Greece is a Ticking Bomb

Recently the IMF published the fifth report on Greece’s tragic economic status: 2011 is going to be one more failure for the ongoing process of the IMF’s ‘shock therapy’ styled reform.

IMF chief of mission Thomsen who as in previous press conferences, admitted that the country’s 18-month record under his policy recommendations had fallen “well short” of his forecasts and reform expectations, stated that “The economic situation in Greece has taken a turn for the worse, with the economy increasingly adjusting through recession and related wage-price channels, rather than through structural reform-driven increases in productivity” adding that “we have reached the limit of what can be achieved through increasing taxes”.

In fact, what was achieved is the extension of time for Greece’s death rattle and nothing more.

The ex-PM Mr. Papandreou after exiting from his office which made him feel free to express himself properly, said that the referendum was an idea based on the right of the citizens to decide on nationwide crucial issues and that the austerity by itself is not going to lead anywhere without growth.

In another interview he stated that Greece is not the only one to take the blame for the present situation but the EU as well, that failed to check on the money provided to the members of the Union. (aka the past PASOK government).

Lastly, during the U.N. climate change summit in Durban, South Africa, he lectured on democratic principles backing the Occupy Wall Street movement, forgetting that when he was in charge he often exercised brutal police force against Greece’s peaceful “indignados”.

While the disabled are protesting on the cuts of their pensions in the center of Athens, and some 130 MPs are claiming backdated salary payments amounting to hundred thousands euros, opposed by Parliament President Filippos Petsalnikos, Mr. Papademos, the unelected PM of the interim government, echoing the words of Thomsen affirmed that there will be no new taxes in the coming year 2012, though experience points to the opposite direction.

Despite that Mr. Venizelos reassured the “no new taxes” motto, he admitted that "the recession is worse than any prediction. We are in out third successive year of recession and heading to a fourth," concluding that "… the atmosphere must change. Banks must feel secure, and we must fully fulfill the decisions of Oct. 26".

According to the IMF’s report: “…banks have increasingly resorted to emergency liquidity assistance (ELA) provided by the Bank of Greece (BoG), with the government approving some €60 billion in guarantees to facilitate this. Total central bank exposure (including ELA by the BoG) now amounts to nearly €120 billion (or 55 percent of GDP)”.(our emphasis)

As for the “Labor market reforms” it states that “to date have not managed to deliver enough wage flexibility to prevent pressure on employment”.

This is explained by the “inadequate tools to allow wages to adjust in small enterprises” which admittedly “represent 97 percent of firms, account for ¾ of total employment and most of the recent increase in the unemployed. These firms could not take advantage of the special firm-level agreements introduced by the authorities in late 2010, and are thus constrained by sectoral and occupational wage floors, or forced to resort to informal arrangements”.

The problem here is more complex than described as the employees like the unemployed (16,5%) are potential consumers and reducing their wages will certainly lead to a deeper downturn. For who is going to buy products (or services) when the 3/4 of the total employees will face more tightness coined as “reduced wage rigidities” ? I guess this smacks of one more vicious circle.

Concerning the potential present risks, the report among others refers to “the continued failure of Greek politicians to reach a national consensus (that) has added election risk to policy implementation concerns”.

And that is the bottom line.

As the side effects of the recent referendum attempt proved, with the elections now added, in short the main democratic functions represent just a risky element for the ongoing social dismantling “shock and awe” therapy.

Out of this white collar’s clinic framework the Telegraph reports: “A new underclass has appeared: in the homeless and hungry who roam the streets; in the spiraling number of drug addicts; in the psychiatric patients ejected from institutions that can no longer offer them a place; in the thousands of shop owners forced to close and board up businesses; in those who forage through municipal rubbish bins at night; and in the pensioners who make do with rejects at fruit and vegetable markets. Suicides have also risen, with help lines reporting a deluge of calls – 5,000 in the first eight months of 2011 compared with 2,500 for all of last year”.

And things getting harder.

OSAC in his Greece 2011 Crime and Safety Report describes the situation in a country that “violent crime is considerably less prevalent than in other European countries”, stating that “ there has been a dramatic and steady increase in security related incidents involving improvised explosive and incendiary device attacks, as well as small arms, grenades, and other infantry style weapons. A majority of the increased attacks are politically motivated incidents that usually have a specific target of interest. Armed violence and random assaults are still somewhat uncommon, but rates of street crimes, such as pick pocketing, purse snatchings, and other crimes of opportunity, appear to remain steady. Statistics for attempted and committed armed bank robberies have increased in Greece over the last two years. Reported crime statistics indicate that fraud related crimes and sexual assault crimes remain low in relation to population size. Cyber-crimes are also low in relation to population size but appear to be gradually increasing. Police have reported a significant increase in burglaries of unoccupied homes and apartments, as well as theft from attended and unattended vehicles with valuables left in plain sight. “Smash & Grab” thefts are a recurring phenomenon”.

Personally, knowing that most of the incidents are not reported as the victims realize that they have nothing to expect from that – I have over 10 of them among friends and relatives – I am sure that this picture is rather inaccurate and reality is considerably darker and as we have noted elswhere it will certainly turn worst.

Depraved from hope for the future, suffering in a devastating present and being bared from any democratic procedures to express its opinion, Greece is a ticking bomb.