Sunday, 15 May 2011

ειρήνη και αγάπη

Wall St Journal

ATHENS—A largely peaceful protest Wednesday by tens of thousands of Greeks against new government austerity measures was marred by violence in central Athens late in the day, when hundreds of youths wearing ski masks hurled water bottles, firecrackers and other objects at police, who responded with tear gas and pepper spray.

Still, the one-day protest was restrained by the standards of recent Greek actions. It came a year after a mass antigovernment demonstration turned deadly as unknown assailants firebombed a bank building, killing three workers.

"There have been 24 detentions and two police officers have been hurt," said police spokesman Panagiotis Papapetropoulos. "There was a small group of protesters that threw objects at police, and there was some use of tmaneargas, but the clash was fairly minor."

Police estimated a modest turnout in the capital of some 20,000 people, while organizers put the number at around 30,000. The protest was backed by a nationwide general strike that effectively shut down most government operations.

The strike, the second called this year by the country's two main umbrella unions, comes just days before the government is to present Parliament with €26 billion ($37.4 billion) in further spending cuts and tax increases to slash the budget deficit over the next five years.

"These neoliberal and barbarous policies, which are driving workers and society into poverty for the benefit of creditors and bankers, are taking us back to the last century," said public-sector union Adedy in a statement. "They must not pass!"

In May last year, Greece narrowly avoided default with the help of a €110 billion bailout from the European Union and the International Monetary Fund in exchange for measures to cut its bloated budget deficit and reform its economy.

The country has cut its budget deficit by about a third, to 10.5% of gross domestic product last year. New measures—expected to be outlined Monday—aim to bring the deficit to below 1% of GDP by 2015.

The measures will include some €15.6 billion in spending cuts, and €10 billion in new taxes. Many of the cuts would come from reduced wage costs in the public sector, cuts in operating expenses at state-owned enterprises, and lower defense and health-care spending.

Measures taken so far have weighed heavily on Greece's sputtering economy as reduced wages and pensions, along with higher taxes, have hit consumer spending, which accounts for about four-fifths of the economy. The country is entering its third year of recession after shrinking a worse-than-expected 4.5% last year, and with only a modest recovery expected later this year.

The Guardian

"Athens has failed its young people. It has nothing to offer them any more. Our politicians are idiots … they have disappointed us greatly," said Dikiakos, who will soon be joined by 10 friends who have also decided to escape the capital.

They are part of an internal migration, thousands of Greeks seeking solace in rural areas as the debt-stricken country grapples with its gravest economic crisis since the second world war.

"It's a big decision but people are making it," said Giorgos Galos, a teacher in Proti Serron on the great plains of Macedonia, in northern Greece. "We've had two couples come here and I know lots in Thessaloniki [Greece's second biggest city] who want to go back to their villages. The crisis is eating away at them and they're finding it hard to cope. If they had just a little bit of support, a little bit of official encouragement, the stream would turn into a wave because everything is just so much cheaper here."
Ironically, it is the medicine doled out under last year's draconian EU-IMF €110bn (£96bn) rescue programme, implemented to modernise a sclerotic economy, that has made their lot worse. Twelve months of sweeping public sector pay and pension cuts, massive job losses, tax increases and galloping inflation have begun to have a brutal effect. GDP is predicted to contract by 3% this year – making Greece's the deepest recession in Europe.

In Athens, home to almost half of Greece's 11 million-strong population, the signs of austerity – and poverty – are everywhere: in the homeless and hungry who forage through municipal rubbish bins late at night; in the cash-strapped pensioners who pick up rejects at the street markets that sell fruit and vegetables; in the shops now boarded and closed and in the thousands of ordinary Greeks who can no longer afford to take family outings or regularly eat meat.

"We've had to give up tavernas, give up buying new clothes and give up eating meat more than once a week," said Vasso Vitalis, a mother-of-two who struggles with her civil servant husband to make ends meet on a joint monthly income of €2,000.

