Is Greece going to set off the long feared next wave of the Great Recession?

If anyone wants to gain more "insider" insight from this whole debacle, here is a very interesting article from John Humphrys, in The Telegraph.

This piece was written in January 2012


John Humphrys is a highly respected journalist, TV and Radio News presenter in the UK. He is well known for his intelligent and incisive cross questioning of the political great and good who he has as guests on The Today Programme, on BBC Radio 4.

His son Christopher married a Greek National and has lived with her in Athens for years, where they now raise their family.

John Humphrys fell in love with Greece many years ago, and has a second home out there.



His article from over three years ago........well worth a read if you want to see both sides of the story : -


Proud, but powerless: the Greece that I love.

After a year of unprecedented strife, Greece, the bad boy of Europe, deserves sympathy more than censure says the Today presenter.



Greece is still the bad boy of Europe, the pantomime villain in everyone’s local theatre. If it clings to the euro, it will eventually drag the rest of the eurozone down with it. If it bails out and dishonours its massive debts – even at the cut prices on offer – the result will be the same. Either way, Europe’s economies will be plunged into chaos and we will all end up worse off than Baron Hardup.
But hang on for a moment before you hurl that rotten fruit at the villain from your seat in the stalls. Here is another performer entering from the wings. He styles himself a master illusionist and he is about to persuade you that you cannot believe the evidence before your eyes. He is about to demonstrate that Greece deserves your sympathy rather than your censure. Ladies and gentlemen, I am that illusionist.
Before I attempt the impossible, I must declare an interest. I have a home in the Peloponnese and my son lives with his lovely Greek wife and children in Athens. So I have an affection for this infuriating country. And it is because I have been a regular visitor for 20 years that I have been able to see the best as well as the worst of it – no more so than last year. The worst can be summed up in two words. Corruption is one. Incompetence is the other.
At the top of the corruption edifice are those senior politicians and powerful businessmen who have become vastly rich at the nation’s expense. To compare dishonest politicians in our own country with those of Greece is to compare a naughty little boy pinching a chocolate when the shopkeeper’s back is turned with a Mafia boss who’ll think nothing of garrotting you with piano wire for failing to show respect. Metaphorically speaking, of course. Forget duck houses. Think mansions and yachts.
At the bottom of the scale are public employees who turned up for work when it suited them and had one or two other jobs on the side. Or they may have been “ghost” workers. Their jobs did not exist at all, but they got paid anyway because their second cousin ran the department. Stir into this toxic mix of nepotism, bribery, tax evasion and greed the grotesque incompetence and stifling bureaucracy that has characterised Greek public life for so long, and there you have it.





