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Author Topic: Greek economy implodes further (Q2)  (Read 1022 times)
Tender Branson
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« on: September 10, 2011, 10:32:05 am »
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ATHENS—Greece's economy sank deeper into recession in the second quarter than previously forecast, with gross domestic product contracting by 7.3% on the year, data from the Hellenic Statistical Authority showed Thursday.

Plunging domestic consumption was mostly responsible for the steep contraction rate in a trend likely to continue in the coming months, economists said, and offsetting gains for a strong year from the country's tourism sector.

Last month, a flash estimate provided by the statistics agency showed that Greece's annual economic output contracted 6.9% in the second quarter, compared with a decline of 8.1% in the first three months of the year.

"The difference of 0.4% in the GDP growth rate, compared with the flash estimate announced on Aug. 12, is due to the availability of new data, mainly on the turnover in the services sector," the agency said in a statement. The figures are nonseasonally adjusted.

Total economic activity in Greece in the April-to-June period reached €40.7 billion ($56.8 billion), down from €43.9 billion in the same period last year, according to the statistics agency. Investment activity for the same period plummeted 17.9%, it added.

Consumption, a key component of the Greek economy, fell 6.8% on an annual basis, easing from a drop of 7.4% in the first three months of the year. But economists say that the slightly smaller decline in second quarter consumption may be short lived and attributed it to the timing of Easter holidays this year that straddled the first and second quarters.

With consumers bracing for the implementation of further austerity measures, promised in exchange for a fresh bailout to Greece, spending will continue its downward course.

"The tourism sector will provide support to the economy in the third quarter, but it is insufficient to offset an accelerated drop in domestic demand," said , senior economist at National Bank of Greece.

In late June, Greece introduced a raft of tax rises and spending cuts as part of a five-year budget plan for 2011-2015 in exchange for a fresh aid package from the European Union and International Monetary Fund.

The latest austerity plan followed fiscal measures gradually adopted since May 2010 when the country received an initial €110 billion EU/IMF bailout to stave off default.

With many reforms taking effect this month, Greek public and private sector workers launched Thursday a barrage of strike action that is set to continue in coming days.

Taxi owners walked off the job for 24 hours, opposing the deregulation of their profession, while doctors joined dentists in staging the first day of a 48-hour walk out in opposition to health sector changes. Tax office employees and customs officials are also scheduled to strike on Monday and Tuesday over cuts to benefits.

Additionally, Athens garbage collectors will launch 48-hour rolling strikes starting Monday and teachers will stay home on Sept. 22.

Finance Minister Evangelos Venizelos recently revised lower Greece's official economic forecast for 2011. The government now sees the economy contracting by 5.3% this year—against a previous forecast of a 3.9% decline.

Mr. Venizelos also acknowledged that the recession could continue into 2012, where previously the government was expecting an upturn.

Uncertainty over Greece's debt burden and deteriorating labor market conditions have knocked consumer sentiment to record lows.

Data showed Thursday that Greece's unemployment fell to 16% in June from 16.6% in May, but remained sharply above the rate of 11.6% a year earlier.

An estimated one million Greeks will be jobless by the end of this year, up from some 793,000 currently, Greece's private sector umbrella union GSEE said Thursday in a report.

http://online.wsj.com/article/SB10001424053111903285704576558112140424614.html
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« Reply #1 on: September 10, 2011, 11:40:25 am »
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Now that's a big surprise!

Didn't Heinrich Brüning successfully proofed in Germany from 1930-1932 that it is always a promising idea to put a economically struggling country on austerity and deflation?
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« Reply #2 on: September 10, 2011, 12:20:31 pm »
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Well, that's austerity for you. It's not surprising that one of the European countries with the best growth rate is Belgium, where they very luckily don't have a government that can implement austerity measures.
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« Reply #3 on: September 10, 2011, 01:44:08 pm »
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Well, that's austerity for you.

It has nothing to do with austerity, and everything to do with the musical chairs stopping in the debt/fraudulent government accounting game.
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« Reply #4 on: September 10, 2011, 03:01:27 pm »
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Well, that's austerity for you.

It has nothing to do with austerity, and everything to do with the musical chairs stopping in the debt/fraudulent government accounting game.

The word you're looking for is austerity - more concise.
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« Reply #5 on: September 10, 2011, 03:26:47 pm »
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Well, that's austerity for you.

It has nothing to do with austerity, and everything to do with the musical chairs stopping in the debt/fraudulent government accounting game.

The word you're looking for is austerity - more concise.

