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Laura

Tensions Rise In Greece As Austerity Measures Backfire

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Unemployment 'up to' 70%. That reads like a sale at Comet.

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.

The feast of the Assumption of Mary on Aug. 15 is the high point of summer in the Greek Orthodox world. Here in one of the country's many churches, believers pray to the Virgin for mercy, with many of them falling to their knees.

The newspaper Ta Nea has recommended that the Greek government adopt the very same approach -- the country's leaders have to hope that Mary comes up with a miracle to save Greece from a serious crisis, the paper writes. Without divine intervention, the newspaper suggested, it will be a difficult autumn for the Mediterranean state.

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

Nikos Meletis is neatly dressed, and his mid-range car is clean and tidy. Meletis used to earn a good living at a shipbuilding company in Perama, a port opposite the island of Salamis. "At the moment, I'm living off my savings," the 54-year-old welder says, standing in front of a silent harbor full of moored ships.

Meletis is a day laborer who used to work up to 300 days a year; this year he has only managed to scrape together 25 days' work so far. That gives him 25 health insurance stamps, when he needs 100 in order to insure himself and his family -- including his wife, who has cancer. "How am I supposed to pay for the hospital?" Meletis asks. Unemployment benefits of at most €460 ($590) per month are available for a maximum of one year -- and only if he can produce at least 150 stamps from the past 15 months.

There's hardly a worker in the shipbuilding district of Perama who could still manage that. Unemployment in the city 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.

Perama is certainly an unusually extreme case. But the shipyards' decline provides a telling example of the Greek economy's increasing inability to compete. 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

Prime Minister George Papandreou's austerity package has seriously shaken the Greek economy. The package included reducing civil servants' salaries by up to 20 percent and slashing retirement benefits, while raising numerous taxes. The result is that Greeks have less and less money to spend and sales figures everywhere are dropping, spelling catastrophe for a country where 70 percent of economic output is based on private consumption.

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.

Things aren't any better in the smaller towns. Chalkidona was, until just a few years ago, a hub for trucking traffic in the area around Thessaloniki. Two main streets, lined with fast food restaurants and stores catering to truckers, intersect in the small, dismal town. Maria Lialiambidou's house sits directly on the main trucking route. Rent from a pastry shop on the ground floor of the building used to provide her with €350 per month, an amount that helped considerably in supplementing her widow's pension of €320.

These days, though, Kostas, the man who ran the pastry shop, who people used to call a "penny-pincher," can no longer afford the rent. Here too, a huge "Enoikiazetai" banner stretches across the shopfront. No one wants to rent the store. Neither are there any takers for an empty butcher's shop a few meters further on.

A sign on the other side of the street advertises "Sakis' Restaurant." The owner, Sakis, is still hanging on, with customers filling one or two of the restaurant's tables now and then. "There's really no work for me here anymore," says one Albanian employee, who goes by the name Eleni in Greece. "Many others have already gone back to Albania, where it's not any worse than here. We'll see when I have to go too."

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.

The country's unemployment rate makes this trend particularly clear. In 2009, it was 9.5 percent. This year it may rise to 12.1 percent and economists expect it to reach 14.3 percent in 2011. Those, though, are only the official numbers, which were provided by Angel Gurría, secretary general of the Organisation for Economic Co-operation and Development (OECD). The Greek trade union association GSEE considers those numbers far too optimistic. It considers 20 percent to be a more likely figure for 2011. This would put the unemployment rate as high as it was in 1960, when hundreds of thousands of Greeks were forced to emigrate. Meanwhile, purchasing power has fallen to its 1984 level, according to the GSEE.

'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. His friends, gathered in a small cafeteria on the pier in Perama, are gradually growing more vocal. They are all unemployed, desperate and angry at the politicians who got them into this mess. There is no sympathy here for any of the political parties and no longer any for the unions either.

"They only organize strikes to serve their own interests!" shouts one man, whose name is Panayiotis Peretridis. "The only thing that interests me anymore is my daily wage. A loaf of bread is my political party. I want to help my country -- give me work and I'll pay taxes! But our honor as first-class skilled workers, as heads of families, as Greeks, is being dragged through the dirt!"

