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Austerity: Up Close and Personal

Dave Emory’s entire life­time of work is avail­able on a flash dri­ve that can be obtained here. (The flash dri­ve includes the anti-fas­cist books avail­able on this site.)

Updat­ed on 5/22/2013

COMMENT: In past dis­cus­sion, we have chron­i­cled the Euro­zone cri­sis as a man­i­fes­ta­tion of suc­cess­ful Ger­man eco­nom­ic and polit­i­cal war­fare against fel­low EU coun­tries. We have also not­ed that the GOP in this coun­try is advo­cat­ing the imple­men­ta­tion of sim­i­lar aus­ter­i­ty poli­cies in the face of this coun­try’s reces­sion.

Paul Krug­man’s lat­est col­umn notes that the IMF (not exact­ly a bunch of fel­low-trav­el­ers) has fun­da­men­tal­ly repu­di­at­ed the aus­ter­i­ty doc­trine as applied to weak­ened economies.

Com­par­i­son by the Ger­mans and their Under­ground Reich allies of the U.S. econ­o­my to that of Greece are fal­la­cious, and designed to ratio­nal­ize the type of hor­ri­fy­ing, wrench­ing bud­get cuts here.

In the past, we have not­ed the ele­va­tion by the EU of the fas­cist LAOS par­ty to become part of the Greek pro­vi­sion­al gov­ern­ment in the late fall of 2011.

Since the same bit­ter med­i­cine is being pre­scribed for Amer­i­ca’s ills, let’s take a look at just what “aus­ter­i­ty” is actu­al­ly like for the aver­age Greek.

Pre­dictably, the social dis­lo­ca­tion pro­duced by such hard­ship is feed­ing grass-roots fas­cist polit­i­cal sen­ti­ment and xeno­pho­bia.

If you don’t like what you see, get busy before you expe­ri­ence the same thing!

“Greece on the Bread­line: Chil­dren of Athens too Hun­gry to Do PE” by Jon Hen­ley; The Guardian; 3/13/2012.

EXCERPT . . . It has been a com­mon secret among PE teach­ers for some time now that they don’t expect pupils to do PE any more, because many of them are under­fed and get dizzy. . . .

 “Squeeze Dry and Obscure”; german-foreign-policy.com; 12/17/2012.

EXCERPT: . . . . A trau­ma ther­a­pist, fol­low­ing his trip to Athens, has described the social con­se­quences and the total col­lapse of the Greek econ­o­my, pro­voked by the Ger­man aus­ter­i­ty dic­tate. The ther­a­pist pro­vid­ed sup­ple­men­tary train­ing for his Greek col­leagues, which was deemed exceed­ing­ly nec­es­sary because of the con­se­quences of the cri­sis. In the process, he also became acquaint­ed with the Greek social sit­u­a­tion and since has been com­plain­ing of the “gigan­tic obscu­ran­tist capac­i­ty” of West­ern Europe, where the aus­ter­i­ty pol­i­cy is being con­tin­ued, in spite of the cat­a­stroph­ic sit­u­a­tion in Greece. For exam­ple, “entire res­i­den­tial blocks (...) are deprived of oil deliv­er­ies for finan­cial rea­sons.” Ille­gal­ly felled trees are the sole source of heat­ing. Who­ev­er must go to the hos­pi­tal, “must bring his own sheets and bed cov­ers, as well as the own food.” “Since the clean­ing per­son­nel was fired, doc­tors, nurs­es and order­lies, who, for months, have not been paid, are clean­ing the toi­lettes.” The EU is warn­ing of “the dan­ger of an out­break of infec­tious dis­eases because of the dev­as­tat­ing hygien­ic con­di­tions.” The trau­ma ther­a­pist report­ed that “women, in their late preg­nan­cies, have to beg from hos­pi­tal to hos­pi­tal, because, hav­ing nei­ther health insur­ance nor enough mon­ey no one wants to help them.” The elder­ly, whose pen­sions have been cut in half, can­not even afford impor­tant med­i­cine. Since the cri­sis began, the rate of sui­cides, on the oth­er hand, has not been cut in half, it has doubled.[3]

Tremen­dous Rage

Accord­ing to the report, one need be “nei­ther a pes­simist nor an expert, to imag­ine what this means for inter­per­son­al rela­tions” as well as “for the cohe­sion of Greek soci­ety.” Rage against Greek politi­cians and “inter­na­tion­al pol­i­cy of finan­cial install­ments flow­ing into bail­ing out the banks, but not the peo­ple,” is “tremen­dous and con­tin­ues to grow.” A soci­ety that can pro­vide at least pro­tec­tion from the worst, would be able to absorb this rage, but Greece no longer has even this pos­si­bil­i­ty, explains the trau­ma ther­a­pist. In Greece “the func­tion­al soci­ety was pro­gres­sive­ly under­mined until it col­lapsed like a dilap­i­dat­ed house,” because “the cri­sis has destroyed the wel­fare state.” Rage is now turn­ing into aggres­sion and vio­lence. As a mat­ter of fact, in tra­di­tion­al­ly hos­pitable Greece, attacks — par­tic­u­lar­ly against migrants — have suf­fered a vast increase. “The num­ber of vio­lent mobs that attack minori­ties is growing.”[4]

Racist Vio­lence

Human rights orga­ni­za­tions have already been com­plain­ing about this for months. For exam­ple, fol­low­ing the mur­der of an Iraqi refugee in Greece, Amnesty Inter­na­tion­al dis­cerned a grow­ing fre­quen­cy of racist-moti­vat­ed attacks.[5] The UN High Com­mis­sion on Refugees report­ed in Octo­ber that between Jan­u­ary and Sep­tem­ber, alone, 87 xeno­pho­bic-moti­vat­ed attacks had been count­ed. This is “excep­tion­al­ly alarm­ing,” par­tic­u­lar­ly in con­sid­er­a­tion of the fact that the actu­al num­bers are like­ly to be far high­er, since vic­tims were either too scared to report attacks to the police or were turned away, when they did.[6] The repres­sive forces are also using exces­sive force against migrants. In mid-Novem­ber, the US Embassy in Athens issued a trav­el warn­ing against a rise in vio­lent attacks against per­sons who, because of their com­plex­ion, are per­ceived to be for­eign migrants.[7] Cer­tain neigh­bor­hoods of Athens are con­sid­ered “no go areas” for migrants.

Plans for a Putsch

In the throes of the cri­sis, the rapid rise of xeno­pho­bia that has over­come Greece is flanked by a just as rapid rise of the extreme right. The neo-Nazi Chrysi Avgi par­ty (“Gold­en Dawn”), which is par­tic­u­lar­ly known for its vio­lence against migrants, won 18 seats in par­lia­ment in the last elec­tions and — accord­ing to opin­ion polls — could win 12 per­cent today. Last fall, one of their par­lia­men­tar­i­ans declared that the par­ty is wag­ing a “civ­il war” against migrants and the left. Accord­ing to pub­li­cist, Dim­itris Psar­ras, who, for the past 20 years has been doing research on the Chrysi Avgi, “the esca­la­tion strat­e­gy (...) has a pri­ma­ry sig­nif­i­cance” for that par­ty. “It is sim­i­lar to the strat­e­gy of Ital­ian neo-fas­cists in the 1970s and 80s: esca­late the con­flict on the streets, between the right-wingers and left-wingers — and in the case of Greece, the migrants — to cre­ate a cli­mate of inse­cu­ri­ty, so that a putsch can be jus­ti­fied.” Psar­ras points out that not only the Greek neo-Nazis, but even “seri­ous media organs (...) are spec­u­lat­ing on pos­si­ble plans for a putsch.” He finds, “if the polit­i­cal and eco­nom­ic sit­u­a­tion becomes even more insta­ble and the soci­ety, more polar­ized, any­thing is possible.”[8]

“Greek Pover­ty So Bad Fam­i­lies ‘Can no Longer Afford to Bury their Dead’ ” by Hele­na Smith; The Guardian; 10/18/2012.

EXCERPT: Van­na Men­daleni is a mid­dle aged Greek woman who until now has not had vehe­ment feel­ings about the cri­sis that has engulfed her coun­try. But that changed when the soft­ly spo­ken under­tak­er, clos­ing her fam­i­ly-run funer­al par­lour, joined thou­sands of pro­test­ers on Thurs­day in a mass out­pour­ing of fury over aus­ter­i­ty poli­cies that have plunged ever grow­ing num­bers of Greeks into pover­ty and fear.

“After three years of non-stop tax­es and wage cuts it’s got to the point where noth­ing has been left stand­ing,” she said draw­ing on a cig­a­rette. “It’s so bad fam­i­lies can no longer afford to even bury their dead. Bod­ies lie unclaimed at pub­lic hos­pi­tals so that the local munic­i­pal­i­ty can bury them.” . . .

“Lit­tle Hope for Greece’s Job­less Youth” by Jan­nis Papadim­itriou; Deutsche Welle; 5/21/2013.

EXCERPT: Near­ly two-thirds of young Greeks are cur­rently job­less. The unem­ploy­ment rate in the coun­try has reached a record 27 per­cent. Experts are warn­ing of dra­matic con­se­quences for Greek soci­ety.

Before Europe’s debt cri­sis set in, young Greeks com­plained of poor­ly-paid jobs and described them­selves as the “1,000-euro gen­er­a­tion.” Today, a sit­u­a­tion like that would be par­adise — cur­rently more than 60 per­cent of young peo­ple have no jobs at all, and ana­lysts and unions are warn­ing of grave social con­se­quences.

“A whole gen­er­a­tion of well-edu­cat­ed young peo­ple feel like they’ve sim­ply been set aside, espe­cially because many of them are long-term unem­ployed,” says Ilias Kat­soulis, pro­fes­sor of soci­ol­ogy and polit­i­cal sci­ences at Athens Uni­ver­sity. He thinks that soci­ety could face seri­ous prob­lems. “In a cri­sis, our soci­ety needs these peo­ple espe­cially,” he says. “But soci­ety hard­ly offers them any oppor­tu­ni­ties to use their qual­i­fi­ca­tions, and that makes the cri­sis worse.” . . .


13 comments for “Austerity: Up Close and Personal”

  1. Aus­ter­i­ty in Europe, and the rules and reg­u­la­tions com­ing from Brus­sels are part of the Ger­man eco­nom­ic sys­tem — the Social Mar­ket Econ­o­my.

    Merkel says in her New Year speech that she hopes (read “is mak­ing sure”) there will be more con­trols next year on inter­na­tion­al finan­cial mar­kets — a pop­u­lar issue in Ger­many that the SPD is plan­ning to make a cen­tral plank of its 2013 elec­tion cam­paign.

    “The world has­n’t suf­fi­cient­ly learned the lessons of the dev­as­tat­ing 2008 finan­cial cri­sis,” she said (is she going to ‘teach’ the world??).

    “Nev­er again can we allow irre­spon­si­bil­i­ty like back then to hap­pen. In a social mar­ket econ­o­my, the State is the guardian of order — and that is some­thing peo­ple should be able to count on.”

    Ger­many’s plan after killing cap­i­tal­ism, part­ly by push­ing for end­less rules on bank­ing, is this;

    Instead of a dynam­ic, grow­ing pot of wealth and ever-increas­ing resources, which can enable larg­er and larg­er pro­por­tions of the pop­u­la­tion to become pros­per­ous with­out tak­ing any­thing away from any oth­er group, there will indeed be an absolute lim­it on the amount of cap­i­tal cir­cu­lat­ing with­in the soci­ety.

    The only deci­sions to be made will involve how that giv­en, unal­ter­able sum is to be shared out – and those judg­ments will, of course, have to be made by the state since there will be no dynam­ic eco­nom­ic force out­side of gov­ern­ment to enter the equa­tion. Wealth dis­tri­b­u­tion will be the prin­ci­pal – vir­tu­al­ly the only – sig­nif­i­cant func­tion of polit­i­cal life.

    The total absence of eco­nom­ic growth would mean that the lim­i­ta­tions on that dis­tri­b­u­tion would be so severe as to require dra­con­ian legal enforce­ment: rationing, lim­its on the amount of cur­ren­cy that can be tak­en abroad, import restric­tions and the kinds of penal­ties for eco­nom­ic crimes (under­cut­ting, or “black mar­ket” sell­ing prac­tices) which have been unknown in the West since the end of the Sec­ond World War.

    As the fixed pot of nation­al wealth los­es ever more val­ue, and resources shrink, the mea­sures to enforce “fair” dis­tri­b­u­tion must become more total­i­tar­i­an: there will have to be con­fis­ca­to­ry tax­a­tion on assets and prop­er­ty, col­lec­tivi­sa­tion of the pro­duc­tion of goods, and direct­ed labour.
    Demo­c­ra­t­ic social­ism with its “soft redis­tri­b­u­tion” and expo­nen­tial growth of gov­ern­ment spend­ing will have paved the way for the hard redis­tri­b­u­tion of dimin­ished resources under eco­nom­ic dic­ta­tor­ship.

    Con­sid­er from that per­spec­tive, what asso­ci­at­ing every human move­ment with car­bon emmis­sions real­ly means. Ever tight­en­ing car­bon allowances will shrink coun­tries and pop­u­la­tions by legal force. The Eco move­ment is a tool of the same eco­nom­ic sys­tem being pushed on peo­ple.



    Posted by GW | January 8, 2013, 5:52 am
  2. Did­n’t every­body hear the great news? The worst of the euro­zone cri­sis is behind us. Aus­ter­i­ty works! Appar­ent­ly!

    Wash­ing­ton Post
    Euro­pean lead­ers hail break­through in debt cri­sis

    By Antho­ny Faio­la and Edward Cody, Pub­lished: Jan­u­ary 5


    After more than three years of glob­al mar­ket tur­moil, polit­i­cal upheaval and nail-bit­ing sum­mits, Euro­pean lead­ers are declar­ing that the worst of the continent’s debt cri­sis is behind them.

    In New Year’s speech­es and con­grat­u­la­to­ry com­ments, lead­ers across the region are cred­it­ing fresh rounds of painful aus­ter­i­ty, a hard-fought new role for the Euro­pean Cen­tral Bank and steps toward deep­er inte­gra­tion with achiev­ing a break­through.

    Bor­row­ing costs for trou­bled nations, they note, have come down steadi­ly from last year’s dan­ger­ous­ly high lev­els, pulling a string of coun­tries back from the brink of immi­nent finan­cial col­lapse and defy­ing naysay­ers who pre­dict­ed a quick breakup of the euro zone last year.

    Yet any sug­ges­tion of vic­to­ry in Europe may be viewed as the eco­nom­ic equiv­a­lent of Pres­i­dent George W. Bush’s “Mis­sion Accom­plished” speech on Iraq aboard the USS Abra­ham Lin­coln in 2003. Though mar­ket pan­ic is sub­sid­ing, the region appears to be sim­ply trad­ing a cri­sis of finan­cial mar­kets for one root­ed in its ail­ing economies.

    Con­fronting the real­i­ty of deep bud­get cuts, high­er tax­es and piles of debt that have hin­dered any prospect of recov­ery, Italy, Spain and Greece are bat­tling what econ­o­mists pre­dict will be yet anoth­er year of bru­tal reces­sion. Spain, in fact, may face a down­turn even worse than the one seen in 2012, with its still-trou­bled regions and banks poten­tial­ly prompt­ing a bid for fresh bailout assis­tance. Even mighty Ger­many and France, the anchors of the 17-nation euro zone, poten­tial­ly face weak­er growth or stag­na­tion this year.


    Every­thing is going to be get­ting bet­ter from here on out. Mis­sion Accom­plished!

    Posted by Pterrafractyl | January 8, 2013, 8:13 am
  3. The lat­est mes­sage from the ECB appears to be:
    1. The euro­zone finan­cial mar­kets are back to ‘nor­mal’. Bor­row­ing costs have fall­en from their cri­sis-lev­el peaks and, while this has­n’t actu­al­ly led to low­er unem­ploy­ment, offi­cials hope the improve­ments in the finan­cial mar­kets will even­tu­al­ly trick­le down into the real econ­o­my. Some­day. Yay!
    2. The ECB will not engage in any new stim­u­lus and will instead be stick­ing with its sole man­date of low infla­tion or euro­zone-wide “price sta­bil­i­ty” (except for times when the focus on “price sta­bil­i­ty” cre­ate crises that under­mine faith in the euro itself).
    3. The long-term solu­tion to the record high unem­ploy­ment rates in many euro­zone coun­tries — with youth unem­ploy­ment near­ing 60% in Spain — is to reform labor laws that make it eas­i­er for com­pa­nies to fire old­er work­ers (prob­lem solved!).

    In oth­er words, the phi­los­o­phy of “just bare­ly enough help at the last minute to avoid com­plete finan­cial cat­a­stro­phe with­out any real regard for the real (non-finan­cial) econ­o­my” is still guid­ing the poli­cies at the ECB:

    Updat­ed Jan­u­ary 10, 2013, 3:59 p.m. ET

    Europe’s Bank Damps Talk of New Stim­u­lus


    FRANKFURT—A unit­ed Euro­pean Cen­tral Bank sent a strong sig­nal that it is unlike­ly to cut inter­est rates despite eco­nom­ic con­trac­tion and record unem­ploy­ment, sug­gest­ing the euro-zone econ­o­my must find its own foot­ing with­out addi­tion­al help from the cen­tral bank.


    We are now back in a nor­mal sit­u­a­tion from a finan­cial view­point, but we are not see­ing an ear­ly and strong recov­ery,” he said.


    Offi­cials vot­ed unan­i­mous­ly to leave their key lend­ing rate at a record-low 0.75% and announced no new stim­u­lus mea­sures.

    One month ago, Mr. Draghi said there had been a “wide dis­cus­sion” and “pre­vail­ing con­sen­sus” on inter­est rates, sug­gest­ing some mem­bers favored a cut in Decem­ber.

    Thurs­day’s deci­sion “implies there was no request for a rate cut,” Mr. Draghi said. He ticked off a num­ber of pos­i­tive devel­op­ments in the past six months: low­er bond yields; renewed cap­i­tal inflows; ris­ing bank deposits in South­ern Europe; and improve­ment in sen­ti­ment mea­sures.

    “His mes­sage was very clear: do not expect more stim­u­lus from us,” said Chris­t­ian Schulz, econ­o­mist at Beren­berg Bank.

    Gross domes­tic prod­uct has failed to expand in the euro zone since the third quar­ter of 2011. It is expect­ed by econ­o­mists to have declined sharply in the fourth quar­ter with the region’s largest econ­o­my, Germany—which has so far with­stood the three-year-old debt cri­sis with strong growth—sliding into con­trac­tion.

    But Mr. Draghi said the improved health of finan­cial mar­kets “should work its way through to the econ­o­my” and that glob­al demand should strength­en, boost­ing exports.


    The hope is that low­er gov­ern­ment-bond yields will trans­late into reduced bor­row­ing costs for house­holds and busi­ness­es, fuel­ing new spend­ing, invest­ment and hir­ing. Yet there is lit­tle evi­dence out­side of busi­ness sur­veys that the improve­ment in finan­cial mar­kets is spurring renewed activ­i­ty in South­ern Europe.

    The euro zone’s unem­ploy­ment rate rose to a record 11.8% in Novem­ber, and there are deep divi­sions with­in the 17-mem­ber cur­ren­cy bloc. Spain’s unem­ploy­ment rate is 26.6%, com­pared with 5.4% in Ger­many. Near­ly 60% of Span­ish youths are with­out work, com­pared with 8% in Ger­many.

    There is lit­tle the ECB can do to bring these rates into bet­ter bal­ance, Mr. Draghi said, not­ing that the ECB’s sole man­date is to keep infla­tion low. Labor-mar­ket poli­cies that pro­tect old­er work­ers have forced young peo­ple to bear the brunt of the adjust­ment to weak­er eco­nom­ic growth, he said, while a lack of mobil­i­ty has pre­vent­ed work­ers in strug­gling coun­tries from seek­ing work else­where in the euro zone.

    “Mon­e­tary pol­i­cy can­not do much about that,” he said.

    Despite hav­ing inter­est rates at record lows, the ECB has refrained from the types of aggres­sive mea­sures oth­er cen­tral banks are tak­ing to safe­guard their economies. The Fed­er­al Reserve is buy­ing mort­gage bonds to bring unem­ploy­ment down. The Bank of Japan is buy­ing large amounts of assets, includ­ing gov­ern­ment bonds and real-estate invest­ment funds. Switzer­land’s cen­tral bank has pur­chased cur­ren­cies of oth­er coun­tries in order to hold down the lev­el of the Swiss franc.


    It’s also worth point­ing out that a Mitt Rom­ney vic­to­ry in 2012 could have imposed this same “price stability”-only bind on the Fed­er­al Reserve. It’s a reminder that this bizarre push to impose aus­ter­i­ty and bank bailouts to ele­vate “finan­cial health” over the actu­al health of the econ­o­my and its cit­i­zens real health is a glob­al agen­da:

    Fed’s dual man­date on the table in wake of QE3
    The Fed
    Sep­tem­ber 19, 2012|Greg Robb, Mar­ket­Watch

    WASHINGTON (Mar­ket­Watch) — Two top Fed­er­al Reserve offi­cials who opposed the lat­est round of Fed asset pur­chas­es have wad­ed into tricky polit­i­cal waters by sug­gest­ing that law­mak­ers could tie the Fed’s hands if they want­ed to block more asset pur­chas­es.

    A future Con­gress might restrict us to a sin­gle man­date – like oth­er cen­tral banks in the world oper­ate under – focused sole­ly on price sta­bil­i­ty,” said Richard Fish­er, the pres­i­dent of the Dal­las Fed­er­al Reserve Bank in a speech on Wednes­day night in New York.

    Ear­li­er in the week, anoth­er region­al Fed bank pres­i­dent, James Bullard of St. Louis, was even stronger, say­ing he sup­port­ed restrict­ing the dual man­date to a sin­gle infla­tion-fight­ing goal.

    Bullard said sup­port­ers of QE3 had placed too much empha­sis on the Fed’s abil­i­ty to bring down unem­ploy­ment. He said mon­e­tary pol­i­cy, in real­i­ty, could only have tem­po­rary effects on the job­less rate. His com­ments came in an inter­view with Reuters.

    At stake is the Fed’s oper­at­ing char­ter that calls for the cen­tral bank to con­duct pol­i­cy with two goals, or man­dates: keep­ing unem­ploy­ment low and infla­tion sta­ble.

    With the Fed’s tra­di­tion­al tool to adjust the econ­o­my — the fed­er­al funds rate — stuck near zero, Fed Chair­man Ben Bernanke has launched uncon­ven­tion­al asset pur­chas­es to bring down long-term inter­est rates and boost the econ­o­my.

    Last week the Fed launched a third round of quan­ti­ta­tive eas­ing under which it will buy $40 bil­lion per month of mort­gage-backed secu­ri­ties. The pur­chas­es have so far boost­ed bank reserves by an excess $1.6 tril­lion.

    Bernanke has jus­ti­fied the Fed’s asset pur­chas­es by say­ing the cen­tral bank is try­ing to meet its low unem­ploy­ment man­date. The unem­ploy­ment rate has been stuck above 8% for 43 months.


    The mat­ter is not sim­ply aca­d­e­m­ic.

    With the base of the Repub­li­can Par­ty this year very anti-Fed, a Rom­ney vic­to­ry in Novem­ber would like­ly spark efforts to lim­it the Fed’s pow­ers in mon­e­tary pol­i­cy and bank­ing reg­u­la­tion, experts said.

    “Many Con­gres­sion­al Repub­li­cans seem eager to tie the Fed’s hands and Bullard is play­ing into that,” said Joseph Gagnon, a for­mer Fed staffer and now a senior fel­low at the Peter­son Insti­tute for Inter­na­tion­al Eco­nom­ics.

    House Repub­li­cans have already intro­duced leg­is­la­tion to end the Fed’s dual man­date and vice-pres­i­den­tial nom­i­nee Paul Ryan has been advo­cat­ing the mea­sure in recent cam­paign appear­ances.


    Posted by Pterrafractyl | January 12, 2013, 5:24 pm
  4. Yes, the EU’s lead­ers are seri­ous­ly prep­ping for anoth­er round of blood­let­ting and prayer to the Con­fi­dence Fairies. Oh Con­fi­dence Fairies, please accept our human sac­ri­fices so they our peo­ples may be pure and vir­tu­ous and spared from your wrath:

    Bud­get cuts must go on, says EU’s Rehn

    Jan­u­ary 12, 2013

    The worst of the euro­zone debt cri­sis may be over, but gov­ern­ments must not let up on reforms or bud­get cuts if they want to put the tur­moil firm­ly behind them, the EU’s top eco­nom­ic offi­cial said on Fri­day.

    In a speech to diplo­mats and indus­try offi­cials, EU Eco­nom­ic and Mon­e­tary Affairs Com­mis­sion­er Olli Rehn called for pri­ori­tis­ing invest­ment, fight­ing youth unem­ploy­ment, con­tin­ued reduc­tion of bud­get deficits and tighter eco­nom­ic inte­gra­tion of the 17-mem­ber sin­gle cur­ren­cy area.

    “Our patient may be out of inten­sive care, but it will still take some time before she can be giv­en a clean bill of health,” Rehn said. “That’s why any lapse into com­pla­cen­cy would be unfor­giv­able. We need to stay the reform course to revi­talise the Euro­pean econ­o­my,” he added.

    To over­come the cri­sis, the euro­zone agreed last year in a spe­cial treaty to keep bud­gets in bal­ance or sur­plus and cut debt and launched a per­ma­nent euro zone bailout fund, the 500 bil­lion euro ($660 bil­lion) Euro­pean Sta­bil­i­ty Mech­a­nism (ESM).

    Euro­zone coun­tries also nego­ti­at­ed a new res­cue pack­ages for Greece, includ­ing a debt restruc­tur­ing, and agreed on a loan to recap­i­talise Span­ish banks. They decid­ed the euro­zone will have a bank­ing union with a sin­gle super­vi­sor and, even­tu­al­ly, a joint bank res­o­lu­tion mech­a­nism and deposit guar­an­tee scheme.

    The move that final­ly con­vinced investors was the Euro­pean Cen­tral Bank’s promise to buy unlim­it­ed amounts of bonds of a gov­ern­ment that asks for ESM help and agrees to reforms.

    But low­er deficits were still cen­tral to emerg­ing from the three-year pub­lic debt cri­sis, Rehn said, even though their is increas­ing debate about the impact of aus­ter­i­ty on growth.

    The Inter­na­tion­al Mon­e­tary Fund said late last year that the dam­age from aggres­sive aus­ter­i­ty may be up to three times more than pre­vi­ous­ly thought, after ear­li­er pre­scrib­ing sharp deficit cuts to the euro­zone. The IMF has since shift­ed its advice, now argu­ing against forc­ing heav­i­ly indebt­ed coun­tries such as Greece to reduce their deficits too quick­ly.

    Rehn said the IMF’s Octo­ber study, which was updat­ed this month, was not applic­a­ble to every­one and did not take into account that investors expect gov­ern­ments to con­trol their debt.

    You have to take into account the con­fi­dence effect,” Rehn said, adding that the impact of aus­ter­i­ty dif­fered across coun­tries depend­ing on whether they still had access to mar­kets.

    No word on Spain

    The dif­fer­ence in opin­ion may mark a split with­in the “troi­ka” of inter­na­tion­al lenders — the Com­mis­sion, the IMF and the Euro­pean Cen­tral Bank — over how to deal with frag­ile Euro­pean economies try­ing to pull out of reces­sion in 2013.

    Against a back­drop of record unem­ploy­ment, many econ­o­mists believe spend­ing cuts in almost all euro zone coun­tries drove the bloc into its sec­ond reces­sion since 2009 last year.

    But ECB chief Mario Draghi has also reject­ed any idea of eas­ing up on efforts to reduce sov­er­eign debt.

    So much progress accom­pa­nied by so big sac­ri­fices have already tak­en place that to revert to a sit­u­a­tion that has been found to be unten­able would not be right,” he told the ECB’s month­ly news con­fer­ence on Thurs­day.


    Yes, it just would­n’t be right to reverse course on the aus­ter­i­ty dri­ves giv­en all the sac­ri­fices that have been made...because sac­ri­fi­cial death-spi­rals are the height of virtue. Oh Con­fi­dence Fairies, may the wis­dom of your teach­ings spread far and wide.

    Posted by Pterrafractyl | January 12, 2013, 7:36 pm
  5. Ah, the joys of cur­ren­cy union pol­i­cy-mak­ing: So it looks like there’s a num­ber of lead­ers in the finan­cial com­mu­ni­ty that main­tain that the euro­zone’s gen­er­al “aus­ter­i­ty” approach is work­ing, as evi­denced by the calm­ing of the euro­zone sov­er­eign bond mar­kets (LOL!), but there’s still a pesky prob­lem of record unem­ploy­ment and per­sis­tent intra-euro­zone trade imbal­ances. Finan­cial ana­lysts in the arti­cle below appears to have a num­ber of pro­posed changes, like dra­mat­i­cal­ly cut­ting wages and slash­ing state spend­ing instead of mass lay­offs and slash­ing state spend­ing. Yep, those are the pro­posed changes for “rebal­anc­ing” the euro­zone:

    Analy­sis: No respite for euro zone in long rebal­anc­ing slog

    By Alan Wheat­ley, Glob­al Eco­nom­ics Cor­re­spon­dent

    LONDON | Tue Jan 22, 2013 3:12am EST

    (Reuters) — The euro zone cri­sis is enter­ing a new, treach­er­ous phase for gov­ern­ments, which can only cross their fin­gers that slow-burn reforms will pay off before vot­ers get fed up with aus­ter­i­ty and high unem­ploy­ment.

    On the face of it, 2013 should be a much less trau­mat­ic year than 2012 for the 17-nation sin­gle-cur­ren­cy area.

    Finan­cial con­di­tions have improved enor­mous­ly since the Euro­pean Cen­tral Bank promised to do what­ev­er it takes to pre­serve the euro. Yields on the bonds of high­ly indebt­ed periph­er­al coun­tries have fall­en sharply, bank fund­ing strains have eased and stock mar­kets have ral­lied.
    Coun­tries on the south­ern rim of the euro zone have made big strides in reduc­ing their bud­get and trade deficits. They are no longer liv­ing way beyond their means. They have also intro­duced polit­i­cal­ly touchy struc­tur­al reforms, notably to make their labor mar­kets more flex­i­ble.

    But demand is like­ly to remain weak, while unem­ploy­ment, already at a record 11.8 per­cent, is fore­cast to rise fur­ther before it comes down. Recov­ery will be slow.

    “They’ve tak­en the med­i­cine, but they’re not going to jump out of bed straight away,” said Sebas­t­ian Barnes at the Organ­i­sa­tion for Eco­nom­ic Coop­er­a­tion and Devel­op­ment in Paris.

    The prob­lem is bridg­ing the gap over the next two or three years when you’re putting in place the right poli­cies but they’re not quite bear­ing fruit. So it’s a ques­tion of man­ag­ing pub­lic expec­ta­tions,” Barnes, advis­er to the rich-coun­try forum’s chief econ­o­mist, added.


    A nag­ging wor­ry is that the euro zone is mak­ing up for its eco­nom­ic mis­takes through what Barnes calls “bad rebal­anc­ing”.

