Will Greece default and when?

Probably one of the greatest concerns of the Greek man on the street currently is the question if Greece will manage to cut its debt over the coming four years or if, as an alternative, it will be forced to default on its debt. 

I believe there is a substantial risk that the $110 billion loan from the IMF and the EU will only delay the inevitable. The Greek economy, it is clear, will not grow for the coming two years. Possibly 2013 will be the first year when the economy will show signs of growth. Inspite of all austerity measures which have been introduced, it looks to me as if Greece will have continued difficulties in servicing its debt. For the coming years the IMF loan - and do not forget it is a loan which also has to be repaid - will give Greece a certain security but it will not replace the need of the country to borrow on the capital markets. 

Part of the recent problem and ultimately the reason why the country had to take the $110 billion loan is the fact that it was too expensive to borrow on the free markets. There were high fears on the financial markets that Greece could default and thus the rates for lending to the country were prohibitively high. If a time does not come when there is enough international confidence in the future of the Greek economy then Greece would be forced to borrow at rates it could not afford to pay. In this scenario the only alternative would be for Greece to "restructure" its debt, i.e. default on at least part of it and let the financial markets take what is called a "haircut", i.e. the country could offer to repay 60% or 70% and default on the rest.

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.

I could not resist this one - Greece bankrupt?

A holiday in Greece? No let's just buy it!

Greece - austerity measures - does Greece need a bail out

Things are grim in Greece at the moment - yesterday we had the country paralyzed by a general strike - government employees, air traffic controllers, bus drivers - an estimated 2 million were on strike some sources say. This is the worse climate I have experienced in Greece in 15 years.

You only have to look at the faces of the people travelling on the bus this morning - expressions were morose, one can even feel other people's insecurity. Unemployment is raising its head even higher and people are simply afraid - and rightly so. How much worse can it get and how did the country get into this disastrous situation in the first place.

There are more questions than there are answers. Let's start with one FACT. In previous years, previous governments cooked the books to hide the national deficit - by fair means and foul. The national statistics office was not independent of the political powers and obviously painted the picture they were told to by the powers on how. PASOK claims when in came to power in October 2009 - it discovered and revealed to the public that the deficit was actually double what the previous government had claimed it to be.

Then we have the issue of a bloated public administration - by the way those in secure jobs and the first to strike because of a pay freeze - that's hardly what I call solidarity. Jobs in the public administration even ridiculous department were created to provide jobs for friends - not to serve better the Greek citizen. Corruption in Greece was a daily fact of life - it was uncommon for a doctor or a dentist to provide you with a receipt for their services - instead the black money went into their pockets and past the taxman. I suppose at some time there had to be an end ot this ugly story - those who earn big salaries - the doctors, the dentists, the lawyers were the most astute at not paying taxes. Taxi drivers went on strike last week because they are going to be forced to issue receipts - i.e. they will have to account and declare their real income - unthinkable in Greece - but the reality of life in the rest of Europe.

And our European friends - both Eurozone and beyond - there is a mixed message, as I see it. On the one hand they feel angered that Greece has shown itself incapable of getting in act and finances in order and ont he other they reaslie leaving the country out on a link could potentially damage the Euro, damage credibiliity in the Eurozone and ultimately political damage the credibility of the whole European concept. They feel caught between a rock and a hard place. Rumours of Greece asking to leave the Eurozone - it cannot be expelled - do not help the situation. The richi n fear of being confronted with the new devalued drachma are getting their money out of the country into Swiss banks - disaster can be a self-fulfilling prophesy.

Blue Oyster Cult, Thessaloniki 13 December 2009

Formed in 1967 this band, the Blue Oyster Cult is still going strong today and as part of there European tour they are appearing at the principal club in Thessaloniki on 13 December 2009. The band is a hard rock, psychedelic rock and heavy metal one. Earlier they were known as the soft white underbelly and were acclaimed to be the Black Sabbath of th e USA. Worldwide they have sold over 14 million re cords, half of these in the US alone.
Their current lineup consists of:

Eric Bloom and Buck Dharma performing in 2008

• Eric Bloom: lead vocals, rhythm guitar , keyboards
• Buck Dharma: lead guitar, vocals (1967-present)
• Richie Castellano: keyboards, guitar, vocals (2004-present)
• Rudy Sarzo: bass guitar, back-up vocals (2008-present)
• Jules Radino: drums, percussion (2004-present)

Frederico Aubele in Thessaloniki on 11 December 2009

Frederico Aubele is appearing for one night only at the Principal Club just outside Thessaloniki on 11 December as part of a European tour. On Saturday evening 12th December he is also in Athens - again for one night only.

