Tag Archives: Greek bailout

The big payback

Christine Lagarde may not have wanted to imply that Greeks were suffering payback for years of living large and that the world should have more sympathy for people in Niger because they’re much worse off and at least they pay their taxes, but that’s certainly what the International Monetary Fund managing director appeared to suggest in her interview with The Guardian on Saturday.

A few hours later, and after she had been condemned by Greek leaders and thousands of people posting on her Facebook page, Lagarde clarified her comments: she was “very sympathetic to the Greek people and the challenges they are facing.” She added that a comment regarding widespread tax evasion in Greece was a reference mainly to “the most privileged.” By then, though, the damage had been done.

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Greece, a country left with no good choices

I took part in a radio discussion on Thursday with KCRW presenter Warren Olney. The subject was: Greece, a country left with no good choices.

The panel included Russel Shorto, the author who wrote a very good piece about Greece called ‘The Way Greeks Live Now’ for the New York Times Magazine: http://www.nytimes.com/2012/02/19/magazine/the-way-greeks-live-now.html?_r=1&scp=1&sq=Russel%20Shorto&st=cse

The other two participants were Charles Wyplosz from the International Center for Money and Banking Studies and Jennifer McKeown of Capital Economics.

It made for a very interesting discussion both with regards to the limited economic options Greece has but also about the country’s tarnished image.

Please listen if you get the chance:

http://www.kcrw.com/news/programs/tp/tp120223greece_a_country_lef

Will anyone be left standing at the end of Greece’s marathon?

Illustration by Manos Symeonakis

Of all the European leaders, Economic Affairs Commissioner Olli Rehn is perhaps the last you would expect to have a finger on society’s pulse. Yet it was the Finnish technocrat who produced the most apt analogy at the end of an epic Eurogroup session that ended on Tuesday morning with eurozone finance ministers agreeing a new bailout for Greece.

“In the past two years and again this night, I’ve learned that ‘marathon’ is indeed a Greek word,” Rehn told reporters. There seemed to be an exquisite timing to the marathon reference, even though most journalists were too bleary-eyed at that point to appreciate it. Marathon can refer to one of two things: one of the most decisive battles in history, in which the ancient Greeks repelled the threat of the Persians and a disastrous future, or the long-distance race which marks the lung-busting effort of messenger Pheidippides to inform the Athenians of victory over the invading army.

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They all fall down

Collapsing buildings seem to be a good metaphor for Greece during these dark days. A number of edifices in Athens are likely to be demolished after being gutted by fire during rioting on Sunday night. The vandalism and violence destroyed what was a large and peaceful demonstration against the austerity measures in Greece’s latest loan agreement with the European Union and International Monetary Fund. The deal was approved by MPs but the turmoil this process caused within Greece’s parties emphasized that the country’s political structure is also crumbling.

While the expulsion of 43 MPs from PASOK and New Democracy for not approving the bailout was the most visible sign of a political system that is reaching the end of its days, the last week laid bare much greater inadequacies. No matter how many lawmakers are jettisoned from this hot air balloon, it won’t get off the ground again.

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Choose any color you want

There are many reasons why you might not want to be George Papandreou, Antonis Samaras or Giorgos Karatzaferis, but this weekend in particular the leaders of three parties in Greece’s coalition government find themselves in the most unenviable of positions.

They are due to hold talks with Prime Minister Lucas Papademos on the measures that Greece will have to implement to receive further loans from the eurozone and the International Monetary Fund. But the leaders of PASOK, New Democracy and the Popular Orthodox Rally (LAOS) are walking into a lose-lose situation.

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Ghost dog

Illustration by Manos Symeonakis

We all needed a moment or two to recover from Development Minister Michalis Chrysochoidis’s “the dog ate my memorandum” moment this week, but now the dust has settled it’s clear that regardless of whether it was a monumental gaffe or a misguided tactical move, the PASOK official’s plea of ignorance encapsulated the dilemma that’s been plaguing Greece throughout this crisis.

Hovering between confusion and collapse, Greece is suffering from the most extreme state of schizophrenia as it flits from all-out opposition to hands-down acceptance of the terms being attached to the emergency funding being provided by the European Union and International Monetary Fund.

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Caution: Falling wages

Illustration by Manos Symeonakis

So this is what it’s come down to. The negotiations over wages in Greece due to take place over the next few days will be a defining moment of this crisis, not because a reduction in the minimum wage or cuts to private sector salaries will make a huge difference to the economy but because it is a test of whether those involved in the process – labor unions, employers, the government and the troika – are prepared to face the truth. It is test of whether someone is willing or able to step forward with some kind of coherent plan.

It doesn’t take long to think of several good reasons why reducing private sector wages during a deep recession seems a suicidal idea. They include the fact that it would further undermine withering domestic demand and likely precipitate the closure of more businesses on top of the 38,000 that have shut down over the last two years. The more fiscally minded might point out that lower wages means lower tax revenues, which has a heightened relevance at the moment given that recent figures showed Greece raised 50 billion euros in revenues in 2011 compared to 50.8 in 2010 despite imposing a raft of new taxes.

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