its depiction of the futility of what had been at the time history’s bloodiest conflict, deeply angered the Nazi Party, so when it played in Germany, Nazi thugs released rats and snakes into the audiences.
Screenings were quickly cancelled, delivery the brownshirts a victory.
Well, it seems to Nazis’ latter day Greek descendants have taken a page directly from Joseph Goebbels’ script:
From Athens News:
An Athens theatre will on Friday make another attempt to premiere a controversial play after Golden Dawn members, Orthodox priests and religious extremists prevented a performance of it on Thursday night.
About 100 protesters turned up at the Chytirio theatre on Iera Odos St, which is staging the play Corpus Christi by American playwright Terence McNally.
Viewing the play is “blasphemous” – it depicts Jesus and the apostles as gay men as a metaphor for the acceptance of the gay community in society – the protesters hurled racist and homophobic abuse at theatre goers and cast.
Among the crowd waving Greek flags, holding icons and crucifixes, singing the national anthem and shouting homophobic slogans were a number of Golden Dawn MPs, including Christos Pappas and Ilias Panayiotaros.
More from Keep Talking Greece:
They tried to interrupt the play and break through the riot policemen deployed outside the building. As they wouldn’t step back, the police made limited use of tear gas. However they tried again to enter the theater and threw yogurt at the entrance.
As police chased the protesters in the surrounding streets, four people were detained.
And then the unprecedented happened: Christos Pappas, Golden Dawn MP, rushed to the police bus and freed an older man. Right there in front of the policemen’s eyes who refrained from stopping this incredible incident. Pappas grabbed the man from the arm and the two left , while the police was just looking passively.
When Newsit reporter asked the head of the deployed policemen how comes the MP freed a detainee, he replied that ‘detentions are virtual’.
At the same time, somewhere near and away from the cameras, a reporter from Lifo-Magazine was beaten by the protesters.
Manolis Vamvounis described minute by minute in a convulsive way via his twitter account (see a text description here) how he was humiliated by the religious fanatics and was attacked by GD-members, while the police was standing by doing nothing. The injured man sought shelter to a friend’s home and wrote that he was afraid to file a lawsuit to police. Then one of of the men who punched him was a “well known GD-MP”, Manolis claimed without making public his name.
The man, who was scared to death, had deleted his profile on Facebook out of fear, he wrote.
And yet another Golden Dawn outrage
This time the victim was the daughter of a famous Greek general and war hero.
The granddaugher of General Christodoulos Tsigantes (1897-1970) was attacked by a group of five far-rightists who demanded to see her ID.
The incident, which took place on Stisichorou Street, in central Athens recently, was unearthed after the woman filed a complaint with the British Embassy.
According to the report, the woman, who holds dual nationality, was asked to prove her Greek nationality and speak Greek.
General Tsigantes led the Ieros Lochos Greek special forces unit which was formed in the Middle East in 1942.
Meanwhile, according to Skai, several embassies located in Athens have received complaints from their citizens that members of far-right Golden Dawn party have demanded to check their IDs.
Greek unemployment numbers spike again
Ah, yes. That austerity’s really working.
The Greek working class is being destroyed as the Troika’s draconian measures bite deeper.
And the latest numbers come before the layoffs mandated in the new round of cuts now nearing approval.
From the BBC:
Unemployment in Greece hit a record 25.1% in July, with the level among young people reaching 54.2%, according to the latest official figures.
Greece’s statistical authority said 1.26 million Greeks were jobless in July, with more than 1,000 jobs lost every day over the past year.
With austerity cuts continuing and Greece likely to enter another year of recession, the level may rise further.
The worst-affected 15-24 age group, however, includes those in education.
According to Greece’s statistics agency the total unemployment rate rose from 24.8% in June. In July 2008, a year before Greece’s financial crisis broke, there were about 364,000 registered unemployed.
“This is a very dramatic result of the recession,” said Angelos Tsakanikas, head of research at Greece’s IOBE economic research foundation. He did not expect employment to pick up for at least a year.
