What's Been Happening in Greece

Jeff—Saturday

For those of you who’ve wondered what’s been going on in Greece since November 8, 2016—or, for that matter, anywhere else in the world outside of 725 Fifth Avenue (NYC), 1600 Pennsylvania Avenue (WDC), and Mar-a-Lago (FL)—here’s where things stand.

The Grand Kabuki play of bailout back and forth is well into its third run, featuring Greece’s left wing SYRIZA Prime Minister again railing at his country’s EU and IMF creditors over additional austerity measures they insist Greece follow as a condition for the disbursement of more funds in July. And they want an answer by Monday.

The smart money is on Greece’s Prime Minister capitulating once more, after an encore performance of Sturm und Drang. At least that’s been the modus operandi so far, what with SYRIZA having raised the nation’s VAT to 24%, cut pensions by 40%, dramatically increased taxes on land, cars, gasoline, cigarettes, etcetera, and cut close to six billion euros from public wages (though recently announcing 40,000 new public sector hires—widely seen as an effort to counter their party’s sinking poll numbers).

Greece Prime Minister Alexis Tsipras

The Prime Minister has little choice but to go along with Greece’s lenders’ demands if he wishes to cling to his position, for anything leading to snap elections would likely send SYRIZA and its far-right coalition partner out of power.

A new poll shows 8 of 10 Greeks holding a negative view of SYRIZA’s achievements in its two years in power, and has SYRIZA trailing its center-right opposition party, New Democracy, by 16.5 percentage points.

Nine of ten respondents believe things are headed in the wrong direction, and their responses to other questions on what they see as their country’s fortunes are equivalently dire. More than three quarters of respondents see things getting worse.

And they appear to be correct. “Experts” had predicted that fourth-quarter 2016 growth in Greece’s economy would exceed its third quarter growth of 0.9%, but instead it fell by 0.4%, with unemployment remaining at 25%, manufacturing activity recording its largest decline in 15 months, and import prices reaching their highest level in 70 months.

As one reporter (Mediapart’s Martine Orange) observed:

Martine Orange

“European officials may argue that their bailout is working, they welcome the recovery of Greece and the budget surpluses, but the situation is quite different: passively we are witnessing the low-noise collapse of a whole country….

“In seven years Greece's GDP decreased by a third. Unemployment affects 25% of the population and 40% of young people between 15 and 25 years. One third of companies have disappeared in five years. Successive cuts imposed everywhere in the name of austerity now bite in all regions. There are no more trains, no more buses in whole parts of the country. No more schools, sometimes. Many secondary schools had to close in the most remote corners because of lack of funding. Per capita spending on health has declined by a third since 2009, according to the OECD. More than 25,000 doctors were dismissed. Hospitals lack personnel, medicines, everything....

“One fifth of the population lives without heating or telephone. 15% of the population has now fallen into extreme poverty compared to 2% in 2009

“The Bank of Greece, which cannot be suspected of complacency, has drawn up a report on the health of the Greek population, published in June 2016. The figures it gives are overwhelming: 13% of the population are excluded medical care; 11.5% cannot buy prescription drugs; People with chronic health problems are up to 24.2%. Suicides, depression, mental illness show exponential increases. Worse: while the birth rate has fallen by 22% since the beginning of the crisis, the infant mortality rate almost doubled in a few years to reach 3.75% in 2014.”

Ms. Martine’s bottom line to all of this is simple: “After seven years of crisis, austerity and European plans, the country is exhausted, financially, economically and physically.”

As she sees it, the entrenched unwillingness of Greece’s creditors to accept debt relief—instead insisting on further punishing austerity measures—as the only way out of this eternal quagmire, seems motivated by a desire to force Greece into Grexit…at least from the euro.

Putting it succinctly, she writes, “Pushing Greece out instead of granting it the necessary restructuring of its debt, at a time when geopolitical tensions have never been so strong, where Donald Trump explicitly attacks the construction of Europe and bets on its breakup, seems incomprehensible.”

How apt.

With so much in play—SYRIZA driven to stay in power at seemingly any cost, Greece looking for a shining knight with a magic wand to salvage it from financial extremis, and the attention span of the world driven by 140-character tweets—what happens there next may be just that.  Incomprehensible.

Let us pray.

—Jeff