What's Happening in Greece by @DavidOAtkins

What's Happening in Greece

by David Atkins

Talos at European Tribune writes from on the ground in Greece:

How is Greece taking the new loan deal that accompanies the PSI? Most compare it to a dictatorship, a foreign occupation, the kind of terms a victor imposes on a defeated country. No wonder: Two years of the most grinding austerity, has caused a destruction of the Greek economy that has no precedent, in peacetime, as official nominal wages dropped 15%, unemployment passed the 20% mark and, according to polling company VPRC, the bottom 90% of Greek households, suffered in 2011 alone loss of income on average ~45% of their incomes.

Greece is already a "labor wasteland" where jobs are near impossible to find and when they materialize they are more likely to be "black", uninsured, well below the poverty threshold.Yet the new loan deals mandate among other things:

* The dismantling of collective bargaining and the annulment of the current collective agreement. "Labor law" in Greece will not be a meaningful subject any more

* Across the board cuts in nearly all of private sector wages and salaries to the tune of 22%. This includes the minimum wage (which will be now around 580 euros net, and under 500 euros if you are a new entrant into the job market). This affects all sort of benefits i.e. the unemployment benefit which is reduced to 369 from 461 euros. This in a country where the cost of living in its capital is still higher than that of Berlin.

* Immediate elimination of rent subsidies for the poorer, cuts in pensions, mass privatization at fire sale prices (including the Athens and Thessaloniki water companies, and the lottery/football pool company, whose market price right now is at two years profits) etc. This on top of galloping social destruction, a health system that is going to the dogs (the decay of which is producing even stronger superbugs) and public services being destroyed or annihilated.

* At the same time whatever debt will remain - and it will be huge and unsustainable anyway - will now be under English law, and not Greek law, meaning that the terms of the loans will be draconian.

And much, much more: 650 pages of it that Greek MPs were required to read in 24 hours since they received the package, Saturday, to vote on it on Sunday. The process is illegitimate, and constitutionally questionable yet the two government coalition partners (socialists and conservatives - the far right LAOS rightly figured that this will destroy it electorally and removed its ministers from the government), are extorting their MPs: "pain or destruction" they warned, along with the PM. Everything will be rationed, Greece will leave the euro and remain a third world country for ever. Sane people disagree. But they are not in government.

Follow the links within the piece and read the whole thing to get a sense of just how awful these austerity measures are, and you'll understand why Athens is in flames.

There is a lot of blame to go around in Greece. The ratio of its social safety net to its GDP does not actually exceed that of most other social democracies. But corrupt politicians have wrecked the country's finances through neoliberal policies and by simply failing to collect taxes, particularly during election years, in order to gain support. The major financial institutions then charged outrageous fees for servicing Greek debt, while helping Greek politicians hide it so that it could not be known and managed more effectively.

Now the austerity mavens are using this opportunity to destroy the social contract in Greece as a matter of shock doctrine emergency, promising enormous economic disaster if Greece doesn't toe the line.

But Greece need do nothing of the sort. Argentina and Iceland have already shown a path forward for countries reeling from a combination of predatory banks and corrupt neoliberal politicians; the only wrinkle in the plan is Greece's membership in the EU. But that is the European Central Bank's problem, not Greece's. If the EU fears contagion too much to allow Greece to devolve its debt in an orderly manner, then the EU must commit to taking the necessary stimulative measures to put the Greek economy back on an even keel.

That would mean enacting the opposite of austerity, no matter what the Bond Lords might demand. If the EU cannot commit to that course of action, then it should allow the Greeks to manage the crisis in their own sovereign fashion, readopting the drachma at a devalued rate while telling the private banks to stuff it.