    So, while ris­ing exports have played a role, the improve­ment in the periph­ery’s cur­rent account has been achieved main­ly by slash­ing imports.

    And the reduc­tion in rel­a­tive wage costs need­ed to bring about ‘inter­nal deval­u­a­tion’ — the only deval­u­a­tion avail­able in the absence of exchange rate flex­i­bil­i­ty — has so far been engi­neered dis­pro­por­tion­ate­ly through a rise in unem­ploy­ment rather than wage mod­er­a­tion.

    Ire­land is a notable excep­tion — as is Britain out­side the euro zone — and Barnes said there were encour­ag­ing signs else­where, for exam­ple in Spain.

    Italy, how­ev­er, has bare­ly touched its wage bar­gain­ing sys­tem. “The prob­lem there is that wages have run ahead of pro­duc­tiv­i­ty,” he said.


    Gilles Moec, an econ­o­mist with Deutsche Bank in Lon­don, also frets about Italy. Italy has its gov­ern­ment deficit under con­trol, but Moec sees signs of a grow­ing ‘employ­ment over­hang’, linked to what he says is extreme­ly slow finan­cial rebal­anc­ing by the pri­vate sec­tor since the onset of the cri­sis.

    This is reflect­ed in a rise in employ­ee com­pen­sa­tion in Italy as a per­cent­age of cor­po­rate val­ue-added to 57.7 per­cent from 52.5 per­cent in 2007.

    By con­trast, in Spain, where unem­ploy­ment of 25 per­cent is more than twice as high as Italy’s, the wage share dropped over the same peri­od to 55.9 per­cent from 64.7 per­cent.

    Rebal­anc­ing, in short, is far from com­plete. That is true for cred­i­tor coun­tries, too. Ger­many’s cur­rent account sur­plus is stuck at a stub­born­ly high 6 per­cent of GDP, reflect­ing weak invest­ment and con­sump­tion.

    Gold­man Sachs has attempt­ed to mea­sure the progress being made in iron­ing out the imbal­ances by updat­ing its esti­mates of the real exchange rate changes need­ed to bring coun­tries’ net debt posi­tions — the result of accu­mu­lat­ed annu­al cur­rent account deficits and sur­plus­es — back into broad equi­lib­ri­um.

    In keep­ing with improve­ments in their cur­rent accounts, Greece, Por­tu­gal and Spain now require an infla­tion-adjust­ed depre­ci­a­tion that is about eight to 10 per­cent­age points low­er than two years ago, Gold­man reck­ons.

    Still, the remain­ing adjust­ment is huge — about 25–30 per­cent in the case of Spain and around 15–25 per­cent not only in Greece and Por­tu­gal but also in France, where employ­ers and unions this month agreed on a pack­age of labor reforms to restore com­pet­i­tive­ness.

    Ger­many, inci­den­tal­ly, requires a real appre­ci­a­tion of 15–25 per­cent.

    Instead of high­er unem­ploy­ment and low­er wages, struc­tur­al reforms offer a less painful path to rebal­anc­ing, Gold­man said.

    Switch­ing resources to exports from domes­tic sec­tors such as con­struc­tion in Spain and pub­lic ser­vices in France would reduce the need for fur­ther real exchange rate depre­ci­a­tion.

    “But adopt­ing such reforms is not pain­less: the poten­tial loss of polit­i­cal cap­i­tal from vest­ed groups stand­ing to lose exist­ing priv­i­leges can pre­vent politi­cians from imple­ment­ing the nec­es­sary reforms. This remains true across most of the periph­ery, in France and Ger­many,” wrote Gold­man econ­o­mist Lasse Hol­boell W. Nielsen.

    Barnes with the OECD said all coun­tries could do more, but the lack of reform in big­ger economies, includ­ing France and Ger­many, was a par­tic­u­lar con­cern.

    The OECD’s research sug­gests that, con­trary to received wis­dom, struc­tur­al reforms can yield pos­i­tive results with­in a year or two, notably by cat­alyz­ing invest­ment and jobs. In turn, that can have an impact on pub­lic per­cep­tions.

    “I don’t think in any of these coun­tries the reforms are suf­fi­cient for what they should be achiev­ing in the long run,” Barnes said. “But just get­ting reform on the agen­da and get­ting peo­ple to rec­og­nize that the sys­tem needs to change, and is going to change, is very impor­tant.”

    Yes, accord­ing to the OECD, con­trary to “received wis­dom” (which one can “receive” by observ­ing recent eco­nom­ic his­to­ry), “struc­tur­al reforms” (i.e. mass wage cuts and cut­ting pub­lic spend­ing) real­ly can work in a year or two by cat­alyz­ing invest­ment and jobs. If it has­n’t hap­pened over the past year of two, it’s because there has­n’t been enough “struc­tur­al reform”. It’s a theme.

    Posted by Pterrafractyl | January 22, 2013, 11:06 am
  6. Anthana­sios Orh­panides, the for­mer head of the Cen­tral bank of Cyprus and for­mer advis­er to the US Fed­er­al reserve, appears to be lament­ing the ECB’s com­mit­ment to pur­chas­ing sov­er­eign bonds — which was only agreed upon by the ECB when it appeared that Spain was on the verge of aus­ter­i­ty-induced finan­cial implo­sion — because these emer­gency bond pur­chas­es only delayed desired “reforms”. He also thinks it’s crazy that the UK might not be enthu­si­as­tic about fur­ther EU inte­gra­tion. Inter­est­ing:

    Orphanides Says ECB Bond-Buy Plan May Delay Gov­ern­ment Reforms
    By Ste­fan Riech­er — Jan 17, 2013 10:49 AM CT

    For­mer Euro­pean Cen­tral Bank Gov­ern­ing Coun­cil mem­ber Athana­sios Orphanides said the ECB’s bond-pur­chase plan may prompt gov­ern­ments to delay need­ed reforms.

    The pro­gram, dubbed Out­right Mon­e­tary Trans­ac­tions, has “giv­en gov­ern­ments yet anoth­er oppor­tu­ni­ty to post­pone actions,” Orphanides said today at the Bloomberg Glob­al Mar­kets Sum­mit in New York. “Inad­ver­tent­ly, the OMT may have delayed the progress that I would have hoped to see at the end of last year.”

    ECB Pres­i­dent Mario Draghi has pledged to buy unlim­it­ed amounts of sov­er­eign bonds if need­ed to shore up con­fi­dence in the euro as long as gov­ern­ments sign up to eco­nom­ic reforms. The announce­ment of the plan alone has low­ered bor­row­ing costs in coun­tries like Spain and Italy, reduc­ing pres­sure on them to agree to the terms of ECB bond pur­chas­es.


    U.K. Exit ‘Sui­ci­dal’

    Orphanides, who sat on the ECB coun­cil as the gov­er­nor of the cen­tral bank of Cyprus until last May, said Euro­pean gov­ern­ments “need to real­ize that the gov­er­nance of the euro area needs to be strength­ened.”

    “Strenghen­ing gov­er­nance is some­thing we will hope­ful­ly see more of, and that’s the rea­son why we can be opti­mistic,” he said.

    Asked about the pos­si­bil­i­ty of the U.K. exit­ing the Euro­pean Union, Orphanides, now a senior lec­tur­er at the MIT Sloan School of Man­age­ment in Cam­bridge, Mass­a­chu­setts, said such an event would be cat­a­stroph­ic for Lon­don and Britain.

    “It would be unthink­able that over the long haul Lon­don could remain the finan­cial cen­ter of the euro area, and this is a huge risk to the U.K.,” he said. “The U.K. has ben­e­fit­ed tremen­dous­ly from the arrange­ment. Frankly, I think it would be sui­ci­dal for the British econ­o­my over the long run if they exit­ed.”

    So, appar­ent­ly, if Spain was allowed to implode last Sep­tem­ber, Spain and the UK could have avoid­ed this:

    Spain’s Lost Gen­er­a­tion Spends Sal­ad Days Toil­ing in U.K.
    By Andrea Ger­lin & Alex Morales — Jan 23, 2013 6:46 AM CT

    Car­los Her­nan­dez Son­se­ca stud­ied six years for a bachelor’s degree and couldn’t find a job near his home out­side Madrid when he grad­u­at­ed in 2011. Last year, he took an increas­ing­ly well-worn path to the U.K.

    The 27-year-old jour­nal­ist now wash­es and chops veg­eta­bles eight hours a day at the Vital Ingre­di­ent sal­ad bar in London’s finan­cial dis­trict, mak­ing 260 pounds ($418) before tax­es in a 40-hour week. Thir­teen oth­er Spaniards are among a work­force of 17, said man­ag­er Fran­cis­co “Chico” Baum­le, a Brazil­ian.

    U.K. fast-food jobs and oth­er low-wage roles have been dom­i­nat­ed by Poles and oth­ers who arrived after the Euro­pean Union expand­ed east­ward in 2004. Now they’re joined by young Spaniards who can’t find work at home, where unem­ploy­ment hit 25 per­cent last year. In the finan­cial year to April, 30,370 Spaniards reg­is­tered to work in the U.K., up 25 per­cent from the pre­vi­ous year, and more than dou­ble the 2009-10 lev­els, accord­ing to data from the Depart­ment for Work and Pen­sions.

    “We are a lost gen­er­a­tion, for sure,” Her­nan­dez Son­se­ca said. “Spain has noth­ing to offer us, so we go abroad and we work as sal­ad mak­ers and kitchen porters. They are los­ing mon­ey and they are los­ing skilled peo­ple.”

    The newest work­ers have it tough­est in Spain’s labor mar­ket, where the job­less rate among adults under 25 reached 52 per­cent in the third quar­ter of 2012, accord­ing to the most recent data from Spain’s Nation­al Insti­tute of Sta­tis­tics.
    McDonald’s Job

    The unem­ploy­ment rate in the fourth quar­ter, due to be released tomor­row by the insti­tute, prob­a­bly rose to 26 per­cent, accord­ing to the medi­an of 10 esti­mates in a Bloomberg sur­vey. In the U.K., where the unem­ploy­ment rate is 7.7 per­cent, job­less claims unex­pect­ed­ly fell in Decem­ber, the Office for Nation­al Sta­tis­tics said today.

    Her­nan­dez Son­se­ca is one of three mem­bers of his uni­ver­si­ty class now work­ing at the same sal­ad bar. His col­league Pablo Med­i­na Mar­tin came to Lon­don in Jan­u­ary 2012 and ran down his sav­ings dur­ing a month-long job hunt. He cleared tables and unloaded deliv­er­ies at a McDonald’s Corp. (MCD) restau­rant in east Lon­don before mov­ing to the sal­ad bar in May.

    “When I went to uni­ver­si­ty, I nev­er thought I’d end up work­ing in a McDonald’s,” said Med­i­na Mar­tin. “In Spain, the staff in McDonald’s tends to be from South Amer­i­ca, Ecuador, Colom­bia, the immi­grants. Here in Lon­don, we’ve real­ized we’re the ones who are the immi­grants.”


    Posted by Pterrafractyl | January 23, 2013, 1:53 pm
  7. Here’s one of those arti­cles that should raise ques­tions over whether or not increas­ing eco­nom­ic “com­pet­i­tive­ness” is real­ly all that great a goal:

    Work­place stress is cost­ing Ger­many time, mon­ey, health
    Date 29.01.2013

    Work­place stress is impact­ing on lives and bal­ance sheets alike, and more strong­ly than ever, a new study has found. Ger­man Labor Min­is­ter Ursu­la von der Leyen has urged employ­ers and trade unions to seek solu­tions.


    The “Stress Report Ger­many 2012” study, pub­lished on Tues­day, indi­cates that 43 per­cent of work­ers believe that their jobs have become more stress­ful in the past two years.

    Half of the rough­ly 17,600 peo­ple sur­veyed said they faced severe time pres­sure, and of those who took time off owing to psy­cho­log­i­cal ill­ness, 70 per­cent said the cause was stress.

    Fresh impe­tus for failed talks?

    Talks between employ­ers and unions seek­ing a com­mon “state­ment on psy­cho­log­i­cal well-being in the work­place” recent­ly fell apart, with trade unions blam­ing the employ­ers.

    Von der Leyen said such leg­is­la­tion remained a pos­si­bil­i­ty, although she added that it would only be mean­ing­ful if labor rep­re­sen­ta­tives — not the gov­ern­ment — forged it. Some mea­sures to pro­tect work­ers’ psy­cho­log­i­cal well-being are already enshrined in Ger­man and EU law.

    “There is a need to act in our busi­ness­es,” the Chris­t­ian Demo­c­rat cab­i­net min­is­ter con­clud­ed.

    Almost half of the full-time staff sur­veyed in the study by the Fed­er­al Insti­tute for Occu­pa­tion­al Safe­ty and Health (BAuA) said they worked more than a 40-hour week; one in six said they were in the office for more than 48 hours. More than 60 per­cent said they worked Sat­ur­days.

    The insti­tute’s pres­i­dent, Isabel Rothe, said her orga­ni­za­tion had not­ed a steep rise in work­place stress up until 2006, with lev­els remain­ing com­par­a­tive­ly con­sis­tent since then.


    The ques­tion of “why we struc­ture the econ­o­my the way we do?” has pret­ty much always been a poignant ques­tion for soci­eties across the globe. But when were liv­ing in a glob­al­ized econ­o­my that’s fac­ing surg­ing youth unem­ploy­ment cou­pled with an appar­ent inabil­i­ty for soci­eties to deal with aging pop­u­la­tions and lim­it­ed vital nat­ur­al resources, it’s impor­tant to keep in mind that some goals are bet­ter than oth­ers.

    Posted by Pterrafractyl | January 29, 2013, 8:44 pm
  8. One of the ideas behind the expan­sion­ary-aus­ter­i­ty the­o­ries is that once a “rebalancing”(wage cuts) has tak­en place with­in the indebt­ed coun­try the increased “com­pet­i­tive­ness” will result in a rebound in exports and eco­nom­ic reju­ve­na­tion. And sure enough, it looks like Greece’s aus­ter­i­ty regime has increased at least one type of export:

    Fears in Ger­many as Gold­en Dawn moves in from Greece

    Greek neo-Nazi par­ty believed to be in Nurem­berg with aim of recruit­ing young Greeks flock­ing to Ger­many in search of work

    Kate Con­nol­ly in Berlin and Hele­na Smith in Athens
    The Guardian, Tues­day 5 Feb­ru­ary 2013 13.26 EST

    Ger­man and Greek rightwing extrem­ists have been forg­ing close con­tacts in Ger­many in an attempt to strength­en their pow­er base in Europe, accord­ing to Ger­man offi­cials.

    Mem­bers of the Greek neo-Nazi par­ty Gold­en Dawn are believed to have set up a cell in the south­ern Ger­man city of Nurem­berg with the aim of recruit­ing young Greeks who have flocked to the coun­try in search of work.

    Greek com­mu­ni­ty lead­ers in Ger­many have con­demned the arrival of the par­ty, also known as Chrysi Avgi, and called on author­i­ties to clamp down on a group that they said had shown its readi­ness to use vio­lence in Greece and could attempt to do the same in Ger­many.

    Gold­en Dawn, which has close to 20 seats in the Greek par­lia­ment, has described the move on its web­site as the “answer of expat Greeks to the dirty hip­pies and the regime of demo­c­ra­t­ic dic­ta­tor­ship in our home­land”.

    In a state­ment, the Bavar­i­an office for the pro­tec­tion of the con­sti­tu­tion said: “We are keep­ing an eye on devel­op­ments.”

    It said Gold­en Dawn had “an inter­na­tion­al net­work of con­tacts, includ­ing con­tacts with neo-Nazis in Bavaria. These con­tacts are cul­ti­vat­ed via mutu­al vis­its as well as at meet­ings at rightwing extrem­ist events in Europe.”

    It con­firmed that mem­bers of Gold­en Dawn and far-right Ger­man groups had organ­ised rec­i­p­ro­cal vis­its to each oth­er’s coun­tries as well as meet­ing at rightwing extrem­ist meet­ings out­side Ger­many and Greece.


    An esti­mat­ed 380,000 Greeks live in Ger­many, main­ly in the indus­tri­al Ruhr val­ley, though the actu­al fig­ure, as – many do not reg­is­ter with the author­i­ties – is believed to be near­er 900,000. Rough­ly-speak­ing in mod­ern times they have come in three waves – after the sec­ond world war and then dur­ing the Greek dic­ta­tor­ship, when many Greek com­mu­nists were giv­en refuge, par­tic­u­lar­ly in East Ger­many. The third wave is occur­ring now as many, par­tic­u­lar­ly young Greeks, come to Ger­many look­ing for work and to escape unem­ploy­ment at home.German neo-Nazi groups, such as the Bavar­i­an-based Freies Netz Süd, have been fol­low­ing the polit­i­cal suc­cess­es of Chrysi Avgi for some time, mak­ing open ref­er­ence to the Greek par­ty on their web­sites.

    The anti-Nazi organ­i­sa­tion Nurem­berg Union Nazi Stop said it would be mon­i­tor­ing Gold­en Dawn’s activ­i­ties in Ger­many.

    Over the past months Gold­en Dawn, which is wide­ly con­sid­ered to be racist and anti­se­mit­ic, has been held respon­si­ble for numer­ous attacks on for­eign­ers in Greece. The par­ty, whose sym­bol resem­bles the swasti­ka, won 18 par­lia­men­tary seats in last year’s elec­tion. Its pop­u­lar­i­ty cur­rent­ly stands at around 12%.

    Posted by Pterrafractyl | February 10, 2013, 4:42 pm
  9. Clear­ly, the only fea­si­ble way for the US to pre­vent a com­plete implo­sion of the US econ­o­my is to imple­ment aggres­sive aus­ter­i­ty mea­sures now. Oth­er­wise the deficit will spi­ral out of con­trol and no one will want to buy US debt:

    For­eign hold­ings of US debt increased to record $5.56 tril­lion in Decem­ber

    By Asso­ci­at­ed Press, Updat­ed: Fri­day, Feb­ru­ary 15, 9:49 AM

    WASHINGTON — For­eign demand for U.S. Trea­sury secu­ri­ties rose to a record lev­el in Decem­ber, evi­dence that over­seas investors remained con­fi­dent in U.S. debt despite on-going bud­get bat­tles in Wash­ing­ton.

    The Trea­sury Depart­ment said Fri­day that for­eign hold­ings of U.S. Trea­surys rose 0.3 per­cent in Decem­ber from Novem­ber to $5.56 tril­lion. It was the 12th con­sec­u­tive month­ly gain.

    Chi­na, the top for­eign hold­er, increased its hold­ings 1.7 per­cent to $1.2 tril­lion. Japan, the sec­ond largest hold­er, boost­ed its invest­ment 0.2 per­cent to $1.12 tril­lion.

    Demand kept ris­ing in Decem­ber even as Con­gress approached a dead­line to raise the government’s $16.4 tril­lion bor­row­ing lim­it. In Jan­u­ary, Con­gress approved a mea­sure to tem­porar­i­ly sus­pend the bor­row­ing lim­it until May 19. That has allowed the gov­ern­ment to take on more debt while the debate con­tin­ues.

    Why can’t pol­i­cy-mak­ers just do the right thing, make the cuts, and set the econ­o­my on a path to pros­per­i­ty? It’s for the chil­dren:

    Austerity’s chil­dren becom­ing Europe’s ‘lost gen­er­a­tion,’ rais­ing fears of new cri­sis
    Claire Dav­en­port, Reuters | Feb 14, 2013 12:10 PM ET

    BRUSSELS – Chil­dren across Europe are being dri­ven into pover­ty by harsh gov­ern­ment aus­ter­i­ty and youth unem­ploy­ment is soar­ing, threat­en­ing to cre­ate “lost gen­er­a­tions” that could fire up a new con­ti­nen­tal cri­sis.

    Glob­al char­i­ty Car­i­tas said on Thurs­day that around three out of every 10 chil­dren in Greece, Ire­land, Por­tu­gal, Italy and Spain are in or have been pushed to the brink of pover­ty.

    Greece said its youth unem­ploy­ment had now exceed­ed 60%. Spain’s is above 50% and Por­tu­gal has just topped 40%.

    Think tank Bruegel said the prob­lem extend­ed well beyond the debt-laden periph­er­al euro­zone economies and could come back to reverse Europe’s slow recov­ery from finan­cial cri­sis.

    In a report, Car­i­tas said euro­zone coun­tries that have received inter­na­tion­al loans — plus Italy, which hasn’t — are cre­at­ing a huge class of poor­ly-edu­cat­ed and poor­ly-fed young peo­ple with low morale and few job prospects.

    “This could be a recipe not just for one lost gen­er­a­tion in Europe but for sev­er­al lost gen­er­a­tions,” Car­i­tas said, cit­ing the Euro­pean Union’s own sta­tis­tics.

