Greece, six months after the bailout [updated]

Let's see what's going on in Greece, after it's been "saved" by the EU and the IMF. You will see clearly that not a single problem has been resolved, and that beside adding a lot to the debt burden of the country in order to make whole various banks and lenders which made the error of lending money to a insolvent borrower (Greece), things are far worse of now than they used to.
Dec. 15 (Bloomberg) -- Greek unions grounded flights, kept ferries docked at ports and shut down public services today to protest wage cuts as the government sticks to conditions of an international bailout.

Air-traffic controllers walked off the job, canceling all flights to and from Athens International Airport. Public transport workers, whose salaries are being cut by 10 percent under a bill approved early today in parliament, will work on and off between 9 a.m. and 5 p.m. to carry protesters to rallies.
 Let's be clear about one thing: striking and destroying even more an economy that has already been brought to its knees will only help make things worse. Those wages need to be cut, and people need to be laid off. That should have happened irrelevant of whether the country was bailed out or not.
In terms of our salaries, we are going back at least 20 years,” said Stamatis Klapsis, 52, who has worked as a stationmaster at a suburban Athens bus depot for 31 years. “They are taking us back to the Middle Ages.”
This just shows how much the compensation plans were generous and far from the reality of the productive capacity of these wagers.
While Prime Minister George Papandreou has reduced government spending and raised taxes, the reality of overhauling labor laws is biting hard in a country where the wage bill for state-owned employers often outstrips revenue. The Athens bus operator has 2,000 vehicles and three times as many workers to operate them, with salaries amounting to almost twice revenue, according to figures from the company and Finance Ministry.
Again, a majority of the employees need to be laid off, and salaries need to be cut. Most importantly, the government has to privatize all these businesses, as it doesn't have to carry this dead weight and tax 100% of the citizens in order to pay 3 times as many workers as there are bus drivers!
“You can tighten your belt up to a point and then you reach a point where fiscal austerity is self defeating and I think they’ve reached that point,” said Diego Iscaro, an economist at IHS Global Insight in London. “Now they really have to concentrate on these kinds of measures.”
This is simply not true. First of all, defaulting on the debt instead of accepting a bailout that just increased the amounts due by hundreds of billions was a far better solution: once the debt burden gone, taxes can be cut dramatically.
Other groups taking part in today’s strike include bank employees, doctors, teachers and employees from state-controlled Public Power Corp., which supplies electricity in the country of 11 million people. Taxi drivers will turn off their engines from 10 a.m. to 2 p.m.
This means that bank employees, doctors and all these other classes of workers are on government payroll? That's madness.
Bus, train and subway workers plan a 24-hour strike tomorrow, the third in a week since plans to decrease their wages were approved by the cabinet on Dec. 9.

[...] “We made a choice, a conscious choice to accept an agreement with a mechanism that we ourselves worked to realize,” Finance Minister George Papaconstantinou told parliament yesterday before the debate on further reductions to state-paid salaries. “When are we going to look in a mirror and see the reality and dare to make the changes needed?”
You made the wrong choice. But yes, please look into the mirror, and realize that it is still time to default, and to privatize.
Papaconstantinou pledged to get the deficit to 7.4 percent of GDP in 2011, down from 9.4 percent of GDP this year, and plans to save 800 million euros next year from state companies. Workers will keep their jobs by being deployed elsewhere.
These amounts are tiny drops in the ocean of debt that Greece is carrying. They should get a surplus of 10-15% during many many years just to be able to decrease the debt...
[...] About 89 percent of workers at state companies, known as DEKOs in Greece, will have wages reduced 10 percent because their monthly salaries exceed 1,800 euros, according to the bill yesterday. Gross wages will be capped at 4,000 euros a month.
The 1,082 employees at the Athens-Piraeus Electric Railways Company ISAP make an average 56,554 euros a year, almost three times the average wage at a private company, according to Finance Ministry figures. They operate one track from the capital’s port of Piraeus to the northern suburb of Kifissia.

The 11 most unprofitable state companies had combined sales of 1.5 billion euros in 2009 and losses of 1.7 billion euros, the ministry’s data show. Wage costs for the 11 employers totaled 1.2 billion euros in 2009, with 78 percent of income going to salaries.
 A company that makes losses year after year is due to go bankrupt. But when it's a state company, it just gets more and more money from the government to pursue a business that either has no future, or that it is very bad at conducting. But the company is never shut down, because the government would lose votes. That's implicit vote buying and corruption.
[...] The economy is forecast by the government to shrink 4.2 percent this year and 3 percent in 2011. Unemployment will jump to 14.6 percent next year from 12.1 percent this year.

“Right now we have a common enemy, those who are in government, the IMF and the EU,” said Klapsis, the stationmaster. The IMF “wherever they pass through is scorched earth, the same as fire. They leave nothing behind,” he said.
This is not news. Government and IMF and the EU have always been the enemy. It's high time people start to realize that. I posted about this several month ago:Enemy Public Number One: The Government.

[udpate] Here's a video of the riots in Greece which looks more like civil war than anything else.

No comments: