I think most of us have been waiting and watching for Greece to fall. I admit to being gullible from time to time, just like Charlie Brown I fall for the media blowing up an issue into a catastrophe. But on Greece and the Euro, I feel confidant there is a real story, not just media hype. For one thing, Flag has mostly agreed it is a big deal. And then we are told about all the other countries near default. But first, a close look at Greece.
Will Greece Default on March 20 ?
Felix Salmon is adamant that we’ve got the actual date for the Greek default:
But at least we have a date, now. Greece will officially default on March 20.
I find it very hard to fault his logic as well.
As I pointed out yesterday the actual haircut that the private sector holders of the debt are being asked to take is a lot higher than the 50% that is generally being bandied around. It’s a lot more like 70%.
Well, they are no Black Flag, but I think Forbes is somewhat credible. I by no means think they have all the answers. I think enough credit may not be given to the leaders of France, Germany and the Euro that have cheated death and won more times than can be explained. But then, as in with all forms of gambling, the “house” does have some advantages, in this case, the makers of the rules may not be as bound by them as the rest of us.(1)
It seems to me they are juggling, catching one pin just before it hits the ground and tossing it back into the air. Another “pin”.
Euro zone unemployment reaches near 15-year high
By Robin Emmott
BRUSSELS | Mon Apr 2, 2012 10:00am EDT
(Reuters) – Unemployment in the euro zone reached its highest level in almost 15 years in February, with more than 17 million people out of work, and economists said they expected job office queues to grow even longer later this year.
Joblessness in the 17-nation currency zone rose to 10.8 percent – in line with a Reuters poll of economists – and 0.1 points worse than in January, Eurostat said on Monday.
Economists are divided over the wisdom of European governments’ drive to bring down fiscal deficits so aggressively as economic troubles hit tax revenues, consumers’ spending power and business confidence which collapsed late last year.
February’s unemployment level – last hit in June 1997 – marked the 10th straight monthly rise and contrasts sharply with the United States where the economy has been adding jobs since late last year. (2)
Debt-mired Ireland is facing a revolt over its new property tax.
The government said less than half of the country’s 1.6 million households paid the charge by Saturday’s deadline to avoid penalties. And about 5,000 marched in protest against the annual conference of Prime Minister Enda Kenny’s Fine Gael party.
Emotions ran raw as police backed by officers on horseback stopped demonstrators from entering the Dublin Convention Centre. Many protesters booed and heckled passers-by who were wearing Fine Gael conference passes, some screaming vulgar insults in their faces.
Protesters jostled with police as they tried to block the way of Fine Gael activists using a back entrance. One man mistakenly identified as the government minister responsible for collecting the tax had to be rescued by police from an angry scrum.
Kenny said his government had no choice, but to impose the new charge as part of the nation’s efforts to emerge from an international bailout. Ireland already has endured five emergency budgets in four years and expects to face at least four more years of austerity.(3)
“Somewhere down the line we will have a massive wealth destruction that usually happens either through very high inflation or through social unrest or through war or credit market collapse,” he said. “Maybe all of it will happen, but at different times.“(4)
I have also said the US is at a tipping point, with 48.5% getting some form of government support. I think the government like keeping a dependent group. I think once it’s large enough, we may never move back to a fiscally responsible nation, and will likely fail sometime in the future. It’s pretty simple, why would anyone work if they can be paid to sit at home and do nothing? Why work hard if the government takes any “extra” you produce and gives it to people who sit at home and watch TV? When the workers are outnumbered by the non-workers who like living off the dole, all they have to do is keep voting for politicians that will continue to reward them. Funny thought, our best hope may be the non-workers might be too lazy to vote. But I’m sure the power that be will “fix” any problems like that, provide cell phones that allow you to text in your vote. Hey, it’s good for the environment. What’s our carbon footprint for driving to the polls every two years?
Am I wrong? Maybe overstating things? So how’s that socialism working out in Europe?
Voters may topple eurozone rescue plans
Voters in Greece, Spain, and Portugal may hold the fate of the EU in their hands.
Patience with the largest budget cuts in memory in those three countries is wearing thin and there are indications that, given the opportunity, the electorates might force politicians to break their bail out agreements with the EU.
An unexpectedly broad general strike in Spain on Thursday and mounting opposition to Prime Minister Mario Monti in Italy are among indicators that resistance is growing in a region at the center of concerns about a resurgence of the euro zone debt crisis.
Portugal remains very subdued for the moment and even Greece, scene of repeated violent street protests, has quietened recently. But there are signals that political leaders will soon be directly in the firing line across Europe, especially if more cuts are required to reduce sovereign debt.
The atmosphere seems a combination of two opposite tendencies – acceptance of the message that deep cuts are the only way to save their countries from economic catastrophe, and a mounting feeling that greater pain cannot be borne by populations suffering deprivation and misery.