Not that the Greeks could have created their disaster alone. They needed help from outside agencies, such as powerful investment bankers who turned a blind eye when the national books were being cooked and foreign governments who knew perfectly well the ship was heading for the rocks but were quite happy to watch it sailing on so long as a little business was thrown their way.
Now that it is holed beneath the waterline and sinking fast, it is not the rich and powerful who will perish, but the ordinary Greeks who have done their best. They feel they have been betrayed by their own politicians and by the leaders of the European Union – especially Germany. I have not spoken to a single Greek citizen who does not reflect that anger.
The younger ones show it by protesting. Almost half the young people of Greece have no job. Those in work express their fury by staging strikes; others by switching their political support from the mainstream to politicians on the extreme Left and Right. And many others – in the country that gave the world democracy – see no point in politics when their elected prime minister can be replaced by a technocrat imposed on them by foreign diktat. Some even whisper: “At least under the junta….” But it is the EU that attracts the most anger. More specifically, what everyone calls “the troika”: the EU, the European Central Bank and the IMF.
This might seem puzzling, given how Greece appeared to prosper from the moment it joined the EU 30 years ago. Now, the day of reckoning has come and it is the ordinary people who must pay the price. Their sense of injustice is personified in a man who has become a national hero: Manolis Glezos.
When the Germans occupied Greece in 1941, they draped the swastika over the Parthenon. Glezos risked his life to climb the Acropolis and tear down the hated flag. He was 19 then and ever since he has never stopped fighting what he sees as oppression. He fought in the civil war that followed Hitler’s defeat. He fought the military dictatorship who ran the country until 1974 and spent years in jail to defend democracy. He fought political battles when he was elected to the European Parliament. And now he is fighting the deal being imposed by the troika.
Last year he was on a demonstration’s front line and was attacked by the police. They fired tear gas at him and grabbed him by the throat. He was 89. He was back on the front line within days. At his home in Athens, I asked him why Greece should not repay the vast amounts it has borrowed. By way of answer, he produced a book he has published of horrifying accounts of the Nazi atrocities, photographs of some of the 200,000 who died from starvation or were executed.
The slaughter in the village of Distomo, when 218 men, women and children were murdered by the SS as their homes burnt around them, was described by a German federal court in 2003 as “one of the most despicable crimes of the Second World War”.
Then he showed me a portrait of his young brother and, hanging next to it, a framed circle of faded cloth. It was hidden inside his brother’s beret and the words painstakingly etched into it form a farewell message. His brother was one of those executed.
Mr Glezos swelled with pride when he talked about how his brother went to his death. Pride and anger. Pride for his brother. Anger against modern Germany which, he says, has never paid Greece the reparations that are his country’s by right. Yet Germany is now insisting Greece pay back money which, says Mr Glezos, the nation was effectively tricked into borrowing so that the Germans could become even richer and stronger.
Let me stress, this is not the view of one magnificent, if deluded, old man: it is shared by millions of ordinary Greeks and many politicians, too. They do not fit the stereotype of tax-dodging, retsina-drinking layabouts. They work hard and are now genuinely suffering because of the austerity programme. Old people are giving their pensions to their children so their grandchildren do not go hungry. They themselves eat in soup kitchens.
This country has changed beyond recognition. It doesn’t mean for someone like me who’s been coming here for so long that you stop loving it. And at the end of this horrendous year I feel no less affection for it than I did at the beginning. But what is “it”? Greece is staggeringly beautiful. Its history and its legacy are unique. And none of that will change. But its people? It’s hard to escape a sense that many of them feel defeated.
I had Sunday lunch recently with the Papadamos family: three generations of them, at first glance, a typical middle-class family. In reality, they are desperate. Their main income came from Stella, the mother, a qualified civil engineer whose salary was more than 40,000 euros a year. Now it is a third of that and she can no longer afford the mortgage. Nor can she pay it off by selling their apartment: it’s worth less than a third of what she paid for it, and there are no buyers.
A few months ago, the family decided the only thing to do is leave Greece and move abroad – ideally, to England. But they can’t afford to. They are trapped.
“I love Greece,” Stella told me, “but my country has been sold. It has been sold for a very cheap price.”
Stella is the real face of Greece. She – like millions of her compatriots – should not be pilloried. They should be pitied.


Footnote from his son, Christopher......

My WIFE is a lawyer, who works 14-hour days, writes Christopher Humphrys. She’s lucky if half of her clients can pay. I play in a small Athens orchestra and the atmosphere at work is grim. Our monthly salary for December was not paid.
Now the weather has turned cold, we usually have Granny at home with us. Her own apartment block has no heating – the tenants can’t pay the bills. In some parts of Athens militant mayors opposed to the austerity measures organise electricians to re-connect people who are cut off. It’s illegal, but popular. Unfortunately, in our district the council is too busy trying to stop the neo-Nazi supporters and communists trying to kill each other. They don’t always succeed. There’s a death every few months.
I love taking my small son Hector to football training. He’s a bit upset because his best friend has stopped coming. His father still has a job, but hasn’t been paid since September. He can’t afford the 60 euros a month for training.
I used to enjoy walking the streets. When I came here, this city was like a series of villages. Now there are many people sleeping rough and streets where drug addicts shoot up quite openly.
Austerity is a clever word. It has a veneer of respectability. But that rings hollow here. What I see is pain, fear and despair – in the face of my wife, who rarely sees our children, and in the faces of friends who try to make ends meet. They cannot see what the future holds.
For the first time in 20 years, I’m thinking of leaving Greece. But it is my home. And surely we’ll get through this. Won’t we?



http://www.telegraph.co.uk/news/worldnews/europe/greece/8998359/Proud-but-powerless-the-Greece-that-I-love.html

I honestly think that Greece should have their debts cut to the average per capita EU amount so that they can actually be able to pay it off rather than endlessly pay a staggering interest only payment.

This will greatly piss off Ireland and Spain (not to mention France, Italy and Portugal) who also suffered greatly from the EMU shambles in their own ways, but a line has to be drawn somewhere.

Greece was a troika fuelled financial incompetence too far, the like of which should never, ever be allowed to happen again.
The whole EMU scheme was brought in with the idea of forcing the EU to adopt universal uniform taxation and spending, which would be one short skip and jump from a fully Federal EU, with individual countries sovereignty being thrown out of the window.