Here’s a commentary on the latest numbers from Keep Talking Greece:
We’re not shocked anymore to read that one in four Greeks have no job. We’re not shocked anymore to read more that 1,261,604 people have no work. The “lucky” among them will be entitled to receive 368 euro per month for the duration of one year as unemployment allowance.
No, we’re not shocked anymore to read that young labour forces between 15-25 years old are unemployed at 54.2%.
No, we are not shocked anymore. Because the statistics just confirm what we hear and see every day. In our neighborhood, in the environment of our relatives and friends and the broader environment of our relatives’ relatives and the friends of our friends.
The thousands electroshocks we have been receiving every single day since Greece asked the aid of international lenders in May 2010 have turned us into apathetic creatures.
No, we are not shocked anymore.
PS Unemployment: 24.8% in June 2012 and 17.8% in July 2011. Although summer months are been considered as providing seasonal jobs, 23, 255 people lost their jobs between June and July 2012.
Greeks cut medical care, cite austerity
Yet another set of numbers which come as no surprise.
But there’s a twist.
Six out of 10 Greeks have consciously cut their spending on medical treatment as the impact of the economic crisis tightens their budgets but four in 10 say their last visit to a doctor was to a private practitioner due to concerns about the plummeting quality of state health services, a new study has shown.
The seemingly contradictory conclusions of the study, carried out by the National School of Public Health (ESDY), were presented on Thursday at a press conference where the role of Greece’s main public healthcare provider (EOPYY) was dissected.
As daily Kathimerini reports today, of the respondents questioned in the ESDY study, around half said they would like to see the debt-ridden EOPYY replaced by a new and better-functioning organization.
We’d say it’s a clear sign that austerity is working just as intended: Sick Greeks are being driven out of the public health care sector into the hands of private practitioners, who make more than the $7.50 an hour paid to state hospital physicians.
German economists call for a Greek debt haircut
That’s the only way the country can survive, giving the mountain of debt the government is tasked with repaying, said the money wizards.
Greece cannot be saved without further debt restructuring, Germany’s leading economic institutes said on Thursday, adding that was the best way for Athens to return to sustainable debt levels.
According to Reuters, asked whether investors in Greek debt would need to accept another haircut, or reduction in the value of their holdings, Joachim Scheide, head of forecasting at Kiel-based IfW institute, said: “Yes, we don’t think Greece can be saved.”
The International Monetary Fund wants official lenders such as Germany to take a “haircut” along the lines private bondholders already swallowed earlier this year.
Some details from Spiegel:
“We believe that Greece cannot be saved,” said Joachim Scheide from the Kiel Institute for the World Economy, one of several top economic institutes tasked by the German government with examining the state of the country’s economy twice a year.
Oliver Holtemöller, of the Halle Institute for Economic Research, was also pessimistic at the Thursday press conference called to present the evaluation. He said it is unlikely that Greece will ever be able to free itself from its debt burden — and called for a new debt haircut for the country.
Report co-author Kai Carstensen, of the Kiel Institute for the World Economy, put it more clearly at the Thursday press conference. Referring specifically to the unlikelihood that Greece will be able to manage its debt burden anytime soon, he said, “it is time to draw the consequences: No to aid payments, yes to debt restructuring.”
The report was also heavily critical of the European Central Bank’s plan to purchase unlimited quantities of sovereign bonds from debt-ridden euro-zone member states on secondary markets. “The ECB is becoming the guardian of national budgetary policy and possibly even holds sway over the solvency of individual countries,” the report reads. “In addition to the bank’s independence, its credibility is also in danger.”
Furthermore, the report adds, such behavior could trigger high inflation, which would seriously damage the ECB. “Should higher rates of inflation result, it will be extremely difficult to re-establish the ECB’s credibility,” the report says. Still, for 2013, the research institutes forecast a modest inflation rate of 2.1 percent.
Economic contraction figures revised again
It’s going to be even worse that they thought.
