Athens burns as Greece struggles to implement spartan budget
Athens, reputed to be the origin of democracy, is in the 21st century a pariah of the worst extremes of what government by the welfare state can do for an economy. Civilization has ground to a halt as as the irate, impoverished population spasms in protest of reality.
The hospitals and transit systems that ideally operate at a constant hum in the background of a functioning society run on skeleton crews or entirely abandoned as workers strike in a desperate effort to preserve their wages. Riots have destroyed some of the most historic buildings in Athens; the mobs looted 150 businesses and set fire to another 48. Over a hundred each have been injured or thrown in jail. The police themselves are out of tear gas and have asked for more supplies to be brought. No word on whether or not the money exists to pay for them, or if chemical weapons would be considered a charitable donation in this instance. It’s only a concern because the ATM’s in the city center are sitting empty. What a headache for a country that has literally run out of Aspirin and other basic medications as a result of government price controls!
The failure of Greece’s socialist government to allow people to provide for themselves has become a human tragedy. The country’s economy has shrunk by 15% over the past three years, and over one-fifth of the adult population is currently unemployed. Not at all coincidentally, suicide has gone up 40% over the last year.
Most painfully, children are literally being abandoned in the streets as workers’ wages shrink as a result of the prolonged economic depression.
From the Daily Mail:
Maria was forced to give up her eight-year-old daughter Anastasia after losing her job.
She looked for work for more than a year, having to leave her child at home for hours at a time, and lived off food handouts from the local church.
She said: ‘Every night I cry alone at home, but what can I do? It hurt my heart, but I didn’t have a choice.’ She now works in a cafe but only make £16 per day and so cannot afford to take her daughter back.
Anarchy is as-yet too strong of a word for the situation, but it is becoming a distinct possibility as the Greek Parliament is torn apart by the opposing forces of eurozone fiscal interests and popular will.
The “troika” formed by the EU, European Central Bank, and IMF has already rejected one austerity proposal. Greece is seeking its second bailout in less than two years, this one worth $170 billion. Few structural changes were made after the last handout from Brussels, and the European elite have become skeptical that a second debt swap will be any more effective in rescuing Greece from its economic death spiral. The Prime Minister of Luxembourg said on the issue, “There is no disbursement before implementation [of reforms]”. The EU’s wealthy nations as well as private bondholders are angry about the losses they will face in any deal that is struck, and are now subtly pushing Greece to drop its usage of the Euro.
In any case, the citizens of Greece now feel manipulated and insulted as their fates remain in the hands of EU bureaucrats. The troika is making policy demands and passing them on to the country’s actual elected officials. Those demands include painful tax hikes and spending cuts. Few are surprised that measures like a 22% cut in the monthly minimum wage or mass layoffs of civil servants have led to a near-revolt. Support for the austerity budgets is so weak, that the troika has demanded future sessions of Parliament be legally bound to continue their implementation.
The pressure on Parliament to find a minimally painful solution to the crisis has proven toxic. 43 representatives who refused to go along with the austerity plans were expelled by their parties and replaced. Others effectively voted ‘present’ on the reform package. It’s an unsustainable level of turnover and dysfunction. The Parliament must approve a deal acceptable to all parties in time to make its payments on the debt the country has already accumulated in time for the March 20 deadline, or a default will occur. Whether or not the embattled Greek government could survive such an event is uncertain.
And the possibility remains that all of this may only be delaying the inevitable. Greece’s economy remains mired in a depression, with no signs of recovery to be found. The country already has some of the highest taxes in Europe, and further hikes will not make its business climate more competitive. The burden of making payments on a debt that totals 160% of GDP has already pushed Greece to the brink of default twice.
A third bailout appears to be an impossibility. Portugal, Ireland, Italy, and Spain also have government debts that far outsize their actual economies. The troika is well aware that any one of those nations could be next to come to the table and uncomfortable with the precedent that has been set. If Greece cannot find a way to reduce its government’s obligations and debt this time, there may be no way out other than the pain associated with a total currency reset.