In the drive towards eventual federalisation, France and Germany have always been in the front seats, and consequently, imo, France and Germany are mostly to blame for the hasty "welcoming" of new countries into the fledgling Euro.
The Euro gave Germany a far cheaper currency than their DM at the time, and for many many years this greatly increased their manufacturing exports to the neighbouring EMU partners.
Suddenly, German BMW's, Porsches, VW's, Audis, Bosche products, etc etc., were much cheaper than when they were priced in DMs, so much so that for the past three or four years, and Walter will no doubt verify this to a certain extent, Germany has been running A MASSIVE AND ILLEGAL SURPLUS.
There is supposedly some sort of penalty that should be imposed during such times of gross surplus, but surprise surprise, Germany seems to be getting away with it scott free at the moment.
I shall try to find a link.



Greece should never have been allowed in without proper scrutinisation.
The Troika failed miserably in safeguarding Greece's wellbeing, purely so that they could grab another country into the Eurozone.
The, in my view, almost criminally negligent Troika should now be made to pay for their part in this whole politically motivated pyramid scheme.

Let Greece either breathe again and everyone lick their wounds, or risk Greece crashing out and having the likes of Putin picking up the pieces.


There can be strings attached to the partial cancellation of their debt, such as an overhaul of their tax loopholes and collection enforcement etc., but this whole financial fiasco and Greek "bankruptcy" should be regarded as a collective thing, with at least half the finger wagging pointed firmly at the politically devious, manipulative and reckless Troika.

Staunch the bleeding, let the patient recover, learn from the experience and move on.

The "Euro" had been a goal of the European Union (EU) and its predecessors since the 1960s, entered into force in 1993 with the Maastricht Treaty and in 2009 with the Lisbon Treaty.

Might well be that some of the newer EU-members than the original six look at this differently.

Germany's record trade surplus is a bigger threat to euro than Greece
If EU law were properly enforced, Germany would face fines for endangering eurozone stability and breaching the Macroeconomic Imbalance Procedure for the fifth year in a row


Germany’s current account surplus is out of control. The European Commission’s Spring forecasts show that it will smash all previous records this year, reaching a modern-era high of 7.9pc of GDP. It will still be 7.7pc in 2016.
Vague assurances that the surplus would fall over time have once again come to nothing. The country is now the biggest single violator of the eurozone stability rules. It would face punitive sanctions if EU treaty law was enforced.
Brussels told Germany to do its “homework” a year ago, but recoiled from taking any action. We will see if Jean-Claude Juncker's commission does any better this time.
If not, cynics might justifiably conclude that big countries play by their own rules in Europe, and that Germany can defy all rules.
The EMU punishment machinery is highly political, in any case. The story of the EMU debt crisis is that the authorities persistently enforce a creditor agenda rather than macro-economic welfare (an entirely different matter).
This is the fifth consecutive year that Germany’s surplus has been above 6pc of GDP. The EU’s Macroeconomic Imbalance Procedure states that the Commission should launch infringement proceedings if this occurs for three years in a row, unless there is a clear reason not to.


There are few extenuating circumstances in this case. Germany’s surplus is not caused by a one-off shock. The surplus remains huge even if adjusted for lower energy import costs. It is a chronic structural abuse, rendering monetary union unworkable over time, and is surely more dangerous for eurozone unity than anything going on in Greece.
“The European Commission should stop pulling its punches: Germany should be fined,” said Simon Tilford, from the Centre for European Reform.
“Their surplus should be treated in the same way as the southern deficits were treated earlier, as a comparable threat to eurozone stability. What is so worrying is that the surplus would normally be falling rapidly at this stage of the economic cycle,” he said.

Germany’s jobless rate is at a post-Reunification low of 4.7pc. It should therefore be enjoying a surge of consumption. This it is not happening because the rebalancing mechanism is jammed. What this shows is the EMU remains fundamentally out of kilter, and doomed to lurch from crisis to crisis even if there is a recovery.
Any rebound in southern Europe will lead to the same build-up in intra-EMU trade imbalances, and therefore in the same offsetting capital flows, vendor-debt financing, and asset bubbles that led to the EMU crisis in the first place.

he International Monetary Fund warned last year that the German surplus – then 8.25pc of GDP when adjusted for the cycle - is destructive for EMU as a whole. It is between three and six percentage points higher than is either “desirable” or justified by fundamentals. It is not in Germany’s own economic interest, and makes it even harder for the EMU crisis-states to claw their way out of trouble.
The IMF said Germany’s exchange rate is undervalued by as much as 18pc under trade elasticity theory even then, before the more recent plunge in the euro. This was achieved by squeezing wages in the early years of EMU, undercutting the South.
Efforts by France, Spain, Italy, Portugal and Greece (super-competitive Ireland is irrelevant to this debate) to claw back lost ground by doing the same at this late stage is precisely what pushed the EMU system as a whole into a quasi-deflationary slump from 2011 to 2014.