    While these coun­tries’ future work­ers may suf­fer a loss of morale, qual­i­fi­ca­tions and prospects, those that strug­gle through are like­ly to take their tal­ents else­where.

    Those with qual­i­fi­ca­tions are already leav­ing in droves to seek work else­where, par­tic­u­lar­ly in Ger­many where the num­ber of Span­ish and Greek job­seek­ers almost dou­bled dur­ing the first half of 2012.

    Bruegel econ­o­mist Zsolt Dar­vas said the relent­less rise in youth unem­ploy­ment not only destroyed morale at an impor­tant age of devel­op­ment but also threat­ened to reignite an eco­nom­ic cri­sis that appeared to be eas­ing.

    “This is not just a prob­lem for these (periph­er­al) coun­tries. This is a Euro­pean prob­lem,” he said. Thir­teen of the Euro­pean Union’s 27 mem­ber states have youth unem­ploy­ment above 25%.


    Since 2010, Greece, Ire­land, and Por­tu­gal have received bil­lions of euros in loans from the EU and the Inter­na­tion­al Mon­e­tary Fund in return for spend­ing cut­backs and tax ris­es. Spain has had its banks bailed out.


    In 2010, 37.6% of chil­dren were at risk of pover­ty or exclu­sion in Ire­land and 28.9% in Italy. Fig­ures for 2011 are not avail­able.

    Chil­dren are defined as near­ing pover­ty and exclu­sion if they live in fam­i­lies with 60% or less the medi­an income or have par­ents with lit­tle or no employ­ment or lack basic essen­tials such as pro­tein-rich foods, heat­ing and clothes.

    Car­i­tas said gov­ern­ments must ask them­selves what these trends will mean for chil­dren in the long run.

    Stud­ies show chil­dren from poor house­holds are more like­ly to under­per­form at school and to strug­gle to find or keep a job.

    “They are look­ing at a future where the prospect of unem­ploy­ment is stretch­ing out ahead of them,” de Bur­ca said.

    Posted by Pterrafractyl | February 15, 2013, 11:11 am
  10. Two news sto­ries came out yes­ter­day that dove­tail per­fect­ly in an exam­i­na­tion of the cur­rent stench (state) of Amer­i­can cap­i­tal­ism. Here’s the first, from “The Dai­ly Mail.UK”:


    “Why it’s bet­ter to grow up in Slove­nia and Greece than the U.S: Child­hood obe­si­ty, poor edu­ca­tion and homi­cide rates put Amer­i­ca 26th out of 29 nations in sur­vey about best places to raise a child”

    “Lack of edu­ca­tion, cost of health­care, child­hood obe­si­ty and teenage preg­nan­cies put the life chances of Amer­i­can chil­dren at the bot­tom of a table of over­all well being – far behind those from poor­er coun­tries, a damn­ing report has found.
    UNICEF ranked the U.S. at the bot­tom of a league table of the best places to raise a child – below the likes of Slove­nia, Greece, Hun­gary and Slo­va­kia.
    Only Lithua­nia, Latvia and Roma­nia lagged behind.
    Despite being the sev­enth rich­est coun­try in the world, the U.S. had some of the worst rates for teenage preg­nan­cies, homi­cide and child­hood obe­si­ty.
    The overview of child well-being was con­struct­ed out of five dif­fer­ent dimen­sions – mate­r­i­al well-being, edu­ca­tion, health and safe­ty, behav­iors and risks and hous­ing and envi­ron­ment.
    Fac­tors such as pover­ty, infant mor­tal­i­ty and homi­cide rates were tak­en into con­sid­er­a­tion.
    For behav­iors and risks, things like teenage preg­nan­cies, smok­ing cannabis, bul­ly­ing, obe­si­ty and exer­cise tak­en were fac­tored in.
    The U.S. is one of the only coun­tries with infant mor­tal­i­ty rates high­er than six per 1,000 births, along with Latvia, Roma­nia and Slo­va­kia, and has one of the low­est birth weight rates of all the coun­tries sur­veyed.
    It also has one of the low­est rates of young peo­ple enrolled in edu­ca­tion and preschool.
    Only Greece and Roma­nia fared worse in over­all edu­ca­tion­al well-being.
    Amer­i­ca has – by far – the high­est rate of chil­dren who are over­weight by BMI with almost 30 per cent, though it also has one of the high­est rates of chil­dren aged 11 – 15 who exer­cise at least one hour a day, com­ing sec­ond only behind Ire­land.
    The U.S. has the high­est rate of teenage preg­nan­cies but one of the low­est lev­els of under­age drink­ing.
    It also ranks at the bot­tom of the league in homi­cide rates with five per 100,000.
    The ‘low fam­i­ly afflu­ence’ rate, the infant mor­tal­i­ty rate, and the per­cent­age of young peo­ple who smoke cig­a­rettes, for exam­ple, have fall­en in every sin­gle coun­try for which data was made avail­able.
    Over­all, the Nether­lands was ranked first, fol­lowed by Nor­way, Ice­land, Fin­land and Swe­den.
    (Mulit­ple charts with infor­ma­tion at link)

    So why have things got­ten so bad for the gen­er­al pop­u­la­tion in Amer­i­ca com­pared to small Euro­pean coun­tries that have been bat­tered by war and aus­ter­i­ty?
    “Rus­sia Today” (RT) ‑Ok, con­sid­er the source… Has a valid argu­ment that the U.S. has been tak­en over by cor­po­rate fas­cism:


    Is it cor­po­rate fas­cism yet?

    “The finan­cial cri­sis that washed across the globe in 2008 is just the lat­est eco­nom­ic dis­as­ter to hit the Amer­i­can peo­ple. The fall of too-big-to-fail banks and com­pa­nies marked the lat­est chap­ter of a tragedy that has been unfold­ing for years.

    Franklin D. Roo­sevelt once warned that democ­ra­cy will nev­er be safe if the peo­ple tol­er­ate the growth of pri­vate pow­er to a point where it becomes stronger than their demo­c­ra­t­ic state itself. If such a sce­nario arose, Roo­sevelt said, that would be the very def­i­n­i­tion of fas­cism.
    Has Amer­i­ca, the self-pro­claimed land of the free, reached such a point?

    With the rise of the law­less transna­tion­al cor­po­ra­tions, an increas­ing num­ber of Amer­i­cans are becom­ing mere spec­ta­tors to this win­ner-take-all econ­o­my. At the same time, work­ers are sim­ply too afraid of risk­ing their posi­tions by demand­ing demo­c­ra­t­ic rep­re­sen­ta­tion in their myr­i­ad work­places. Cor­po­ra­tions play on the fear fac­tor while enforc­ing the most egre­gious labor prac­tices.

    Com­bine this with the vast polit­i­cal pow­ers that cor­po­ra­tions have acquired and you have a recipe for a nation­al dis­as­ter.

    As Fran­cis Fukuya­ma point­ed out, “An Amer­i­can chief exec­u­tive exer­cis­es author­i­tar­i­an pow­ers of which a politi­cian could only dream,” and is held account­able in his actions only to a board of direc­tors, which enables him to “hire, fire, make merg­ers or divest divi­sions at will.”
    Indeed, the cap­tains of big busi­ness are able to act with total impuni­ty, and this has cre­at­ed a ver­i­ta­ble reign of fear through­out every sec­tor of the econ­o­my.

    For the Amer­i­can peo­ple, out-of-con­trol cor­po­rate pow­er – cor­po­rate fas­cism, if you will – has erod­ed their stan­dard of liv­ing, to say noth­ing about the stan­dard of democ­ra­cy.

    No mat­ter how the spin doc­tors twist US labor data over the past forty years, it is near­ly impos­si­ble to find a sil­ver lin­ing. As the Finan­cial Times summed up the grim real­i­ty: “The annu­al incomes of the bot­tom 90 per­cent of US fam­i­lies have been essen­tial­ly flat since 1973—having risen only by 10 per­cent in real terms over the past 37 years”—despite the rise in two-income homes. Over the same peri­od, how­ev­er, the incomes of the top 1 per­cent have smashed through the roof.
    Con­sid­er the fan­tas­tic growth of bil­lion­aires in the Unit­ed States over a very short time. When Forbes mag­a­zine launched its rank­ing of the nation’s ultra wealthy in 1982, the “price of admis­sion” into this pres­ti­gious club was just $75 mil­lion of net worth. Today, as Forbes report­ed, even after adjust­ing for infla­tion, “this year’s entry fee ($1.1 bil­lion) is rough­ly six times what it was 30 years ago.

    Here is a look at the res­i­dents of the Forbes 400 pent­house, oth­er­wise known as the 1 per­cent: “The com­bined net worth of the 2012 class of the 400 rich­est Amer­i­cans is $1.7 tril­lion, up from $1.5 tril­lion a year ago. The aver­age net worth of a Forbes 400 mem­ber is a stag­ger­ing $4.2 bil­lion, up from $3.8 bil­lion, and the high­est ever, as two-thirds of the indi­vid­u­als added to their for­tunes in the past year.”

    Now com­pare those fig­ures to 1982, when there were just 13 bil­lion­aires while the total worth of the 400 club was just $93 bil­lion. Despite what the super rich wish to believe, this mas­sive hoard­ing of wealth is work­ing against the Amer­i­can peo­ple.

    For those who have for­got­ten what the eco­nom­ic cli­mate inside of the Unit­ed States was like before the 2008 eco­nom­ic tsuna­mi made land­fall, con­sid­er the fol­low­ing. The Econ­o­mist, quot­ing Julia Isaacs of the Brook­ings Insti­tute, report­ed that “between 1974 and 2004 medi­an wages for men in their 30s, adjust­ed for infla­tion, fell by 12% from $40,000 to $35,000.”

    The Wall Street Jour­nal, call­ing this mid­dle-class blood­let­ting “the lost decade,” report­ed: “The infla­tion-adjust­ed income of the medi­an household—smack in the mid­dle of the populace—fell 4.8% between 2000 and 2009, even worse than the 1970s, when medi­an income rose 1.9% despite high unem­ploy­ment and infla­tion. Between 2007 and 2009, incomes fell 4.2%.”

    The arti­cle pro­vid­ed a can­did com­ment by Nicholas Eber­stadt, a polit­i­cal econ­o­mist at the right lean­ing Amer­i­can Enter­prise Insti­tute: “It’s going to be a long, hard slog back to what most Amer­i­cans think of as nor­mal­cy or pros­per­ous times.” That dire prog­no­sis may even­tu­al­ly prove to be over­ly opti­mistic since many econ­o­mists believe the best days of the Amer­i­can econ­o­my are gone for­ev­er.