The Greeks have been fraudulently living beyond their ability to tax. They also appear to be unable to stop doing it, as the Greek people keep expecting Brussels to send them more money. As bad as things are now, they will get worse when the rest of Europe stops lending them money, which could happen any day now.  If Merkel's government collapses there will be a European paralysis for a couple of months, and there is a good chance that whatever government is elected will have pledged itself to no longer prop up the PIIGS.  It's only a couple of years at most before we see the reemergence of at least one and maybe both of the drachma and the mark.  Either Greece is kicked out of the Eurozone for its inability to meet the conditions or Germany decides it's no longer go be part of the farce.
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« Reply #6 on: September 10, 2011, 03:41:19 pm »
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The Greeks have been fraudulently living beyond their ability to tax. They also appear to be unable to stop doing it, as the Greek people keep expecting Brussels to send them more money. As bad as things are now, they will get worse when the rest of Europe stops lending them money, which could happen any day now.  If Merkel's government collapses there will be a European paralysis for a couple of months, and there is a good chance that whatever government is elected will have pledged itself to no longer prop up the PIIGS.  It's only a couple of years at most before we see the reemergence of at least one and maybe both of the drachma and the mark.  Either Greece is kicked out of the Eurozone for its inability to meet the conditions or Germany decides it's no longer go be part of the farce.

Actually it is Germany which is to blame for the troubles, not Greece.
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« Reply #7 on: September 10, 2011, 05:12:34 pm »
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Well, that's austerity for you.

It has nothing to do with austerity, and everything to do with the musical chairs stopping in the debt/fraudulent government accounting game.

PX actually made a point of the government being unable to constitutionally cut some benefits to government employees.
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« Reply #8 on: September 10, 2011, 05:28:26 pm »
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Actually it is Germany which is to blame for the troubles, not Greece.

True, Germany should never agreed to having Greece be in the Eurozone, but they foolishly thought they could trust Greek politicians to be at least somewhat honest.
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« Reply #9 on: September 10, 2011, 05:49:07 pm »
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Well, that's austerity for you.

It has nothing to do with austerity

Declining consumption as the government takes money out of the pockets of the Greek people. Hmm.
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« Reply #10 on: September 10, 2011, 07:15:04 pm »
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It's a bit of everything, really. Worth pointing out that the first 'rescue' package obviously made the situation a lot worse. But then it relied on insane troll logic, so, you know.
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« Reply #11 on: September 10, 2011, 09:01:48 pm »
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Their national government cooked their books so well for so long that they put Enron to shame. Throw in high taxes that almost everybody evaded and continues to evade like Leona Helmsley, and what did you think would eventually happen?

Austerity is not the catch-all phrase for what is happening in Greece and why. An actual description of what happened and why they are feeling the pain right now would be "unaccountability in a government run by crooks who conducted reckless government spending/borrowing and fraudulent accounting for far too long."
« Last Edit: September 10, 2011, 09:04:14 pm by Politico »Logged

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« Reply #12 on: September 10, 2011, 09:29:27 pm »
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It's a bit of everything, really. Worth pointing out that the first 'rescue' package obviously made the situation a lot worse. But then it relied on insane troll logic, so, you know.

Care to expound on that logic? IMF packages have worked for a lot of countries, and in theory internal devaluation is a sound idea, the problems is in the details of implementation.
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« Reply #13 on: September 10, 2011, 09:51:13 pm »
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I mean the logic that results in giving a country a series of loans to solve a debt crisis. I don't understand the details; maybe it's a brilliant idea that has just been a miserable failure because of some other reason, or perhaps I'm grossly misunderstanding things. Perhaps I've been mislead by sensationalist articles or something (not sarcasm; this is absolutely possible). But... aren't there dodgy adverts on telly for that kind of thing? Consolidate all your existing loans into one manageable monthly repayment and such wonders.
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« Reply #14 on: September 10, 2011, 10:23:38 pm »
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Well I wouldn't say you're grossly misunderstanding things. After all, the sensationalist articles turned out to be right and the pencil pushers at impressive sounding institutions with impressive sounding titles turned out be disastrously wrong. The logic to the plan was the Greeks were supposed to do was fix themselves up, get austere, really quickly. The loans were just there to tide them over until they did, like a band aid. The loans were never meant to be the solution in themselves. Unfortunately the Greeks weren't able to reform quickly enough. The depth of the problem and needed adjustment was severely underestimated.
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« Reply #15 on: September 11, 2011, 05:09:18 am »
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Actually it is Germany which is to blame for the troubles, not Greece.

True, Germany should never agreed to having Greece be in the Eurozone, but they foolishly thought they could trust Greek politicians to be at least somewhat honest.

No, Germany is a prime example - along with China and a few others - of the problem.  They pursue destructive, deflationary 'competitive' policies.  They should be increasing their wages and government spending to pull their fair share.. instead they're little more than pickpockets.
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« Reply #16 on: September 11, 2011, 05:17:36 am »
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Actually it is Germany which is to blame for the troubles, not Greece.