The problem for politicians like Monti and Spain’s Mariano Rajoy is that the very austerity measures imposed to cut debt under pressure from euro zone leaders could deepen recession and create a need for even more severe cuts.
There may only be a few more months left for reforms to start producing benefits before populations either retaliate in electoral tests or take to the streets in increasing numbers.
There is great resentment, not only among left wing parties, but even conservative and center right parties, at the depth of budget cuts and the pain caused by years of recession/depression. More than 50% of Greek youth are unemployed. Similar numbers can be found in Spain and Portugal.
There is also a huge distrust of the IMF and the EU leadership in Brussels. Part of that is class based, but it is also a realization that Germany and other core countries in the EU are the beneficiaries of the austerity measures being implemented, and not the citizens of the countries affected. It is their banks who are being kept afloat, their economies that are being rescued as a result of the austerity-caused bail outs.
Even if those three countries emerge from near insolvency, their relationship with the rest of the EU may be permanently damaged. This does not bode well for the future of a united Europe.(5)
Spain is in a recession, though only down an estimated 1.7% in 2012, if things go well. Unemployment is at 23%, which is higher than Greece for the latest Greek data that I can find. But more than half of young Spaniards (over 51%) are out of work, creating a lost generation that has been hardest hit by Spain’s economic woes. The total number of unemployed has climbed above five million, and Spanish under-25 unemployment has nearly tripled, from 18% just four years ago.
” ‘This is the least hopeful and best educated generation in Spain,’ said Ignacio Escolar, author of the country’s most popular political blog and former editor of the newspaper Publico. ‘And it’s like a national defeat that they have to travel abroad to find work.’ Young Spaniards are now living in the family home longer than ever before, pushing the average age of independence from their parents to well into their thirties.” (The Telegraph)
Unions called a general strike on Thursday as the recently elected Spanish government delivered its new austerity budget. While the protests were mostly peaceful, the pictures we see are of youth in partial riot mode. It is eerily similar to the onset of riots in Greece just a few years ago – except that unemployment is higher than when the Greek crisis started. And while Spanish leaders will protest that Spain is not Greece, there are striking similarities .(6)
Progress can often be defined as the stuff that happens while humanity is preoccupied with everything that is going wrong. On the surface, the first decade of the 21st century looks like an ugly parade of terrorism, war and economic convulsion. But in one important sense it stands as possibly the greatest decade in human history. And that’s no accident.
Among the most vicious enemies of human welfare is poverty. In a world plagued with limited resources, bad governments and unsound economic policies, it often appears to be an inescapable scourge. Most people paid no attention in 2000 when the United Nations proclaimed the goal of halving the number of earth’s inhabitants living in extreme poverty by 2015, compared to 1990.
But way ahead of schedule, the target has already been hit. For the first time since it began tracking, says a new World Bank report, “the data indicate a decline in both the poverty rate and the number of poor in all six regions of the developing world.”
In 1981, 70 percent of those in the developing world subsisted on the equivalent of less than $2 a day, and 42 percent had to manage with less than $1 a day. Today, 43 percent are below $2 a day and 14 percent below $1.
“Poverty reduction of this magnitude is unparalleled in history: Never before have so many people been lifted out of poverty over such a brief period of time,” write Brookings Institution researchers Laurence Chandy and Geoffrey Gertz.
Just as important as the extent of the improvement is the location: everywhere. In the past there has been improvement in a few countries or a continent. Not this time.
A sad note to end on, more riots in Greece. A 77 yr. old man kills himself near parliament to protest the severe cuts imposed by the government. He had worked and paid in for 35 years and stated he did not want to have to feed himself from the garbage.(9) This kind of event provokes an emotional reaction in many, someone HAS to be blamed. But who? They have borrowed more than they can reasonably repay. They refuse to balance their budgets, spending more than they take in.
I think the blame goes to many, the unions, the retired, the non-working, the entire entitlement society. And then there is/was the politicians that promised them they could have increases in their retirement benefits, in their union benefits, free Viagra with their health insurance. And these politicians have all done the same, they have agreed to all these spending increases and borrowed against future earnings. Pass the buck, kick the can down the road, etc.. knowing they would safely be out of office when the bill comes due. I know I do not envy those in office today, bound by promises somebody else made and facing reality, that no one will continue giving them money that all signs show will never be repaid. So the world will sit back and watch as the birthplace of democracy commits suicide.
Can any good come from this? Will the US and the rest of the world learn from this example? It doesn’t seem so to me. Obama’s last budget shows interest payments will exceed defense spending in 2019. (10) All the controversy over was he a Muslim or socialist is funny now that’s its obvious, he’s Greek. So I must think everyone who still supports Obama want’s to follow Greece’s example.