    The hard­est thing to accept about this fan­tas­tic rever­sal of for­tune for so many Amer­i­can peo­ple is that much of the present pain and suf­fer­ing was large­ly avoid­able. It would have required self-restraint, polit­i­cal will, and very lit­tle sac­ri­fice, but the bleed­ing of the Amer­i­can mid­dle class was noth­ing less than a delib­er­ate, pre­med­i­tat­ed crime.

    As the Finan­cial Times revealed, “the share of the US income that goes to work­ers as wages rather than to investors as profits…has fall­en to its low­est lev­el since records began after the Sec­ond World War.” The world’s most rep­utable busi­ness news­pa­per was forced to admit that “some­thing strange and unprece­dent­ed is going on” inside the US econ­o­my.
    Strange, indeed. Accord­ing to the above­men­tioned report, the present eco­nom­ic cri­sis is a wild­ly dif­fer­ent ani­mal from past reces­sions and depres­sions. In past crises, “the labour share tends to rise dur­ing reces­sions as com­pa­nies hold on to work­ers and sac­ri­fice prof­its, then falls back in a recov­ery,” accord­ing to FT. “But dur­ing the 2008 reces­sion the labour share did the oppo­site: it fell, and when the recov­ery began it kept falling.”

    Here comes the bloody kick­er: “If wages were at their post­war aver­age share of 63 per­cent, work­ers would earn an extra $740bn this year, about $5,000 per work­er,” the FT arti­cle reveals. Labor’s slice of the income pie has decreased to 58 per­cent, a his­toric low that still has not hit bot­tom. This unprece­dent­ed dis­par­i­ty in wage dis­tri­b­u­tion explains why the US econ­o­my is furi­ous­ly spin­ning its wheels, while only the cor­po­ra­tions seem to be advanc­ing.

    Mean­while, labor is always one pre­car­i­ous step away from becom­ing road kill. “The decline in the US labor share, along with a shift of labor income towards high­er earn­ers, may be an impor­tant part of why the US eco­nom­ic recov­ery is so slug­gish,” the arti­cle con­cludes. “Instead of hoard­ing labor and cut­ting prices to grab mar­ket share, com­pa­nies are sack­ing work­ers, hold­ing prices and choos­ing to buy back their own equi­ty rather than make new invest­ments.”

    Clear­ly, the Amer­i­can cor­po­rate elite – now ful­ly blessed with the polit­i­cal rep­re­sen­ta­tion orig­i­nal­ly designed for We the Peo­ple – is indulging itself to an all-you-can-eat smor­gas­bord at the salary trough, and with a void of demo­c­ra­t­ic pro­ce­dure inside the work­place, nobody is forc­ing them away from the table.

    What the Amer­i­can work­er des­per­ate­ly needs today is a sep­a­ra­tion of busi­ness from pol­i­tics, sim­i­lar to the way the world of pol­i­tics was sep­a­rat­ed from the world of reli­gion. He also needs demo­c­ra­t­ic rep­re­sen­ta­tion inside of the work­place.

    “The mis­sion of demo­c­ra­t­ic state­craft…,” wrote Arthur M. Schlesinger Jr. “is to give soci­ety a chance of con­trol­ling the ener­gies let loose by sci­ence and tech­nol­o­gy. Demo­c­ra­t­ic lead­er­ship is the art of fos­ter­ing and man­ag­ing inno­va­tion in the ser­vice of a free com­mu­ni­ty.”

    A per­son need not be a Marx­ist to under­stand a very sim­ple uni­ver­sal truth: With­out vibrant rep­re­sen­ta­tion both in the work­place and at home, the indi­vid­u­als at the top of the cor­po­rate pyra­mid will exploit the peo­ple in the eter­nal quest for greater prof­it. At that point, with the cor­po­rate over­lords in bed with our polit­i­cal rep­re­sen­ta­tives, and demo­c­ra­t­ic pro­ce­dure total­ly absent inside of the cor­po­rate fortress, fas­cist is the only way to define such a bru­tal sys­tem.

    Excerpt from the new book by Robert Bridge, “Mid­night in the Amer­i­can Empire”

    Posted by Swamp | April 14, 2013, 11:23 am
  11. Aus­ter­i­ty: You’d sup­port it if you real­ly cared about the kids:

    The New York Times
    More Chil­dren in Greece Are Going Hun­gry

    Pub­lished: April 17, 2013

    ATHENS — As an ele­men­tary school prin­ci­pal, Leonidas Nikas is used to see­ing chil­dren play, laugh and dream about the future. But recent­ly he has seen some­thing alto­geth­er dif­fer­ent, some­thing he thought was impos­si­ble in Greece: chil­dren pick­ing through school trash cans for food; needy young­sters ask­ing play­mates for left­overs; and an 11-year-old boy, Pan­telis Petrakis, bent over with hunger pains.

    “He had eat­en almost noth­ing at home,” Mr. Nikas said, sit­ting in his cramped school office near the port of Piraeus, a work­ing-class sub­urb of Athens, as the sound of a jump rope skit­tered across the play­ground. He con­front­ed Pantelis’s par­ents, who were ashamed and embar­rassed but admit­ted that they had not been able to find work for months. Their sav­ings were gone, and they were liv­ing on rations of pas­ta and ketchup.

    “Not in my wildest dreams would I expect to see the sit­u­a­tion we are in,” Mr. Nikas said. “We have reached a point where chil­dren in Greece are com­ing to school hun­gry. Today, fam­i­lies have dif­fi­cul­ties not only of employ­ment, but of sur­vival.”

    The Greek econ­o­my is in free fall, hav­ing shrunk by 20 per­cent in the past five years. The unem­ploy­ment rate is more than 27 per­cent, the high­est in Europe, and 6 of 10 job seek­ers say they have not worked in more than a year. Those dry sta­tis­tics are reshap­ing the lives of Greek fam­i­lies with chil­dren, more of whom are arriv­ing at schools hun­gry or under­fed, even mal­nour­ished, accord­ing to pri­vate groups and the gov­ern­ment itself.

    Last year, an esti­mat­ed 10 per­cent of Greek ele­men­tary and mid­dle school stu­dents suf­fered from what pub­lic health pro­fes­sion­als call “food inse­cu­ri­ty,” mean­ing they faced hunger or the risk of it, said Dr. Athena Linos, a pro­fes­sor at the Uni­ver­si­ty of Athens Med­ical School who also heads a food assis­tance pro­gram at Pro­lep­sis, a non­govern­men­tal pub­lic health group that has stud­ied the sit­u­a­tion. “When it comes to food inse­cu­ri­ty, Greece has now fall­en to the lev­el of some African coun­tries,” she said.

    Unlike those in the Unit­ed States, Greek schools do not offer sub­si­dized cafe­te­ria lunch­es. Stu­dents bring their own food or buy items from a can­teen. The cost has become insur­mount­able for some fam­i­lies with lit­tle or no income. Their trou­bles have been com­pound­ed by new aus­ter­i­ty mea­sures demand­ed by Greece’s cred­i­tors, includ­ing high­er elec­tric­i­ty tax­es and cuts in sub­si­dies for large fam­i­lies. As a result, par­ents with­out work are see­ing their sav­ings and ben­e­fits rapid­ly dis­ap­pear.


    “Our dreams are crushed,” added Evan­gelia, whose par­ents are unem­ployed but who is not in the same dire sit­u­a­tion as her peers. She paused, then con­tin­ued in a low voice. “They say that when you drown, your life flash­es before your eyes. My sense is that in Greece, we are drown­ing on dry land.”

    Alexan­dra Per­ri, who works at the school, said that at least 60 of the 280 stu­dents suf­fered from mal­nu­tri­tion. Chil­dren who once boast­ed of sweets and meat now talk of eat­ing boiled mac­a­roni, lentils, rice or pota­toes. “The cheap­est stuff,” Ms. Per­ri said.

    This year the num­ber of mal­nu­tri­tion cas­es jumped. “A year ago, it wasn’t like this,” Ms. Per­ri, said, fight­ing back tears. “What’s fright­en­ing is the speed at which it is hap­pen­ing.”

    The gov­ern­ment, which ini­tial­ly dis­missed the reports as exag­ger­a­tions, recent­ly acknowl­edged that it need­ed to tack­le the issue of mal­nu­tri­tion in schools. But with pri­or­i­ties placed on repay­ing bailout funds, there is lit­tle mon­ey in Greek cof­fers to cope.

    Mr. Nikas, the prin­ci­pal, said he knew that the Greek gov­ern­ment was labor­ing to fix the econ­o­my. Now that talk of Greece’s exit­ing the euro zone has dis­ap­peared, things look bet­ter to the out­side world. “But tell that to the fam­i­ly of Pan­telis,” he said. “They don’t feel the improve­ment in their lives.”


    Mr. Nikas, the prin­ci­pal at 11-year-old Pantelis’s school, has tak­en mat­ters into his own hands and is orga­niz­ing food dri­ves at the school. He is angry at what he sees as broad­er neglect of Greece’s trou­bles by Europe.

    “I’m not say­ing we should just wait for oth­ers to help us,” he said. “But unless the Euro­pean Union acts like this school, where fam­i­lies help oth­er fam­i­lies because we’re one big fam­i­ly, we’re done for.”

    You have to feel for the unfor­tu­nate offi­cials that are forced to impose this kind of aus­ter­i­ty. It’s not like they have a choice:

    Greece vows to keep up deficit-bust­ing dri­ve, eyes pri­ma­ry bud­get sur­plus this year

    By Asso­ci­at­ed Press, Pub­lished: April 16

    ATHENS, Greece — Greece’s finance min­is­ter pledged Tues­day to stick with unpop­u­lar aus­ter­i­ty mea­sures and cor­rect years of prof­li­gate state spend­ing, in the hope of secur­ing a bud­get sur­plus this year that could pave the way for a new debt reduc­tion deal.

    “We still face a hard road ahead, until Greece can access mar­kets again,” Yan­nis Stournaras told a press con­fer­ence. “But we have cov­ered at least two thirds of the way, as far as fis­cal adjust­ment goes, and three quar­ters of the way on com­pet­i­tive­ness.”

    Stournaras was speak­ing a day after Greece struck a deal with cred­i­tors expect­ed to secure it 8.8 bil­lion euros in fur­ther loan pay­ments from its inter­na­tion­al cred­i­tors. The deal fol­lowed weeks of tough nego­ti­a­tions and will include a taboo-break­ing 15,000 lay­offs in the pub­lic sec­tor.