Born in Buenos Aires, he started studying music at the age of twelve. His debut album Gran Hotel Buenos Aires was the result of him being signed up by Thievery Corporation's Eighteenth Street Lounge Music. he has continued in Europe and now lives in Barcelona having spent some time previously in Berlin. His music is described as Latin, tango, lounge - a mix of the Americas.

You can find many of his tracks on youtube including some of the more famous such as Esta Noche and Postales.

Goodbye Olympic Airlines - Hallo Olympic Air !

Wednesday 30 September is the last day of existence of Olympic Airlines, formerly Olympic Airways, the former national carrier of Greece which has brought in crippling losses over the years. The airline has been privatised after years of trying to find a buyer. As of 1 October 2009, "Olympic Air", under the ownership of the Marfin Investment Group, will take to the skies. One of the major problems of the former national airlines, set up and originally owner by Aristotle Onassis, was the age of the fleet. The core of the airline and the European and national networks were served by Boeing 737's, many of them over 20 years old.

The new fleet will consist initially of 13 Airbuses (320's and 319's) as well as 10 Bombardier Dash 8-Q400 aircraft , five Bombardier Dash 8-100 and one ATR-42. I imagine the Airbuses will serve the international routes and the Dash fleet will be allocated to the 20 domestic locations. In fact the fleet in considerably downsized although an additional number of Dash and Airbuses will also come into service by March 2010.  Total investment in new aircraft is well over $1.1 billion.
One major difference is that the new Olympic Air will no longer fly to intercontinental destinations. Until today Olympic Airlines was flying to Johannesburg, New York and to Toronto via Montreal. These routes never made profit and seemingly now have been abandoned. Additionally I imagine cuts in certain Euroepan routes, the new website of the airline gives few details but does state that it will serve London, Paris, Vienna, Brussels, Amsterdam, Milan, Rome, Bucharest, Larnaca, and Sofia. I assume several German routes (Berlin, Stuttgart, Dusseldorf and perhaps Munich) will get the chop mainly on account of the fierce competition Olympic Air will face from Aegean Airlines which in recent years has been taking on a increasing number of European routes to compete with Olympic.

What a surprise - 5000 homeless in Athens

Last month I wrote a short article about Greek authorities clearing illegal immigrants out of ruined buildings in Athens. I complained about the short-sightedness of such actions asking where are these people supposed to go. I was therefore nto astonished to open today's newspaper and read about the increase in the number of homeless in Athens this winter.
Official figures show that 5,000 people are homeless in the city. They even admit that the number is probably much higher - something they would be less eager to admit with unemployment figures but that is not a surprise either. 

Deputy Mayor Eleftherios Skiadas had to admit that the clean up operations in the summer had had its consequences. “The evacuation roughly doubled the number of people at our meal centers.” They simply could not cope. This is what I mean by short-sighted actions on the part of the authorities. Instead of taking a more pro-active stance and arranging for these homeless to find alternative accommodation, they were left on the street. Something, I fear symbolic of Greek politics, solve the immediate problems and worry about the consequences later. The social unrest kindled by such off-the-cuff decisions is exemplied by the following: 

"Over the last three months, Koumoundourou Square has turned into an open-air hotel for immigrants, homeless people and drug addicts,” said the Panathinaia residents’ group in a letter to Alternate Interior Minister Christos Markoyiannakis." Fabulous eh?

PASOK's election strategy - will Greece swallow it?

Now after the week-end speech of Papandreou, PASOK oppostion leader, we have a clearer view of how the party plans ot get the majority. As I stated in my previous post he seems to be placing importance on emphasising what PASOK will push through byu way of legislation in the first 100 days if the party wins the election. One measure which will inevitably be popular - if the electorate fall for it - is the promise to raise wages and pensions in the public sector - the exact opposite of Karamanlis who stated his intention to freeze wages in the public sector. Papandreou plans to make savings by cutting public waste in the sector.
Secondly PASOK  has vowed they will introduce legislation to protect people with bank loans and to take measure to combat the rising cost of living. One such measure is to break any cartel or price fixing in Greece, issues we have seen in the past on account of the relatively small number of big players in the market. This will be combined with stronger efforts to combat tax evasion and to tax church properties. A third measure Papandreou mentions is help for small and medium-sized enterprises in the form of low-cost loans and an additional measure which makes sense is working on cutting bureaucracy for those wishing to set themselves up in business. Although not specific in his speech, Papandreou also foresees incetnives on the job market to increase employment in the face of the economic crisis.
New Democracy has responded that this is an unrealistic set of measures which does not entail one unpopular measure. So now the question remains if PASOK has the credibility among the electorate to get their vote of confidence in the form of an election victory.

Election in Greece - the fight is on!

If someone were to asked me today, based on the statements of the ruling party led by PM, Kostas Karamanlis, and by G. Papandreaou, opposition leader of PASOK, who is going to wine the elections on 4th October, I think my answer would be, I do not know. The Greek media treat the campaign now as a politcal Olympic 100 meters race, happy that they can now fill endless hours of television time with the senseless rantings and speculations of six people talking at the same time. 
Opposition leader, Papandreou, outlined PASOK's strategy today and yesterday at the end of the Thessaloniki Trade Fair. I am surprised that he has made the mistake of foregoing the support of previous PASOK Prime Minister, Kostas Simitis, who has announced that he will not stand in the upcoming elections - a clear expression of the divide within the party. It is a mistake Papandreou may well  regret not reaching a compromise with Simitis.
PASOK's election manifesto held few surprises and in some senses is an imitation of the Obama campaign in view of what PASOK would do in the first 100 days if the party wins the elections.
However, there is one fact no one can hide - not even Papandreou. The citizens will have to undergo hard times in terms of taxation and other measures if Greece is to get out of the financial and economic mess it now finds itself.

Greece in recession - tough times ahead

Although no one is saying it out loud, there is a general consensus that the Greek economy has entered recession. This has been partly staved off up to now due to the fact that the banking sector had not been contaminated with the toxic assets which took their toll in the USA and other EU economies. But the pillars of the Greek economy are shipping and tourism and here Greece is now feeling the pinch. With any global economic slump the shipping industry suffers as goods are not being produced or exported in the quantities they are during an economic upswing. Added to this the country so far this year has seen a 17% downturn in revenue from the tourist sector.
Prime Minster Karamanlis's speech at the Thessaloniki trade fair on Saturday launching the national election campaign is having a mixed reception. Some say why give him a third chance when he has been unable to launch the economic reforms desperately needed. he has admitted acting wrongly in connection with the high ranking New Democracy government officials involved in the Vatopedi land scandal.
PASOK of course is trying its very best to capitalise on the situation, claiming even that Karamanlis has been unrepentent for getting the country into the situation - economic and financial - that it is now facing. The far left spent the weekend in an Athens hotel trying to decide who would steer the party int he election period. They could nto come up with an answer which shows the deep rifts appearing in  the Coalition of the Radical Left (SYRIZA)which the press this Monday is calling headless. What a view of the current political scenery in Greece, wha can one expect - not a great deal.

Greece and Ireland weakening the Euro?

Greece can be currently summed up as a coutnry in economic, financial and political turmoil. The markets have reacted strongly to Karamanlis's decision to  go for October elections rather than a protracted campaigning struggle from now until March 2010. But the majority of economists would now admit that Greece is now sliding into recession. National debt is well over 103% of GDP and the European Union is casting a careful eye on what Greece is going to do in terms of fiscal readjustment. Indeed many now expect the two weakest EU countries, Greece and Ireland, to receive support from the EU coffers raather than default but this could well be at the expense of Germany and ultimately the strength of the Euro.
It is commonly accepted now in economic circles that the reforms carried out by New Democracy did not go far enough both in regard to the social insurance system and the education system. Ultimately New Democracy was forced to bow down when confronted with smouldering large- scale social unrest in the country which was fanned by high youth unemployment and general social  and political discontent and mistrust of the government. Coupled with this, leftist groups and anarchists in the country have resorted to terrorist violence to exploit the situation, the bombing outside the Athens Stock Exchange on Thursday of last week being the most recent example. Greece has hard times ahead.