"If you take away my family's bread, I'll take you down -- the government needs to know that," Meletis says. "And don't call us anarchists if that happens! We're heads of our families and we're desperate."

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."

Edited by Laura

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Not nice, but when the money runs out and the debt is maxed out what alternative is there but to stop spending?

The UK faces the same issue.

Austerity is not a "choice" or a "policy" it's an inevitability

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The feast of the Assumption of Mary on Aug. 15 is the high point of summer in the Greek Orthodox world. Here in one of the country's many churches, believers pray to the Virgin for mercy, with many of them falling to their knees.

maybe they need to get down on their knees to the IMF instead

or maybe they need to tell them to clear off

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Not nice, but when the money runs out and the debt is maxed out what alternative is there but to stop spending?

The UK faces the same issue.

Austerity is not a "choice" or a "policy" it's an inevitability

Agreed 100%

coming here soon, unfortunately.

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they are in the shit.

The bailout and austerity plan was doomed to fail since the beginning. This is an example of a cure which kills the patient before the illness.

They should have left the Euro, or not fiddled the figures to join in the first place and squirrelled the funds away when they came. a bit like South Italy.

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maybe they need to get down on their knees to the IMF instead

or maybe they need to tell them to clear off

thats the way to go forward but won't happen at the mo.

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Not nice, but when the money runs out and the debt is maxed out what alternative is there but to stop spending?

The UK faces the same issue.

Austerity is not a "choice" or a "policy" it's an inevitability

I thought accepted HPC wisdom was we were going to print ourselves to hyperinflation?

I've been in my bunker for 4 frikkin years and I'm getting tired of the taste of beans...

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Perhaps someone thought recovering from bankruptcy was supposed to be easy? Of course it's hurting like f*ck, and of course it'll trash the place, but if they see it through they'll be ok.

Of course also they should be leaving the Euro and coming to terms with their creditors (because they can't have Euro denominated debt if they get out). Not getting out might make all their pain pointless.

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they are in the shit.

The bailout and austerity plan was doomed to fail since the beginning. This is an example of a cure which kills the patient before the illness.

They should have left the Euro, or not fiddled the figures to join in the first place and squirrelled the funds away when they came. a bit like South Italy.

What Bailout?

I thought they BORROWED some more money?

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Daily pay!! Presumably a one day contract. That would put the cat among the pigeons in the UK.

p-o-p

Bankers queuing up at the gates to see if there is anything for them that day?

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Oh... Greece! How are you... great party... Have you met Reality? Greece, this is Reality, Reality, meet Greece! I'll leave you to to chat. I've just introduced John to Yoko, and they are getting on SOOOO well, sure you two will as well. Reality, don't run away now as Britain has just turned up and you guys will just have SO much to chat about! Seriously, once you see Britain's bloated public sector and entrenched borrowing habits, you two are going to have a BALL! See you at the buffet!

I quote it in my signature, I'll say it again.

We can evade reality, but we cannot evade the consequences of evading reality.

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Perhaps someone thought recovering from bankruptcy was supposed to be easy? Of course it's hurting like f*ck, and of course it'll trash the place, but if they see it through they'll be ok.

Of course also they should be leaving the Euro and coming to terms with their creditors (because they can't have Euro denominated debt if they get out). Not getting out might make all their pain pointless.

If there is to be a startlingly bloody civil war anywhere soon, I think it will be in Greece. No shortage of enraged lefties there, which is the usual catalyst.

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I thought accepted HPC wisdom was we were going to print ourselves to hyperinflation?

I've been in my bunker for 4 frikkin years and I'm getting tired of the taste of beans...

I bet the quality of the air is not great either. I'd think twice about lighting a match if I were you....

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I bet the quality of the air is not great either. I'd think twice about lighting a match if I were you....

I have to do all my cooking on a primus stove - I've been burning hard currency to light it, 'cos it's worthless init.