Following the recent release of revised data by the Hellenic Statistical Authority (ELSTAT), the government has been forced to revise upward its 6.5% estimate for the 2012 economic contraction seen in the 2013 draft budget, daily Kathimerini reports. Deputy Finance Minister Christos Staikouras told Parliament on Wednesday recession would likely exceed 6.5% and that the general government deficit will amount to 6.6% of gross domestic product, or 13.3 billion euros, down from 9% in 2011. The primary deficit in the first nine months of the year amounted to 2 billion euros against 6.1 billion in the same period last year.
The net deficit of the central administration (including interest payment) amounted to 6.6 billion euros, down from 19.2 billion in 2011. This is due to the severe reduction in expenditure, according to Bank of Greece data, by about 12.5 billion euros, but this is not representative of the state’s real spending obligations given that it owed some 8 billion euros to third parties at the end of July. Revenues, on the other hand, went down in the year to end-September by 1.3 billion euros compared with the first nine months of 2011.
The good news comes from the exports front, as ELSTAT figures showed on Wednesday that they showed a significant rebound in August that offsets most of the decline in July and leads to a level that is higher than expected for the whole of 2012. ELSTAT estimates put the total value of exports in August (not including oil products) at just under 1.24 billion euros, against 1.12 billion euros in August 2011, which constitutes an increase of 9.8% year-on-year. The rebound is attributed to a great extent to the relative recovery of trust in Greek enterprises after the formation of the coalition government.
Sales tax hike kills restaurants, jobs
One austerity measure already imposed is a major hike in Value Added Tax, or sales tax as it’s known in the U.S.
It’s the most regressive of all taxes, simply because it strikes hardest at the poor, who spend vastly larger parts of their incomes on life’s necessities.
From Andy Dabilis of Greek Reporter:
A rise in Value Added Tax to 23 percent that included restaurants in a bid to raise revenues has backfired as a report showed it has led to the closing of 4,000 establishments and the loss of 30,000 jobs.
The Association of Organized Food Catering Chains (SEPOA) said turnover declined by 40 percent in the full year since the tax hike that was designed to bring in more money and that turnover fell from $3.87 billion to $2.32 billion.
SEPOA is once again asking for the immediate reduction of the VAT rate to 9 percent, so that the sector’s enterprises can become viable again and to avoid the loss of more jobs, while increasing state revenues, but the government of Prime Minister Antonis Samaras has shown no interest in doing so.
Even popular restaurants said they are showing losses of 50 percent and more because of pay cuts, tax hikes and slashed pensions put on Greek workers, pensioners and the poor that have slowed spending almost to a standstill. Many restaurants have put out hawkers imploring passers-by to come in for a meal.
One Greek benefits from a job loss
And he’s a bankster. Not only that, but he left the job that paid him so handsomely to resign to take the job of regulating it.
In other words, it’s a golden handshake to step through the revolving door.
From Stephen Grey and Nikolas Leontopoulos of Reuters:
The governor of the Bank of Greece was given a severance payment of 3.4 million euros when he left his former employer, a major bank that he now regulates, documents seen by Reuters show.
George Provopoulos was awarded the sum when he stepped down as vice-chairman of Piraeus Bank to become governor of Greece’s central bank and a member of the board of the European Central Bank in 2008. The scale of the pay-off, previously unknown to most Greeks, is likely to prove controversial, amounting to nearly 2.8 million euros ($3.6 million) after tax.
As governor of the central bank, Provopoulos, now 62, has played a key role in propping up Greece’s banking system, which has received billions of euros in liquidity from the ECB and is in line for up to 50 billion euros of new capital from the bailout provided by euro zone countries and the International Monetary Fund.
Three strike stories, two from Ekathemerini
Organized labor is a prime target of the Troikarchs, and Greek unions are fighting back.
First, the newest call for a job action, from lawyers:
The Athens Bar Association has called a 24-hour strike for October 17 in protest at government measures.
The association said it will participate in a rally on the same day held by other professional sectors such as engineers, doctors and pharmacists.
And the Supreme Court’s enforcer calls a judicial strike unconstitutional:
Supreme Court prosecutor Yiannis Tentes wrote to Greek judges on Thursday to urge them to end a protest against the government’s plans to cut their wages and return to work immediately.
