How Much Austerity Can Greece Bear?

How Much Austerity Can We Bear? Greece 2010 Deficit at 10%

April 7, 2011

KeepTalkingGreece.com - Save, Save, Save in a barrel with no bottom! Greece’s debt explodes, revenues are not flowing, new budget deficits sprout every year.

The wages and pensions cuts, the V.A.T. and taxes hikes made us poorer by 30-40% in 2010. Now new austerity measures will be added.

Then the IMF/EU/ECB- representatives, currently in Athens, demand new stricter austerity and a disciplined fiscal policy for 2011-2015.

A possible debt restructuring will bring more austerity.

The European Central Bank interest rates increases will swell the debt.

New austerity measures will be inevitable. Even if 3/4 of civil servants are fired, those having a home, a job, a pension will have to come up just for the debt. How much more austerity can Greeks bear?

I am afraid there is the urgent need for new radical solutions that will turn upside down what we have been knowing about micro- and macro economic models. Bu,t first of all, European Monetary Union needs to be restructured. Better, let it dissolve all together, accept that the Keynesian model failed and let every country go its way.

By the way, I almost forgot the Reuters exclusive story, “Greece 2010 deficit tops 10 pct, faces more austerity”:

Greece’s 2010 budget deficit was bigger than estimated at over 10 percent of GDP, heralding yet more austerity measures, a source close to the country’s international lenders told Reuters on Thursday.

The revision will heap another fiscal burden on a government already struggling to avoid a debt restructuring after missing some targets of an EU/IMF bailout.

The government’s most recent estimate of last year’s deficit was 9.4 percent of economic output, while its lenders — the ‘troika’ of European Commission, IMF and ECB — saw it at 9.6 percent. The initial target was about 8 percent of GDP.

“The revision will make it more difficult for Greece to achieve its 2011 budget targets. They will have to save more,” said Christoph Weil, Frankfurt-based economist at Commerzbank.

“The EU/IMF safety net for Greece will probably have to be beefed up,” he said. “In the long term, this can’t be done without restructuring, in 2013 or later.” (Read Full Story by Clicking Title)

How could this happen to the Troika-guys? How could they add 2+2 and come up with 3.63? I slowly start to think that they are cheating us.

IMF/EU/ECB-Troika’s Non-stop Pressure on Greek Government

April 7, 2011

KeepTalkingGreece.com - New and inevitable measures are on the way and the IMF/EU/ECB control units are adamant to put pressure on the Greek government to speed up with necessary public spending cuts even blackmailing with the 5th tranche of the €110 bailout.

According to newspaper Proto Thema, the Troika tough guys are asking a strict cap on the salaries of civil servants and drastic cuts in the spending of public administration, hospitals and insurance funds.

The Troika representatives asked Finance Minister George papaconstantinou explanations as to why the new wages policy on the state-run enterprises DEKO has not been implemented and why 235 public agencies refused to send data.

Especially for DEKO and other public agencies the Troika is asking a “new memorandum” with provisions such as:

• New “haircut” up to 20% in the wages costs of public administration
• Sharp cuts in the ‘extras’ of those highly paid
• Wage costs to fall to 45-50% of total revenues from all public utilities/DEKO.
• Closing down of some loss-making state-run enterprises.

The economic team argued however that it is premature to announce “here and now” measures, as the final deficit of 2010 has not been definite yet and it has not been clear the results of the government measures taken in 2010.

According to newspaper, the Finance Ministry has time until April 15 to put down a list with the new measures.

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