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Daily pay!! Presumably a one day contract. That would put the cat among the pigeons in the UK.

p-o-p

I work in a Citizens Advice Bureau. I see many people on minimum hours contracts (ie they are only guaranteed X hours a week). Many of these would be equivalent to a days work per week but they have to turn up to just do maybe a couple of hours a day. Even worse are the people who "work" for agencies where they are not guaranteed anything and just have to hope the phone rings. These tend to be minimum wage jobs.

So th pigeon and cat have met already for many people in this poor part of a run- down industrial city

Edited by ong

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Ime, one of the problems that will make this crisis worse in Greece is that the Greeks just do not do the laws of economics.

I'm married to a Greek, I've lived and worked there, I speak the language fairly well, and I have a really special place in my heart for the people and the country, but I have to be honest -- Greeks tend to have this weird brain glitch when it comes to anything to do with money, commerce or business.

They just don't do supply and demand.

Greece is the only country I have ever know where if you can't sell something after 12 months, you put the price up. It's the only country I have ever known where you raise prices on a six month basis, regardless of demand or turnover.

It's the only place where people can get away with being in mortgage arrears for over two years and the only place where people will use any excuse for their empty restaurants, flats, shops - apart from the most obvious one, that the prices are too high. In Greece, businessmen will go bankrupt or wipe themselves out before they will lower prices.

You can see this mentality in that Die Speigel piece. Maria Lialiambidou's retail unit is empty, up for rent. The pastry man can't afford it anymore. But notice what Maria hasn't done, nor any of the other shops for rent on that strip. She hasn't lowered the rent. For if she had lowered the rent by enough, someone would have leased the retail unit -- myabe the pastry man wouldn't have left.

But, for some odd reason, Greeks just don't think like this. Instead, she will sit there with an empty property losing 350 euros a month, rather than renting it out for less and getting 150 euros a month, say.

It is a really common mentality in Greece, and it will cause a lot of problems now the economy needs to restructure.

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Greece is the only country I have ever know where if you can't sell something after 12 months, you put the price up. It's the only country I have ever known where you raise prices on a six month basis, regardless of demand or turnover.

Dissident junk, please allow me to introduce you to my very good friend: the United Kingdom Housing Market ;)

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Dissident junk, please allow me to introduce you to my very good friend: the United Kingdom Housing Market ;)

:D

But Greece does it with everything . Cheese, cars, clothes ...

I used to buy a block of feta every Friday from an old lady down the market. I swear, every week it went up 10 cents.

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Ime, one of the problems that will make this crisis worse in Greece is that the Greeks just do not do the laws of economics.

I'm married to a Greek, I've lived and worked there, I speak the language fairly well, and I have a really special place in my heart for the people and the country, but I have to be honest -- Greeks tend to have this weird brain glitch when it comes to anything to do with money, commerce or business.

They just don't do supply and demand.

Greece is the only country I have ever know where if you can't sell something after 12 months, you put the price up. It's the only country I have ever known where you raise prices on a six month basis, regardless of demand or turnover.

It's the only place where people can get away with being in mortgage arrears for over two years and the only place where people will use any excuse for their empty restaurants, flats, shops - apart from the most obvious one, that the prices are too high. In Greece, businessmen will go bankrupt or wipe themselves out before they will lower prices.

You can see this mentality in that Die Speigel piece. Maria Lialiambidou's retail unit is empty, up for rent. The pastry man can't afford it anymore. But notice what Maria hasn't done, nor any of the other shops for rent on that strip. She hasn't lowered the rent. For if she had lowered the rent by enough, someone would have leased the retail unit -- myabe the pastry man wouldn't have left.

But, for some odd reason, Greeks just don't think like this. Instead, she will sit there with an empty property losing 350 euros a month, rather than renting it out for less and getting 150 euros a month, say.

It is a really common mentality in Greece, and it will cause a lot of problems now the economy needs to restructure.

a government unable to feed them may refocus their gliches.

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We can evade reality, but we cannot evade the consequences of evading reality.

Unless you're Fred Goodwin of course, in which case the consequences of your delusions are paid by other people.

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To me, the economy seems even more illusory than the uk. I just dont see how the money in allows for the money out

And as for greek customers...

Edited by daiking

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  • 152 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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