The economy in Greece - austerity measures here we come!

 

After the previous turbulent week in Greek politics and a nationwide strike, I see the people of Greece now braced for the worst. We await in the coming days news of further tightening of the belts. After a visit to Athens last week by members of the European Central Bank, the European Commission and the International Monetary Fund, the latest revelation is grim. On top of previous calculations, Greece will need to make a further savings of up to Euro 4 billion in 2010 to reduce the budget deficit by the amount targeted for the end of 2010.

Apparently on Friday even the political colleagues of Papandreou were shocked by the grim message he delivered in Parliament. In a nutshell he admitted that the Greek economy is on the edge of disaster and that even waiting until tomorrow will be too late. We must act now. A foretaste, I would say, of what we can expect in terms of austerity measures this coming week. While there is no sign of panic in the country, there is a dejected and depressing if not insecure and uncertain atmosphere. The grim faces of the people on the bus - the eternal winter sales (70%!) which will probably continue to the summer as shops try and survive when Greek citizens have stopped spending money - many because they have none. And the consolation of being a member of the European Union is a weak one - in spite all the talk of offering political support, there is no mention of specific measures to help Greece. Papandreou until now has rejected a financial bail out in any form stating that Greece has its pride and will have to pay off the debts it owes. But time may run out quickly. Greece can service its debts until mid-March. It then has to raise billions in the coming two months to service the next installment. All this at a time when the markets and speculators have turned against the country. Greece's credit rating was downgraded in the previous month for the second time, making it more expensive to borrow money on the international markets.

Where are we going? How did we get into such a mess? Who are responsible - the Greek's themselves? People here today are asking themselves a thousand questions. And always lurking in the background are the rising unemployment figures, now well over 10%. Now we await the visit of Financial Commissioner, Rehn, on Monday, the ideal occasion, one could think, for the unavoidable announcement of further tax rises and measures to save the economy.