The judges have been staging a go-slow protest since September 17, which involves them just working for a few hours in the morning.
The protest is due to run until October 20 and has led to a major gridlock in the judicial process.
“Reactions such as these are not compatible with the constitutional position that judges hold,” Tentes said in a letter.
“It is already clear that without reliable, fast and effective justice, much-desired growth and an exit from the crisis will not be achieved. Judicial officials should not forget this,” he added.
And the third story, this time from Keep Talking Greece:
Greece’s state hospital doctors will launch a 48-hour strike on October 17th and 18th, 2012. On October 17th, they will join the strikes of “scientist sector” (doctors, lawyers, engineers), while on October 18th they will join the general strike organized by public and private sector unions ADEDY and GSEE.
Saying that the upcoming austerity package will totally dissolve the Greek society, hospital doctors federation, opposes further cuts in the doctors’ wages and the planned hospital mergers, and demands hirings in hospitals as well as the payment of outstanding debts for overtime work.
Another Grexit: Greece loses Coca-Cola
The move is corporate, not physical. The plants stay, but headquarters moves to Switzerland and the stock trades head to The City in London, that haven of freebooter capitalism.
In what analysts say is another blow to recession-battered Greece, the Athens-based Coca-Cola Hellenic Bottling Co. SA (CCH) on Thursday announced it is pulling up stakes and moving to Switzerland.
The move aims ‘’to facilitate a primary listing’‘ of the Coca-Cola Hellenic Group on the London Stock Exchange, according to an Athens-bourse company filing today. The world’s second-largest bottler of Coca-Cola drinks, CCH has 5% of its overall activity in Greece, and those factories will keep operating, according to the filing. But financial analysts interpreted the move as yet another bad omen for Greece, which is struggling through its 5th consecutive recession year and battling to stay in the eurozone. Stakeholders in CCH, which already has secondary listings in London and New York, will trade in their shares for shares of Coca-Cola HBC AG, set up in Switzerland by Kar-Tess Holding on Sept. 19.
More from A. Papapostolo of Greek Reporter:
The company would delist from the Athens Stock Exchange and then seek to re-enter it in a secondary listing. Its business activities in Greece, where it runs a corporate service centre, would not be affected, it said.
Coca Cola Hellenic shares were up 2.7 percent in Athens after the news, giving the firm a market value of 6.2 billion euros ($8.00 billion), three times the value of refiner Hellenic Petroleum, Greece’s second-biggest company in terms of capitalization.
The firm, which bottles Coke drinks in 28 countries including Russia and Nigeria, has consistently outperformed the general Athens index which had slumped to 20-year lows earlier this year as a result of the country’s debt crisis.
Foreign investors have been steadily reducing their investment in Greek stocks ever since the country was engulfed by a sovereign debt crisis in late 2009, leading to two EU/IMF-led bailouts and threats to downgrade the status of the local stock market.
Deutsche Welle adds this:
Management said the production facilities themselves would not be affected, but the government stood to lose more than 20 million euros annually in tax revenues.
Greek Development Minister Costis Hatzidakis said he was not happy about the departure. “But I cannot dictate to each company what moves it should make or not,” he said. “What we can do beyond the fiscal measures is continue down the road of structural reforms.”
Earlier this week, the Greek dairy giant FAGE announced it was moving its headquarters to Luxembourg, also in search of lower and more predictable taxes and a low-volatility corporate base.
And, to close, a bit of good news
Though we have to say that the measure looks a lot like an attempt to placate one of the groups currently in the gunsights of the Troikarchs.
Christmas bonuses for the current year will be dispursed to pensioners in the public sector Labor Minister Yiannis Vroutsis stated on Antenna channel on Friday.
At the same time Vroutsis noted that the government’s new reforms regarding state pensions will come into effect next year.
Public sector pensioners will receive 400 euros each at the end of 2012. Christmas bonus payments made to 450,000 state pensioners will cost public coffers some 180 million euros.