Tomorrow we should know more about where Greece is going

Tomorrow we should know more about where Greece is going - that is if the current Prime Minister, Kostas Karamanlis, is re-elected. To avoid a six-month pre-election period which PASOK threatened through not agreeing to the re-election fo the Greek President in March, Karamanlis has called for a general election in Greece on 4th October.
. Tomorrow is an important day because the Prime Minister makes his traditional speech at the opening of the Thessaloniki Trade Fair, when he outlines the government's priorities for the coming period. The mood in New Democracy currently could be described as somber in that many of his party colleagues feel that it is a disaster to bow to elections so soon and that it may mean the end of power for New Democracy. Of course now that the decision is taken they will toe the party line. The trail of government involvement in land scandals (Vatopedi), the Siemens scandal involving high-ranking government officials and the recent fires near Athens and the  incompetent way in which they were handled, do not beckon well for the ruling party and PASOK has been careful not to miss making the easy political capital from New Democracy's mistakes. Karamanlis will also come under tough questionning from the media as to why many of the reform measures promised by him in the past were never implemented. To add to the difficult situation for New Democracy, any political strategy now will have to involve unpopular tax reforms among other things to get Greece out of the economic mess it is confronted with. Not the best political agenda to sell to an already disillusioned public.

Elections in Greece in October

So the waiting is over. The prime minister announced yesterday that he will call snap national elections in the coming month. Critics see this as the opposition party deciding political developments as they had threatened to oppose the re-election of the Greek President in March 2010 thus forcing elections on the country. The call for elections by ruling New Democracy is the culmination of a catastrophic chain of events for the party. It started with scandals over high level government officials being involved in bribe taking for public contracts, a minister who employed uninsured foreigners building his house, the disastrous handling of the fires around Athens two weeks ago and an overall unclear strategy of the government in the economic crisis the country is going through. Promised reforms have not been implemented and now Karamanlis will have to come up with some convincing arguments as to why
However, there seems to be a general feeling within the country of overall political stagnation. Many believe it will make no difference to them if New Democracy or PASOK wins the elections in any case. Neither party can come up with a charismatic person as a leader and there is little confidence that either of them have clear ideas on measures to counter the current economic crisis.

Greece - now recrutiing - scapegoats wanted!

How dare Giorgos Papandreaou tell the press that the country is no longer being governed. I have been doing very well - inspite of those awful forest fires, the odd political scandal and the usual spate of general corruption in the administration. What's so strange about that. Anyway we found a scapegoat for the forest fires, the second in command did not act fast enough - he delayed for two minutes so we'll let him take the blame for  not getting the helicopters off the ground fast enough. Then we found this farmer in Grammatiko who had been protesting earlier about the local landfill - I don't care if he was in Bulgaria that week-end, arrest him for starting the fires. Another problem solved.
Swine flu - no sweat here (excuse the pun) we'll arange that the Italians flew it in to distract from Berlusconi's digressions. The scandals - Siemens? - know nothing about it. I pay my telephone bills, even when I am being bugged. This is all getting too much for me. Let's have an election. Maybe not just yet. Or should I? I used to be so indecisive - now I just don't know.

Detaining immigrants - Greece forced to get its act together - about time!

I reported on Sunday that Greece had been strongly criticsed by the relevant United Nations agency (UNCHR) for the conditions under which illegal immigrants were being housed on the island of Lesbos. Today the government has reported that most of the immigrants are seing sent by ferry yo Athens and to better housing conditions. As I mentioned 100 women adn 50 children were being housed in one room.
Perhaps the vision of oncoming elections and Greek protesters on the roof of the detention centre on Lesbos have moved the government to try and save face in the unacceptable way that illegal immigrants are detained throughout the country. It is just sad that it is the prospect  early elections in October which is moving New Demcoracy to clean up its act.
  Last month many of the underage detainees , i.e. children on their own without parents, staged a hunger strike to protest against the disgusting conditons. Sadly Greece has to let it come to this before taking action. Elections roll on!