    The min­is­ter told the press con­fer­ence Tues­day that the country’s next main tar­get is to achieve a pri­ma­ry sur­plus — which excludes the cost of ser­vic­ing the huge pub­lic debt — on its bud­get in 2013, a year ahead of tar­get. Athens hopes that by reach­ing this mile­stone, it will get fur­ther debt relief from its cred­i­tors.

    The coun­try has been locked out of inter­na­tion­al bond mar­kets after its econ­o­my implod­ed in 2010, and been kept afloat by res­cue loans from its Euro­pean part­ners and the Inter­na­tion­al Mon­e­tary Fund. In exchange, it has imple­ment­ed harsh and deeply resent­ed aus­ter­i­ty mea­sures, slash­ing incomes, hik­ing tax­es and over­haul­ing an inflat­ed, large­ly inef­fi­cient pub­lic sec­tor.


    Posted by Pterrafractyl | April 18, 2013, 9:35 am
  12. So now Greece gets pun­ished if no one wants to buy off their state assets. It’s def­i­nite­ly not a sell­er’s mar­ket:

    June 27, 2013 5:14 pm
    Finan­cial Times
    Greece faces col­lapse of sec­ond key pri­vati­sa­tion

    By Kerin Hope in Athens

    Greece is strug­gling to avoid the col­lapse of a sec­ond big pri­vati­sa­tion, amid pres­sure from bid­ders for the state gam­ing monop­oly to change terms of a deal agreed last month.

    The prob­lems with the €700m sale of OPAP threat­en to add to ten­sion with Greece’s inter­na­tion­al cred­i­tors, who fear the slow pace of pri­vati­sa­tions will require fur­ther more cuts to keep the country’s bailout pro­gramme on track.

    Emma Delta – a bid vehi­cle backed by Greek oil tycoon Dim­itris Melis­sani­dis and Czech bil­lion­aire Jiri Sme­jc – made the only offer for the Greek state’s 33 per cent hold­ing in OPAP.

    Accord­ing to doc­u­ments seen by the Finan­cial Times, Emma Delta now wants to can­cel two ele­ments of the deal: a three-year, €110m con­tract with Intralot, OPAP’s Athens-based tech­nol­o­gy sup­pli­er; and a 12-year con­ces­sion to oper­ate the Greek state lot­tery in return for a €190m down pay­ment and €50m annu­al­ly.

    The lot­tery was award­ed last year to a con­sor­tium includ­ing OPAP, Intralot and Sci­en­tif­ic Games of the US, the world’s largest lot­tery soft­ware provider. Nei­ther con­tract has been signed.

    Greece’s pri­vati­sa­tion agency, Taiped, has reject­ed for­mal com­plaints by Emma Delta threat­en­ing to pull out of the deal and take legal action if its demands are not met.

    Costas Louropou­los, OPAP’s chief exec­u­tive, com­plained in an email seen by the FT that he felt put under pres­sure by Mr Melis­sani­dis in a series of tele­phone calls.

    “He insult­ed me, as on many pre­vi­ous occasions...You dare to sign [the Intralot and lot­tery con­tracts] and I will take your head off,” Mr Louropou­los quot­ed Mr Melis­sani­dis as telling him on May 20.

    Taiped failed to deliv­er one flag­ship pri­vati­sa­tion this month when Gazprom unex­pect­ed­ly pulled out of the bid­ding for the state nat­ur­al gas sup­pli­er Depa. If the OPAP sale falls through, Greece’s pri­vati­sa­tion pro­gramme will be in dis­ar­ray, rais­ing the pos­si­bil­i­ty that the “troi­ka” of inter­na­tion­al lenders – the Inter­na­tion­al Mon­e­tary Fund, Euro­pean Cen­tral Bank and EU Com­mis­sion – could appoint inter­na­tion­al man­agers to replace Greek exec­u­tives hired by the Athens gov­ern­ment to sell €15bn of state assets by 2016.

    A review of Greece’s bailout by the IMF this month found that income lost through slip­page of the pri­vati­sa­tion pro­gramme would con­tribute to a hole in Athens’ bud­get and “addi­tion­al financ­ing will need to be iden­ti­fied”.

    The dis­pos­als of Depa and OPAP were expect­ed to cov­er about half this year’s €2.6bn tar­get for pri­vati­sa­tion rev­enues agreed with the EU and IMF but fail­ure to sell OPAP would prob­a­bly to see income from dis­pos­als this year fall below €1bn. The tar­get has already been revised down­wards twice because of the risks asso­ci­at­ed with invest­ing in reces­sion-mired, polit­i­cal­ly unsta­ble Greece.

    Taiped has pulled off only one size­able deal this year: the €400m sale of Des­fa, the nat­ur­al gas grid oper­a­tor to Socar, the state gas oper­a­tor of Azer­bai­jan.


    Crit­ics of Greek pri­vati­sa­tion say the OPAP dis­pute illus­trates how Taiped’s man­date to “sell to the high­est bid­der” with­out giv­ing pri­or­i­ty to qual­i­ta­tive cri­te­ria or oper­a­tional expe­ri­ence has under­mined the pro­gramme. “The pro­gramme has suf­fered over­all because of a lack of inter­est from glob­al­ly recog­nised play­ers,” said one con­sul­tant who declined to be named.


    Gee, who would­n’t want to make a major invest­ment in a coun­try ruled by a troi­ka of lunatics?

    Exclu­sive: Greece has three days to deliv­er or face con­se­quences — EU offi­cials

    BRUSSELS/ATHENS | Tue Jul 2, 2013 3:52pm EDT

    (Reuters) — Greece has three days to reas­sure Europe and the IMF that it can deliv­er on con­di­tions attached to its bailout in order to receive its next tranche of aid, four euro zone offi­cials said on Tues­day.

    The lenders are unhap­py with progress Greece has made towards reform­ing its pub­lic sec­tor, a senior euro zone offi­cial involved in the nego­ti­a­tions said, while anoth­er said they might sus­pend an inspec­tion vis­it they resumed on Mon­day.

    Athens, which has about 2.2 bil­lion euros of bonds to redeem in August, needs the talks to con­clude suc­cess­ful­ly.

    If they fail, the Inter­na­tion­al Mon­e­tary Fund might have to with­draw from the 240 bil­lion euro ($313 bil­lion) bailout to avoid vio­lat­ing its own rules, which require a bor­row­er to be financed a year ahead.

    That would height­en the risk that con­cert­ed efforts by pol­i­cy­mak­ers over the past nine months to keep a lid on the euro zone cri­sis could unrav­el, at a time when ten­sions are ris­ing in oth­er trou­bled debtor coun­tries.

    Athens is scram­bling to bridge dif­fer­ences with troi­ka inspec­tors and wrap up the review by the end of this week, a Greek coali­tion offi­cial who took part in the talks told Reuters on Tues­day.

    “Nego­ti­a­tions must be con­clud­ed by Sat­ur­day or Sun­day at the lat­est in order to have a (troi­ka) staff agree­ment that will be dis­cussed at a Eurogroup meet­ing on Mon­day,” said the offi­cial who declined to be named.

    The two sides had yet to agree on how to plug a fis­cal gap and Athens has missed a June dead­line to place 12,500 state work­ers into a “mobil­i­ty scheme”, under which they are trans­ferred or dis­missed with­in a year.



    “It is a very dif­fi­cult nego­ti­a­tion,” a senior Greek offi­cial par­tic­i­pat­ing in the talks said. “We’re mov­ing fast to wrap up as many issues as pos­si­ble as soon as pos­si­ble.”

    But Greece’s finan­cial over­seers — the IMF, the euro zone and the Euro­pean Cen­tral Bank — were unlike­ly to be able to con­clude their review in July and might need to sus­pend the vis­it and resume it in Sep­tem­ber, a senior euro zone offi­cial said on con­di­tion of anonymi­ty.

    Rep­re­sen­ta­tives of the EU-IMF-ECB “troi­ka” have been hold­ing ser­i­al meet­ings with gov­ern­ment min­is­ters in Athens on a host of out­stand­ing issues. If talks are not con­clud­ed by the mid­dle of the month, Athens risks miss­ing the install­ment, the Greek offi­cial added.

    Athens and the troi­ka are at odds over an unpop­u­lar prop­er­ty tax and a sales tax for restau­rants, while a short­fall of more than 1 bil­lion euros has emerged at state-run health insur­er EOPYY, mean­ing auto­mat­ic spend­ing cuts may have to be agreed to bring it back on an even keel.

    The gov­ern­ment plans to ask its cred­i­tors to low­er this year’s pri­va­ti­za­tion tar­get of 2.6 bil­lion euros after fail­ing to find a buy­er for nat­ur­al gas com­pa­ny DEPA.

    The belea­guered gov­ern­ment of Prime Min­is­ter Anto­nis Sama­ras has ruled out impos­ing any new aus­ter­i­ty mea­sures. Unem­ploy­ment has hit a record 27 per­cent and Greeks have lost about a third of their dis­pos­able income as a result of bailout poli­cies.

    Using Troi­ka-log­ic, since the main source of the 1 bil­lion euro Greek bud­get short­fall is in health­care, maybe a nice epi­dem­ic will fix things? At least, let’s hope so because epi­demics are what the eco­nom­ic doc­tor ordered.

    Posted by Pterrafractyl | July 3, 2013, 12:48 pm
  13. JTA 6/30/13 reports: BUENOS AIRES, Argenti­na (JTA) — The Jew­ish ex-inte­ri­or min­is­ter of Argenti­na will be inves­ti­gat­ed for his ties to the AMIA Jew­ish cen­ter bomb­ing.
    The Buenos Aires Fed­er­al Appeals Court last week ordered the probe of Car­los Vladimir Corach in con­nec­tion with an ille­gal pay­ment of $400,000 to Car­los Tel­leldin, an auto mechan­ic who was among those charged in the 1994 attack that left 85 dead and hun­dreds wound­ed.
    Tel­leldin, who alleged­ly pro­vid­ed the car bomb that blew up the Jew­ish cen­ter, has not been indict­ed.
    The three Appeals Court jus­tices called on Fed­er­al Judge Ariel Lijo to inves­ti­gate “the exis­tence of con­crete alle­ga­tions involv­ing Car­los Vladimir Corach, which have not been inves­ti­gat­ed until now” regard­ing the ille­gal pay­ment to Tel­leldin.
    Corach was inte­ri­or min­is­ter dur­ing the Car­los Men­em gov­ern­ment in the 1990s. He was respon­si­ble for obtain­ing the build­ing for the Holo­caust Muse­um of Buenos Aires and was the main speak­er at its inau­gu­ra­tion.

    Posted by senn | July 3, 2013, 2:04 pm

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