May 30, 2013
The Greek government is lately endeavoring to establish an environment of optimism, exploiting the sense of the latest reports of the troika. Is there any momentum, or daily and economic developments that justify this wave of optimism? Facts show the opposite, but are all those who believe the opposite biased and prejudiced?
The statement of Eurogroup’s chief Daisselbluhm concerning a new haircut in Greek public debt in 2014 consists a confession that the debt is not viable, despite all efforts for positive signs. In fact, numbers are appalling: Greek debt has been increased from 120% of GDP in 2010 to 170% counting for an additional burden of 50% overall. In this respect, if Greek debt experiences a new cut -similar to the PSI- national economy will get even more damaged adding new cuts to the public spending and the entire economic market.
On the other hand, the positives signs underlined in the reports of the troika have to be further translated to bring out the résumé in its entity: troika is pointing out that competitiveness of the Greek economy has been reduced by 2/3 comparing the actual performance of Eurozone regarding wage cost. In fact, this means that we need to celebrate for the consecutive wage cuts all these years, but not too much as there is a 1/3 left -i.e. further wage cuts- that we need to fulfill before achieving to bring back competitiveness.
Further, the deficit reduction of annual budget and the well-thrilled statement that Greece will soon have primary surplus is overridden by the huge deficits in public insurance funds (i.e. estimated around 3 billion euro) and the fact that there is no positive income or at least any positive perspective that tax evasion is encountered. In other words, the deficit reduction of the annual budget is formed without any contribution stemming from the major “holes” of the Greek monitoring system: no improvement in tax evasion; no improvement in dealing with insurance funds immense debt. This reduction is entirely attributed after the wage and pension cuts, and the complete devastation of the social welfare state fundamentals.
Experience all these years clearly shows that if austerity politics last more and more, the final outcome will be an even darker nightmare for the Greek society and economy: lower wages, unemployment rates beyond 30%, dismantling of labor rights, and de-regulation of social mechanisms. The late announcement by the side of the government that shops will still be open on Sundays might seem instantly progressive and a measure that could revitalize consumption, but in fact is another effort to exhaust the already exhausted market.
Nonetheless, it seems that austerity politics in Eurozone still have some way to go. And so in Greece as well.Dimitris Rapidis