Human trafficking in Greece - big money.

The whole problem of human trafficking in Greece is a difficult one. Just yesterday I reported on the criticism of the UNCHR about the conditions in which illegal immgrants were being housed on the island of Lesbos. But Greece is in no easy position when you discover that it is often immigrants themselves who are organising the human trafficking. Over the weekend two groups were arrested in Athens, three Iranians who were extorting over Euro 10 000 from 19 immigrants for the promise of getting them illegal papers to enter Germany. In another instance two Pakastanis were arrested for holding illegal immigrants against their will and demanding a total of 19 000 Euro from each.
In my opinion all that the Greek authorities can do is come down very hard upon such traffickers be they Greek or foreign. I would advocate immediate extradition to their native countries with no hope of ever applying for legal entry to this country. Only such draconian means are going to put these people off the idea of making money from their fellow countrymen's misfortune.

Greece again criticised for the treatment of illegal immigrants

Sorry to harp on but Greece is part of Europe and is signatory to all UN treaties and is such is a member of UNHCR - the United Nations High Commission for Refugees. As I mentionedt in earlier posts, Greece has a difficult geographical situation when it comes to stopping illegal immigration on account of the long sea border which skirts the Turkish coast. The  island of Lesbos, also close to the coast, receives many hundreds of illegal immigrants from mainly the Middle East each year.
Now after an inspection of the reception centre for illegal immigrants pn the island, a UNHCR spokesman, Andrej Mahecic , has strongly condemned the conditions under which these immigrants are being held, calling them "unacceptable".
The UNHCR spokesman points out that up to 100 woman and 50 babies are being housed in one room in the Centre and many of them have become ill on account of the cramped conditions.
Is Greece and its politicans too busy worrying about winning the next elections than to care about being constantly in international headlines on account of not being able to provide even the most modest of living conditions for those who come here with nothing?

Greek political tensions - a rock and a hard place

Prime Minister Karamanlis has no easy task at present. Apparently the opinion polls show that should he call an early election it woud be the death of New Democracy. PASOKhas threatened to force an election in march by opposing the re-election of the Greek President. Now the ruling party could be facing a split. High levels ministers are giving contradictory advise oon whether to go for elections now or wait.
Obviously the handling of the outbreak of forest fires around Athens last week-end has not helped New Democracy's chances. There are many questions arising on how the fires managed to spread to the outskirts of Athens so quickly and today it is being reported that incendiary devices have been found in the forest near Grammatiko north of Athens where th fires started. Talks of a cabinet reshuffle still remain rumour as Karamanlis may try and sit it out until the annual PM's speech at the opening of the Thessaloniki trade fair when the ruling party outlines the government strategy for the coming year. But the dire economic situation of Greece may dictate action in the end. We will see what happens in the ocming two weeks.

Turning up the political heat in Greece

More and more questions are arising as to how long the country is going to continue without elections in the wake of the disastrous fires around Athens last week-end. Why,  for example, does Greece spend Euro 5 million/year of tax payers money renting water-dumping helicopters from a company in the US and a company in Russia when it has the largest fleet of water-dumping aircraft in Europe? Equally, why were the Greek Air Force helicopters not in a position to help in such a serious situation. Kostas Karamanlis now seems to be keeping his head low but rumours are the heads of a number of ministers may roll - including the interior minister and the New Democracy spokesman for his handling on the media last week-end.
Earlier in the week it looked as if Karamanlis was digging in his heels and would make no announcement of a cabinet reshuffle before his speech at the opening of the Thesslaloniki Trade Fair at the beginning of September. Now, though, it seems that the political damage of the handling of the fires  - amidst growing rumours that it was all well organised by greedy property developers in need of land to expand upon. - may force the Prime Minister to be seen to take some constructive action as soon as possible to minimize the damage to the party  - otherwise it could be his head on the block.