Tag Archives: Athens

Greek Debt is Out of Control, Report Says

According to the newly-formed State Budget Execution Monitoring Office in Athens – staffed by independent analysts – a significant increase of debt, a high primary deficit and the deep recession have boosted to the extreme the dynamics of  Greek debt – and it is now spinning out of control, they write in a report, quoted by the Greek news paper Kathimerini, Friday.

“What does the EU do with a country that is unwilling to undergo change and structural reform, because there is a lack of political will, of functioning administration and of support of the population?”

 Frankfurter Allgemeine Zeitung

The Greek economy is shrinking at an alarming rate, offsetting the impact of the first EUR 159 billion bailout loan, according to the reports. But Greek finance minister Evangelos Venizelos states that the report lacks validity of equivalent international reports. 

Venizelos last week admitted that Greece is likely to contract by more than 4.5% this year, worse than an earlier 3.5% forecast.

Meanwhile, Greece’s debt has ballooned to over EUR 350 billion.

The deficit has climbed to EUR 15,5 billion by July, compared to a target of EUR 16,68 billion for the entire year.

Greek deficit reached EUR 15,5 billion in July, at the same time the economy is contracting by 4.5%.

To make up for revenue shortfall, Greece raises VAT by 10 percentage points on food and restaurants.

Parts of state revenue included in this year’s calculations will not be collected until early 2012.

To make up the shortfall, the authorities on Thursday raised VAT for food at restaurants and hotels by ten points to 23%.

The restaurant sector has described the measure as ruinous and some operators have threatened to withhold the tax to avoid closing down altogether, www.eurointelligence.com reports.

Separately, the Greek Finance Ministry says it will publicize the names of taxpayers who has owed the state more than 150.000 euros for over a year, according to another article in the Greek news paper, Kathimerini.

“Greece is a Lost Cause”

After the Greek parliament’s admission that the Greek debt has spun out of control, Frankfurter Allgemeine Zeitung’s economics editor, Holger Steltzner,  urges the euro zone in a front page editorial to wake up to the fact that Greece is a lost cause.

“The public service and the private sector have ballooned as a consequence of living on debt and they are not competitive and that is why the ‘rescue billions’ will disappear”, Steltzner asserts.

“What does the EU do with a country that is unwilling to undergo change and structural reform, because there is a lack of political will, of functioning administration and of support of the population?” the German editor writes.

Related by the EconoTwist’s:


Filed under International Econnomic Politics, National Economic Politics

Writer Returns From Vacation in Greece – Shocked and Disillusioned

Jean Quatremer is an well-known author and a professional reporter with the French paper Libération. He recently returned from his summer vacation in Greece. Apparently shocked and disillusioned; tax evasion has become a national sport, 30 – 40 percent of the GDP is generated through the black economy and the country is run by a real mafia, he writes in an outburst on his weblog.

“Everywhere, signs of easy money are there: Easy money obtained through European regional aid, and the umbrella of the euro which allowed the state to borrow more than is reasonable, and hire several hundred thousands of civil servants who now owe their position to their political loyalty.”

Jean Quatremer

Personally, I don’t quite understand why Mr. Quatremer is so upset. He says he’s been on regular vacations in Greece  for the last 30 years, and what he’s seeing and describing has been there all the time. (I have been on vacation in Greece, too.). But maybe his anger represent the rude awakening for many Europeans who now realize they are being forced to pay for someone else’s party?

What’s also ironic, is that the things Jean Quatremer now is observing as signs of corruption, greed and mismanagement – the fleet of brand new cars, the roads and buildings under constant construction and the huge piles of cash behind the bars at the waterfront – not long ago was seen as signs of progress.

But that makes Mr. Quatremer’s commentary even more interesting, known for his “behind the scenes” books about the European community.

The scenery of Europe is obviously about to change.

Here are a few samples of Jean Quatremer’s writing:

“After a dinner attended by a dozen guests, we ask for the bill. It arrives on a piece of paper that has nothing official: I am surprised and asks if we can have tax receipt.  Gene my Greek friends. No, the boss does not provide official documents.  Is it possible to pay by credit card? Sorry, we truly regret that the tavern does not have a terminal ad hoc. In other words, here we are in the black economy: no receipt, only the liquid and therefore no tax or a tax symbolic. This tavern is far from an isolated case: none of the restaurants on the island does not issue official receipt, and you can pay in cash.”

Yeah, that’s the Greece we know…

“Prime Minister George Papandreou and Minister of Finance Evangelos Venizelos can not say that fraud is discreet,” Mr Quatremer notes.

Well, I don’t think they ever said that. Anyway, the French writer hammers on:

“The whole island seems to work in black: the work in the houses are without a receipt, as evidenced by a friend crossed the exit port of a bank with an envelope full of notes 100, 200 and 500 euros. “You understand is that or a 23% VAT.  Anyway, if you ask for an invoice, the work will fall behind.” While the bars on the waterfront issue receipts, “but only on the terrace, because it is in public. Inside, however, all is not received,” says a veteran.”

“Tax evasion remains a national sport, the black economy is estimated between 30 and 40% of GDP. If the tax was not corrupt and efficient, it is not (I refer you to Transparency International Chapter of corruption), much of the Greek problems could be resolved.”