Full article.......

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11584031/Germanys-record-trade-surplus-is-a-bigger-threat-to-euro-than-Greece.html

Might be so in some countries. Not here in Germany (suddenly everything became more expensive) or in France (suddenly is wasn't cheaper to buy German products there as I'd done before).

While the latter certainly has a lot to do with my bad calculation (Francs divided by three = DM) versus French € = German €, I don't think that you can blame the European currency for Germany being an export champion.

Walter:-
"The "Euro" had been a goal of the European Union (EU) and its predecessors since the 1960s, entered into force in 1993 with the Maastricht Treaty and in 2009 with the Lisbon Treaty.

Might well be that some of the newer EU-members than the original six look at this differently."




A goal which seemingly allows near bankrupt neighbours to join, then gives them a gold credit card, knowing full well they cannot pay it back.

And by newer members, I assume that is a roundabout way of referring to the UK? Without whom, Germany's "Europe" would have been very different indeed. And the UK who totally bankrupted itself in the process?

Maybe your original founder members should have taken more heed of this new member, who shouted from the rooftops that the EMU would lead to precisely this sort of scenario.

Thank god we stayed out.

"While the latter certainly has a lot to do with my bad calculation (Francs divided by three = DM) versus French € = German €, I don't think that you can blame the European currency for Germany being an export champion."



Without the Euro giving your country a false market, your DM would have become so strong within a few years that your exports would have seemed inordinately expensive to all but the ultra rich, and your sales to the EU would have been far less than they were.

Yes, there was an agreement between France and Germany that they both together would birth the Eu Project, and that they would be both the sheppards. Germany was certainly the stronger in part because of their better relationship the the USA but germany committed to in all things EU being the equal of france, because they cared so much about the idea of Europe and this was the only way to make it work. This more or less worked till France turned up totally broke and with politicians who were not much good. From then on Germany was in charge

And yes, a huge part of the problem is that Paris and Berlin (bonn) decided that at all cost they needed to grow the EuroZone/EU, that they had to make it too big to fail as fast as possible so that the people would stuck with it no matter what. That is why Greece was let in even though they did not meet the standard, never intended to, and lied about what they did do. Damn right, Greece is a problem because of Paris and Berlin, but more because of Berlin because they have been running the EU for a few years now. Mismanagement of Greeces economy was directed by Berlin, the expulsion of Greece from the Euro will mostly be Merkels fault, but the fact that the EU was poorly conceived and that Greece over got to where it could be a huge problem is also at the foot of Paris.

The foundation of the EU certainly is based on the Schuman plan. But besides France and Germany, the other early members - Italy, the Netherlands, Belgium and Luxembourg - had had the same rights. And basically the same ideas.

Italy has not had any money or any functioning political system in memory and the rest are basically cities not states. France and Germany were to two that mattered, no one could defy this team if they agreed and had made up there minds.

http://www.usatoday.com/story/money/2015/06/30/delamaide-merkel-fails-eu-test/29515081/?ref=yfp.

Wait: someone thought that an intolerant East German was or could be a great leader?

looks like the Greek politicians are good at their day jobs after all, but if they dont have the support of a big hitter God help them. Russia? China? USA?

http://www.dw.com/en/opinion-tsipras-an-amateur-and-a-dilettante/a-18554232

Excuse me: No power ever calls a no confidence vote that they not only dont have to call but are criticized for calling....that they very well might lose and that polling done before the call of the vote showed that they would lose, if "hanging onto power" is the goal. We see here the Germans reaching into the ridiculous to demonize their advisories. THe Germans look petty and desperate.

Greek PM offers fresh compromise to creditors. Following link may be updated
http://www.bbc.com/news/world-europe-33345219

Early reports are that the Greeks have more-or-less caved in.

I think that the Greeks are royally shafted whichever way they go.

