Aug
10

The Greek Economy Is On Respirator: 21% Unemployment And a 5 Year Long Recession – Impossible To Keep Athens In The Eurozone

2 Comments

By Paolo von Schirach

Related story:

http://schirachreport.com/index.php/2012/08/08/the-european-union-and-the-eurozone-within-it-are-not-like-the-usa-washington-would-have-to-bail-out-michigan-no-matter-what-germany-does-not-have-to-bail-out-greece-if-the-price-is-too-high/

August 10, 2012

WASHINGTON – I have argued in previous pieces (see link above) that the current 17 members strong eurozone will have to drop its weakest and most indebted members in order to stay viable as a monetary union. The optimists say instead that it is quite possible for the richer eurozone members led by Germany to keep providing loans and liquidity to the Southern members now going through a bad patch until they will be back on their feet and be once again capable to carry their own weight.

Greece in free fall

Well, I just do not think that this rosy scenario is possible. Recent Greek economic statistics reported in a WSJ piece, (Greek Unemployment a Record 23.1%, August 10, 2012), are truly horrifying. Indeed, Greek unemployment just hit 23.1%. (By comparison, consider that some think that America is headed towards terminal decline because its unemployment stays stubbornly at 8. 2%. If 8.2% is a disaster for America what is 21.1% for Greece?). As the WSJ reports, out of a total work force of about 5 million people, 1.15 million Greeks are out a job. Worse yet, youth unemployment is above 50%. Yes, that’s 50%.

More unemployment

And it gets even worse. In order to cut public spending and therefore its still massive debt, the Greek coalition government agreed with its EU-ECB-IMF creditors (“the troika”) to cut 150,000 public sector jobs by the end of 2015. This commitment includes eliminating at least 15,000 positions before the end of 2012. So, more misery added to disaster, assuming that the government will retain the political flexibility to shrink the bloated public sector without inviting social unrest and massive protests. Please remember that Greece has been in a recession for 5 years. The Greeks are really unhappy.

In all this, the small consolation for Athens is that Spain, the fourth largest eurozone economy (after Germany, France and Italy) has an even higher uenployment rate. So Greece is not the unemployment record holder.

Beyond rescue

Given this picture of economic and fiscal disaster, any plan to bring the weak eurozone members soon back into the fold, looks more and more like a dream. The eurozone was designed having in mind relatively wealthy countries run according to very strict fiscal rules of fiscal rigor and frugality. Well, the rules have been eroded up to the point of having been forgotten, while many Southern European countries are now incapable of generating enough wealth to stay ahead of their debt growth. 

Germany will not pay for ever

The notion that Germany, with the help of some more liquidity to be provided by Mario Draghi of the European Central Bank, will be able fix this mess any time soon is plain nonsense. Likewise, the notion that Germany and the other more affluent Northern Europeans will continue to subsidize the weaklings of the South essentially for ever looks economically and politically more absurd as the debt crisis picture stays the same or gets even worse.   

A new, streamlined eurozone

That said, at this point this becomes a political and leadership issue. It is really up to Germany and the other stronger members of the eurozone to take the lead and initiate a process that, however painful and full of uncertainty, should lead to a monetary union with fewer but reliable members.

The attempt to keep the current eurozone as is, no matter what (this the official policy to date) will turn out to be futile and it will further weaken Europe, leading it to a rapid demise. 

 

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Posted in Antonis Samaras Culture Democratic Capitalism Development Economy EU Fiscal Compact Europe European Debt Crisis European Identity Eurozone Featured Germany Greece Political Culture Public Debt Public Policy
2 Comments Posted by Paolo von Schirach

  • Ano

    Athens Archbishop Christodoulos said we deserved 9/11 (ISBN 960-252-007-8). On the Thursday before Easter Greeks chant pogrom inciting Beatitudes against “godslaying lawless Jews”in Greek, but change it to “Assemby of Jews” in English. They removed American Archbishop Iakovos because he was too American and Jerusalem Patriarch Irineos because he was too friendly with Israelis. Old witches who used to work at diners until they dropped now slip “Elder Protocols” and other terror claptrap in the pews. When I was growing up priests, would bathe, shave, wear pants – Robed, bearded, stovetopped priest is terror sympathist by definition. Greece was only euronation not to vote for 1947 Israel creation. In such time of war, we should insist that any public assembly of more than ten mandatorily be only in English! These heathen necromantic iconolaters have the nerve to ban Psalm 150 organs? If the Greek government did an Enron with its own books, and Greeks Trojan Horse their Greek taxes, what makes you think they pay the IRS? They go to Greece annually to tend their undisclosed accounts on soviet Cyprus. Notice the soviet spy money laundered Metsos disappeared with Cyprus complicity? Did Illinois Giannoulias, Florida’s Crist, California’s Angelides and New York’s Gianaris apply Greek budgeting techniques like Sarbanes Oxen? Greek Ponzi fourfold Eurodefecit boasts Trojan Horse Perfidy, Klephth Brigandage. Upset that industrious Albanians invaded their lazy, gungrabbing, babykilling homeland, the soviet-churched Greeks vindictively hire, house and promote illegals. As quakes render their homes disposable, Greeks are oblivious to the very concept of maintenance. Instead of blaming environmetalists for fires and socialists for deficits, jealousy driven soviet faith seeks scapegoats. Olympia Snowjob supports Obamacare and abortion because of her gangreen patriarch (Is Orthodox Christianity progressive? Michelle Boorstein Washington Post 11-4-09 Ecumenical Patriarch Bartholomew spoke about the spiritual imperative for nonviolence, universal health care and reducing consumption to help the environment.) Ancient Greeks reduced consumption to help the environment through infanticide and sodomy. Palamite Zealotes massacred Thessalonian aristocracy in preparation for Cantacuzene usurpation via hesychast hyperventilatory hallucination. This soviet socialism motivated Anatolian farmers to embrace Turks in the 1400s to avoid redistributative taxation and then for liberated mainlanders to migrate to Smyrna in the 1800s.

  • conroyt

    Paolo, the most difficult element of the solution is that the Greek Politicians would have to admit that the story they have told the Greek people for the past 40 years wasn’t true, i.e. that state socialism will generate wealth and will solve all of your problems in life. The Russians learned this and changed (to positive economic) result as have the Chinese and Indians. The hear the actions which the Greek (and other countries in Europe) politicians have taken described as “austerity” is ridiculous. While much has been voted on, almost no gov’t workers have been let go or restructured at the last reports I have seen. The only parts of the plan which get seem to implemented are the “soak the rich” tax increases, which is just one more extension of the 40-year lie. It is sad to see politicians rob the dignity of an entire country.