“Without a thorough investigation, simply to walk through Greece, as I do during the month of August, to realize that this country is still far from Europe, far away.”

Wow! After 30 years?!

“I made several reports in Greece over the last eighteen months.  But it is a country I know for a long time to spend regular vacations (the first was in 1981, just after his accession to the EEC at the time). I saw the European structural funds flowing into this country, like a bottomless pit. If, since 1988, the Union paid the equivalent of 3 to 4% of Greek GDP per year, which is huge, much has been diverted: for example, the Athens-Thessaloniki highway, which is still not completed more than thirty years after the start of work has been funded two or three times the minimum, thanks to European funds.”

Interesting. That’s exactly what Polish analyst Jaroslaw Suplacz says is happening in Poland, too. (Except nobody cares about Poland at the moment).

See also: 

“The European money was mainly used to support consumption instead of being invested in infrastructure projects, research (Greece is the laggard in the EU public and private investment in this strategic sector ) or education to prepare tomorrow’s growth,” Mr. Quatremer writes.

“Everywhere, signs of easy money are there, an easy money obtained through European regional aid and the umbrella of the euro which allowed the state to borrow more than is reasonable, and hire several hundred thousands of civil servants who now owe their position to their political loyalty.”

“It is no accident that Greece imports three times more than it exports.  It is, for example, became one of the leading European markets for luxury cars: During my vacation, I’ve never seen, except in Germany, all of Porsche, Audi, Mercedes, BMW (1 Series to X5), Lexus and all the rest .., A fleet (there are more cars per capita than in France) unrelated to the real wealth of the country.  In front of a modest house of the historic center of Ioannina, and I saw two German cars in the garage that were worth about 100,000 euros.”

“Europeans may have to pay a long time for the Greek error,” Mr. Quatremer concludes.

Jean Quatremer

Well, thank you very much! Some of us have figured that out, already…

However, the Travel Notes of a tourist in Greece” by Jean Quatremer is well worth a read, and herby recommended.

Original post here.

Google-translation to English here.

Related by the EconoTwist’s:


Filed under International Econnomic Politics, Laws and Regulations, National Economic Politics, Philosophy

EU to Greece: No More Solidarity If You Vote No

On the eve of perhaps the most significant vote in the Greek parliament since the return of democracy to the country in 1974, the European Commission has warned Greek deputies that if they do not vote the right way, then “everything changes” as to whether “EU solidarity continues”.

“The only way to avoid immediate default is for parliament to endorse the revised economic programme.”

Olli Rehn

The Greek parliament opened debate on Tuesday on a draconian package of public spending cuts, structural reforms and a massive €50 billion sell-off of state assets imposed by international lenders. The Greek parliament is due to vote on the mid-term package on Wednesday and hold a second vote on its implementation on Thursday.

In a stern public statement issued the same day, EU economics commissioner Olli Rehn said there are only two options for the country: pass the mid-term package or default, the EUobserver.com reports.

“The only way to avoid immediate default is for parliament to endorse the revised economic programme,” he writes in a communique to reporters, read  by his spokesman, Amadeu Altafaj-Tardio.

“To those who speculate about other options, let me say this clearly: there is no Plan B to avoid default.”

In recent weeks, a range of commentators, including mainstream and heterodox economists have recommended a range of other paths out of the crisis than those on the table.

The EU executive however dismissed such ideas as unrealistic.

“According to press reports over the last hours, there seems to be an illusion that there will be other plans on our desk,” Altafaj-Tardio says.

“This should be clear in all journalists, politicians and markets’ minds.”

Pressed whether the commissioner’s words meant that if the vote is defeated, Greece will be allowed to go bankrupt, the spokesman said: “If Greece does everything to take the objectives set a year ago, then EU solidarity continues. If not, then of course everything changes.”

He refuse to answer whether a country can default and still be a member of the eurozone.

“We are not putting ourselves in a scenario without Greece at this point in time,” he says.

However, a euro zone source close to talks on the subject confirmed toEUobserver that there are indeed “half-formed” ideas about emergency measures to take in the event that the Greek parliament votes down the measures.

“It would be extremely irresponsible if there were no Plan B. There have been discussions on what to do, a contingency plan in the event that Greece doesn’t vote the right way,” the source says.

Ideas include a show of public support, possibly with the European Financial Stability Fund directly purchasing Greek government debt – an option that has until now been forbidden.

One idea would involve allowing Greece to miss a payment and the EFSF then swooping in and buying up debt at a significantly discounted rate, but with very strict conditions, according to the EUobserver.com.

Another possibility is that Greece could return to the private sector for funding, although such a move would entail borrowing at acutely high rates.

A market analyst speaking to this website also confirmed that in theory, there is nothing preventing Athens from selling debt to private creditors, at least for a short period.

“In the event of a failed vote, Greece could still make the repayments due in July and August by borrowing in the short-term money market, albeit at a very steep interest rate,” Sony Kapoor, the director of international economic think-tank Re-Define, says.

“This would buy two more months of negotiation time.”

In the same statement, the commissioner again told opposition forces to drop their resistance to the mid-term package and forge “the necessary political consensus”.

Read the full post at EUobserver.com.

Related by the EconoTwist’s:


Filed under International Econnomic Politics, National Economic Politics