Tuesday, November 06, 2012

Greece and austerity economics

The latest step in German Chancellor Angela Merkel's destruction of Greece with the collaboration of the Greek political elite continues this week with a new round of destructive budget cuts in Greece that is being protested by a general strike.

Greek unions voice anger over austerity (Euronews 11/06/2012):

John Psaropoulos in The New Athenian reports on the latest austerity measures in Greek Coalition Unleashes Hurricane Austerity 11/05/2012 and Austerity Bill Brings Changes to State, Pensions, Economy 11/06/2012. In the latter he writes:

Greece is pledging to cut billions of euro from public spending over two years in a massive austerity bill tabled in parliament late on Monday night. It goes to the vote at midnight on Wednesday, in what may be a close contest. Should Greece fail to approve the measures, it would not claim a 31.5 billion euro bailout instalment and run out of money to pay state salaries and creditors before the end of the year.

One coalition partner, Democratic Left, has said its 16 MPs will not vote in favour of the measures. Three MPs from another partner, the socialist Pasok, have said they are against the measures. That could leave the government with a majority of just 157 votes in the 300 seat parliament, down from its nominal bloc of 176. Meanwhile unionists and opposition parties are trying to shake those crucial seven seats out of the government camp.
But they are also proposing growth measures. Or rather, the cosmetic fakery that passes for growth measures in Angie-nomics:

When they came to power last June, the conservatives said that they wanted to emphasise growth and jobs alongside fiscal discipline. Cost cuts alone, they said, were driving Greece deeper into recession.

Accordingly this bill contains provisions that build on previous attempts at liberalisation, particularly in tourism, where Greece owes an estimated one fifth of its economy. Some seem arcane by the standards of a Western economy. For instance, the bill would allow hotels to operate airport courtesy shuttles for the first time. It would also allow car rental companies to sell day-long rentals with drivers, opening up the touring market to them. Both moves are at the expense of professional taxi drivers, who have also tried to prevent the government from allowing unlimited taxi licenses.
Karolina Tagaris and Lefteris Papadimas report for Reuters (Greeks strike over spending cuts before crucial vote 11/06/2012):

The parliamentary vote on Wednesday is the biggest test yet for the government of Prime Minister Antonis Samaras, which needs victory to secure aid from foreign lenders but has failed to convince its smallest coalition partner and the public to back the reforms.

The strike, called by Greece's two biggest labor unions representing half of the four million-strong workforce, brought public transport to a virtual standstill and shuttered schools, banks and local government offices.

A crowd of about 16,000 protesters - fewer than is usual during Greece's frequent strikes - gathered outside parliament in Athens, waving flags, beating drums and chanting "People, don't bow your heads!" and "This strike is only the beginning".

It was the third major walkout in two months against the package of public spending cuts and reforms making it easier to hire and fire workers, which many Greeks feel penalize the poor and spare a wealthy elite.
The presumably "feel" that way because that's what these austerity measures are doing in reality.

And there's a key meeting on the Greek bailout/austerity package is also coming up next week, as Patrick Donahue and Marcus Bensasson report for Bloomberg News (Greece Faces Cliffhanger Vote as General Strike Begins 11/06/2012):

European Union Economic and Monetary Affairs Commissioner Olli Rehn, speaking at a meeting of Group of 20 finance chiefs in Mexico City, said yesterday that a deal must be made at a meeting of EU finance ministers in Brussels on Nov. 12. A European G-20 official, speaking before Rehn and on condition of anonymity, cast doubt on the prospects for that deadline, saying officials may fall short.

Greece is under pressure to make more efforts to rein in its budget deficit and deregulate the economy. While German Chancellor Angela Merkel last month travelled to Greece to signal her willingness to keep Greece in the euro, the country is still struggling to hit its debt reduction targets amid a combination of Greek political resistance to more cuts and economic collapse. ...

The European official who questioned the Nov. 12 target and spoke on condition of anonymity because the negotiations aren’t public said next week’s Brussels meeting will be a step in the process. A package deal has to include both prior actions by the Greek government on fiscal and economic measures and an agreement from creditors on filling the country’s finance gap and making debt sustainable. A list of options is being reviewed, the official said.

“We would need a combination of elements,” Rehn said.
November is going to be an important month in austerity economics and the fight against it in both Europe and the United States.

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