Situation Update

by Greek Reporter

Where does one start? There are so many things, big or small that have happened.

We are a few days away from the implementation of yet another austerity package. Or better phrased, desperate internal devaluation measures packaged as austerity. Of the Troika 10 commandments all preach the Devaluation. Which is killing the people, the economy and the numbers.

You see the method is surmising on a particular performance of the Greek economy. That curtailing public spending and revenue increase by taxation do not affect the Greek GDP. But they have been proven wrong as the structure of the Greek economy returns 94% of the public sector salaries to the state through recurring state revenues (VAT etc) as money circulates around. And taxation –see it as money removed from consumption- lowers the GDP by a factor of 2.

In simple terms while the state may gain X amount of Euros by taxing, it loses 2x as much over time.

Greek Debt Prediction vs Reality
Greek Debt Prediction vs Reality

And it is about the numbers, because –right or wrong- the governments, the markets and even Economic Theories alike, all use the Debt to Gross Domestic Product ratio as an index of a sustainable economy.

More simply put, the Greek dept started as 125% of the GDP in 2009. It has skyrocketed ever since, despite the savior advertised Government-Troika measures. There is a term for this situation and it is called recessive spiral.

Greek Economic Data

Data from Khan Academy

But What about the People?

They are locked and squashed in a vice. One jaw is the recession that limits their income. Call it unemployment, call it decreased sales and revenues, call it whatever. The pushing jaw is the ever rising cost of living. While inflation is not yet a problem, it is the taxation that has squashed the family income.

The latest government fancy is increasing the heating oil tax (for a total increase of 100% in the last two years). Assuming that one has a house fitting to his income, there are regions in Northern Greece that will take almost an entire salary to heat. And as inside info, the number of people paying their taxes has dwindled this month. They would rather heat their children even if they get in trouble with the IRS that threatens with foreclosures of their homes. And what increase in revenues can a state accomplish when heating oil demand drops at 90% in response to a rise in taxation by 40%?

In fact speaking of percentages is worthless anymore. We use “paychecks” instead. If past year’s cuts cost people 1-2 paychecks, this year will cost them another two.

People are numb. You can see it in the way they drive. You can see it in the acts of despair, like suicides that are not reported by the media anymore. The truth comes out by the EMTs occasionally. For some time now, they are having incidents in every shift. This is a humongous change for the country of Zorba the Greek. Antidepressants sell faster than candy.

But even bleaker is the rise of the Golden Dawn. Once Nazi extremists of a 0.3% voting strength, now they have worn the patriotic sheep’s hide and are actively recruiting people. Word in the street is that GD’s power is above 20%. Shocking as it may be, some politicians find solace to the fact that GD works as a venting valve of the social exasperation for the establishment. I tell you not. GD followers are high predators in the food pyramid and are involving even more followers. Ponder this. Anguish and anger have even pushed some Greek Army experts in the GD ranks. You DO NOT feed the monster. Ever!

I will end this bleak report by another critical degeneration of the Greek Democracy. It is the degradation of civil and employment constitutional rights. Everything is sacrificed on the troika demands. It started with the parliament relinquishing Greek sovereignty (decisions on economics are dictated from abroad) to be ratified with a new EU constitution soon. Then it proceeded to abolish work rights and cut retirement benefits. (The state has been getting full payment for the state-sponsored 401K funds and now pays less than the nominal, an act the Greek accountability office has termed it as unconstitutional).

And now the government accomplices have been openly harassing the lone journalists that speak the ugly truth. You might heard of one, but there have actually been four this week, all whom they spoke on the same issue. One (of the several) lists of tax evaders that have been hiding revenues in foreign accounts. And those that were elected to change things are catering for their fundraisers once more by circulating and editing the lists under the table for 3 years now and doing nothing instead.

Puzzling this together I fear that this monstrosity of a government (a Conservatives, Socialists and Liberals conglomerate) will soon have to decide if it will step down or take a blood bath.

A Springier View of Things to Come

Bus Stop Kiosk
Bus Stop Kiosk

A week ago I happen to see school girls painting the bus stop kiosk in the picture.

And this is just a little thing happening. For two years now the Greek churches have collected offers of food in the major supermarkets. It is cooked and discreetly taken to families in need. Clothes, toys and infant accessories are donated too, and volunteers take care of the lonely elders in bed. And hardly a weekend goes past without volunteers cleaning monuments and parks.

As people are binding together a new Greece is rising, maybe too late and maybe at a great cost. But still, a better one.

Greek Reporter - 6 November, 2012

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