True, Germany should never agreed to having Greece be in the Eurozone, but they foolishly thought they could trust Greek politicians to be at least somewhat honest.

No, Germany is a prime example - along with China and a few others - of the problem.  They pursue destructive, deflationary 'competitive' policies.  They should be increasing their wages and government spending to pull their fair share.. instead they're little more than pickpockets.

Pickpockets? Surely, you cannot seriously presume to impose such silly scout morality on the world economy?

----------------

Al, I guess the difference between your scam analogy and this (at least in theory) is that this is like the state stepping in with debt relief for someone going into personal bankruptcy. If Greece were to borrow on the market they would have to pay the kind of interest rates you pay to the scammers you're thinking of. Borrowing from EU/IMF etc they pay a lot less.
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« Reply #17 on: September 12, 2011, 05:31:46 am »
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The problem is twofold.

1)The recession is much deeper than anticipated even by IMF/ECB, thus causing a collapse in revenues.

2)The government is exhausted after waging for two years a brutal war on two fronts: an external one with our debtors and an internal one against a unified and stringent opposition (where you can barely distinguish conservatives from communists, they use the same pro-bigger government rhetoric) with the help of the most reactionary and statist elements of PASOK.

There are many people in the government, fortunately Papandreou is among them, that refuse to capitulate and continue to fight for reforms, ignoring the (often violent) protestations of powerful unions. But as long as some parts of our society sabotage them (like our IRS agents who refuse to collect taxes or make audits because their wages have been cut) it will be very hard to stay afloat without external help.     
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« Reply #18 on: September 12, 2011, 06:45:18 pm »
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The problem is twofold.

1)The recession is much deeper than anticipated even by IMF/ECB, thus causing a collapse in revenues.

2)The government is exhausted after waging for two years a brutal war on two fronts: an external one with our debtors and an internal one against a unified and stringent opposition (where you can barely distinguish conservatives from communists, they use the same pro-bigger government rhetoric) with the help of the most reactionary and statist elements of PASOK.

There are many people in the government, fortunately Papandreou is among them, that refuse to capitulate and continue to fight for reforms, ignoring the (often violent) protestations of powerful unions. But as long as some parts of our society sabotage them (like our IRS agents who refuse to collect taxes or make audits because their wages have been cut) it will be very hard to stay afloat without external help.     

Like most things this really seems to come down to institutional strength and legitimacy. I think Papandreou pretty much has it together in terms of what has to be done, but unless Greek society comes together to get it done, it's not going to work.

The kind of reforms that need to happen in Greece cannot, imo, be done without solid support, at least in the political establishment. Sweden was, roughly speaking, about as fcked as Greece is now back in the 90s. The reforms that were made to prevent a repeat (which are helping us now) had support from both blocs (not the silly ex-Communists, but they don't matter much) as well as the trade unions and such. Without that it would never have worked.

It seems to me that the Greek state is lacking some fundamental legitimacy among the Greek people. That's very much an outsider's observation which isn't based on much though.
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« Reply #19 on: September 12, 2011, 09:05:33 pm »
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The Greeks have been fraudulently living beyond their ability to tax. They also appear to be unable to stop doing it, as the Greek people keep expecting Brussels to send them more money. As bad as things are now, they will get worse when the rest of Europe stops lending them money, which could happen any day now.  If Merkel's government collapses there will be a European paralysis for a couple of months, and there is a good chance that whatever government is elected will have pledged itself to no longer prop up the PIIGS.  It's only a couple of years at most before we see the reemergence of at least one and maybe both of the drachma and the mark.  Either Greece is kicked out of the Eurozone for its inability to meet the conditions or Germany decides it's no longer go be part of the farce.

Actually it is Germany which is to blame for the troubles, not Greece.
It's the Eurozone, not the Mittelbund.  France has just as much pull as Germany.  Making Germany out as some sort of bogeyman is both trite and ignorant.
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« Reply #20 on: September 13, 2011, 09:38:39 am »
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The Greeks have been fraudulently living beyond their ability to tax. They also appear to be unable to stop doing it, as the Greek people keep expecting Brussels to send them more money. As bad as things are now, they will get worse when the rest of Europe stops lending them money, which could happen any day now.  If Merkel's government collapses there will be a European paralysis for a couple of months, and there is a good chance that whatever government is elected will have pledged itself to no longer prop up the PIIGS.  It's only a couple of years at most before we see the reemergence of at least one and maybe both of the drachma and the mark.  Either Greece is kicked out of the Eurozone for its inability to meet the conditions or Germany decides it's no longer go be part of the farce.

Actually it is Germany which is to blame for the troubles, not Greece.
It's the Eurozone, not the Mittelbund.  France has just as much pull as Germany.  Making Germany out as some sort of bogeyman is both trite and ignorant.

Well, it's an Opebo post so what do you expect? Tongue
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