The EMU political powerbrokers should hang their heads in shame. They have greatly contributed to breaking a country, purely to further the Federalist dream.

They nearly did it to Ireland. Spain is now worth about two brass farthings and a donkey turd. Italy is disappearing up its own debt ridden backside. Portugal is all but bust.

And France is fast approaching the point when they will start circling the bowl.

Apart from Germany, it's not exactly a success story, this Euro venture, is it?

We have the same currency in 19 countries. Even for someone from Sterlingcountry it's easier now.

I would imagine that out of those 19 countries, only about three or four were in a position to move itself into a single currency system when they actually did so.
These different countries have different levels of wealth, assets, manufacturing strengths, welfare systems, taxation and pensions. To control their inflation, they were able to increase or decrease their interest rates. To balance their currency in extreme cases, they were able to devalue or revalue their currency.

The day they joined the Euro, they lost all that essential flexibility.

They were suddenly locked in to a 1% fixed interest rate (or thereabouts), and unable to stop the rush for those ultra cheap loans, many of those countries soon saw rampant debt among their businesses and general population.

The Irish property market went through the roof, as even the poorly paid suddenly felt rich enough to go and buy a property, driving prices up into one of the biggest booms that Ireland has ever experienced.
Unfortunately, this was followed by the biggest bust.

Spain experienced much the same thing, leaving vast, unfinished housing estates empty and baking in the sun. A complete brand new International Airport built and left unused. Ghost towns sprang up all over Spain.

Ireland accepted its austerity program like a good schoolchild, after a huge chunk of its young population emigrated away in a desperate attempt to find work.

Spain's youth unemployment % is truly heartbreaking.

France being France, rather than do austerity, it went down the tax high route. It had little option with their population, as any attempt at cutbacks would (and did) result in mass strikes.
As a result of this mainly business taxation, employers thought long and hard before taking on any staff, as the government overheads for each worker meant that they would be paying not only the workers salary, but almost as much again to the government for each worker.
My brother used to employ five electricians up until a few years ago. He now works on his own, as he couldn't afford the government on-costs for each worker.
He is a tiny business in the great scheme of things, so imagine how many young people are not being taken on by big firms in France for this same reason.
Utter madness.

The old saying goes that money is made round to go round.

If say, in the end, Greece, Portugal, France, Italy, Spain and others all end up with staggering, unaffordable debt (they're not far off that now), where is the trading going to come from in this trading block?

We were all supposed to have no trade barriers or tarriffs within the EU.
Don't you think that being bankrupt is a slight barrier to trade?
It's all very well engineering massive surplus after massive surplus as it gives you all a splendid time over there for a while. But when you've mopped up all the spare change from your neighbours, how are you going to sell them anything when they have absolutely nothing left?

To greatly paraphrase the old saying....there's more than one way of skinning a cat, bleeding it dry, sucking out the marrow, lumbering it with the lure of "easy" massive debt and then telling it how it can humbly feed on scraps whilst prostrating itself for eternity with the promise of allowing it to stay in the club if it behaves itself from now on.

Rather than having that shiny Beamer on the drive and a house full of bosch, I bet that the average Stavros now wishes that he had not believed all the propaganda and stayed with his beaten up old Fiat, eh?

According to Tsipras' tv speech some minutes ago, Sunday's referendum is not about whether or not Greece remains in the Eurozone but to get better proposals. And the current situation was the fault of previous Greek government - thus, he was forced to act as he did. Next Monday, there would be better terms for the Greek people.

I believe the core issue here is the ambigiuity of governance withing the union: divided soverignty between the member states and the union government. Ironically this is precisely the thing that enabled Europe to move so quickly skirting historical differences in law, governance and culture. Eventually the issue must be faced and the piper paid.

It is certainly true that a shared currency with principal export markets has been a benefit to EU exporting nations, principally Germany. Equally obvious is the fact that the different taxing and spending policies of the various national governments have created some significant local strains on the common currency and/or their own economies. This risk appears to have been recognized early on with the now forgotten Stability Pact, which severely limited deficit spending and national debt. That proved inconveniently restrictive for the major EU nations and was abandoned quickly. All that said it was the economic policies of the individual nations that caused or enabled the econonic excesses they experienced. The monetary union took away one of the tools for dealing with the excesses that occurred, but it did not cause them.

It is easier to see the flaws in the EU and the Euro Zone than to recall the troubles of the past that some of which might be still with us if they didn't exist.