"With all the cuts we estimate we've lost around €450 a month. We're down to the last cent and, still, we're lucky. We've both got jobs. I know people who are unemployed and are going hungry. They ask family and friends for food," she sighed. "What makes us mad is that everybody knew the state was a mess but none of our politicians had the guts to mend it. It was like a ship heading for the rocks and now the rocks are very near."

Greeks also know that with their economy needing another financial lifeline, and few willing to lend to a country in such a parlous state, it will also get much worse before it gets better.

"In the past, the future always implied hope for Greeks but now it implies fear," said Nikos Filis, editor of the leftwing Avgi newspaper. "Until this week people thought that with all the measures the crisis would be over in a year or two. Now with the prospect of yet more austerity for more aid, they can't see an end in sight."

With unemployment officially nudging 790,000 – although believed to be far bigger with the closure of some 150,000 small and medium-sized businesses over the past year – there are fears that Greece, the country at the centre of Europe's worst financial debacle in decades, is slipping inexorably into political and social crisis, too. Rising racist tensions and lawlessness on the streets this week spurred the softly spoken mayor of Athens, Giorgos Kaminis, to describe the city as "beginning to resemble Beirut".

UK Telegraph

European finance ministers are due to meet in Brussels on Monday to discuss the possibility of more support for the embattled country a year on from its first bail-out.
Though the Greek economy grew 0.8pc in the first quarter, according to figures released on Friday, with more austerity measures likely, few expect the expansion will be sustained.
The S&P 500 closed down 0.8pc to 1,337.77 in New York, while the Dow Jones Industrial Average closed 0.79pc weaker at 12,595.75. The index had fallen as much as 1.2pc in afternoon trading.
Investors’ appetite for safer assets has been intensified by the whip-saw movement in the price of major commodities during the past two weeks.
The dollar, a popular destination for money during moments of uncertainty, gained almost 1pc against a basket of currencies, with the euro falling to a six-week low against the greenback.

“You’ve got these major financial shattering events potentially lurking out there that you don’t know how to play,” said Paul Mendelsohn, a strategist at Windham Financial Services. “When in doubt, get out,” he added.

Der Spiegel

"Me first" Europeans have also gained ground in Germany, for the same reasons. After three bailout plans since the euro first wobbled -- and hundreds of billions of euros in loans and support for Greece, Ireland and Portugal -- Merkel's opponents fear that Berlin will become the paymaster for an increasingly hopeless euro zone.

The threat is real for Merkel. A total of 19 members of parliament from the chancellor's coalition -- which consists of the conservative Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU) and the business-friendly Free Democratic Party (FDP) -- have supposedly said they are no longer prepared to support Merkel's plans to save the euro. But the ruling coalition has only a 20-seat lead over the combined caucuses of Social Democrats, Greens and Left Party members. If more politicians from the CDU, CSU or FDP decide to defect, Merkel's domestic majority for measures to save the euro will crumble, and she would be dependent on opposition votes to get legislation passed.

Which, of course, would be dangerous. "Germany is the most important anchor for Europe," says Friedrich Heinemann at the Centre for European Economic Research. "The whole crisis mechanism (for the euro) stands or falls on German support for EU bailout policies." Complications with the crisis mechanism would send shock waves through financial markets.
The European experiment is showing severe signs of strain, not just among politicians. The euroskeptics in Berlin and Brussels are only reacting to the mood on the street. A recent poll conducted by Germany's Forsa Institute found that there was widespread approval among Germans for certain positions voiced by right-wing populist politicians. Thirty percent said they wanted an "independent Germany, without the euro, where the EU holds no legal sway."

Interesting times. Anyone with their money in risk assets in these precarious times is a bloody fool. I class Australian housing and the All Ords/ASX200 as the riskiest of all.

What do you think a global credit freeze will do to bank lending and the Aussie dollar (think carry trade and our 4 pillars overseas funding to feed a property Ponzi scheme just like the 4 Irish pillars) ?

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