May 072012
 
Pedestrians are reflected in a poster advertising the Greek national elections, on the day of voting in Athens.  -Simon Dawson/Bloomberg

Pedestrians are reflected in a poster advertising the Greek national elections, on the day of voting in Athens. -Simon Dawson/Bloomberg

The election of Socialist Party leader François Hollande and serious loses in the coalition parties (New Democracy and Pasok) in the current Greek government are sending shockwaves throughout  Europe. Whatever challenges the Euro has faced up to this point, they pale in comparison to what the future holds.

The Telegraph has a good initial take on the events:

The economic doctrine of austerity, to cut the burden of state spending to free up the economy, has ruled supreme with the support all of Europe’s leaders, the European Union and financial markets.

But political leaders were on Sunday night conceding the consensus had been shattered beyond repair.

With Europe’s economies plunging further into recession and as unemployment in the eurozone breaks record levels, voters demands for a new approach had finally become to great to ignore.

The popular backlash to EU imposed austerity to the centrist New Democracy and Socialist parties in Greece threatens the existence of the euro itself. 

Greece is potentially ungovernable as a minority government must try and pass a new raft of austerity measures next month which are a condition of an EU-IMF bailout and Greek membership of the euro.

In France, while Hollande, the Socialist President-elect is a centrist, he is sitting on a powder keg of resentment at measures that his government will have to pass if it is not spark a meltdown of financial markets.

He has refused to ratify the treaty unless the eurozone and EU also sign up to a “growth pact”.

And as a footnote, despite Chancellor’s Merkel’s popularity in Germany, it appears that her coalition government suffered a lose in the state of Schleswig-Holstein.

France may muddle through - François Mitterrand came to power in 1981 and after a brief move to the left (inviting the Communist Party into his government) was forced by pressures from the international markets and domestic politics to move to the right. But Greece is in a fundamentally different situation with a negotiated $171 billion dollar agreement with the EU that ostensibly cannot be revoked by the new post-election government.

Problem is – the current coalition parties, New Democracy and Pasok, may have received no more than 34% of the total votes and Syriza, the Coalition of the Radical Left party – which is pushing for an end to the austerity measures – may get as much as 17%. Syriza is looking to form it’s own coalition based on an end to the austerity measures and if the current coalition collapses, the shockwaves will hit the global financial markets. As the Washington Post remarked:

The vote was a stunning repudiation of the two political parties that have ruled Greece since the end of dictatorship here nearly 40 years ago. The pro-business New Democracy Party and the Socialists have traded power for decades. Now, a cacophony of new, skeptical voices will crowd the halls of parliament — including a far-right party called Golden Dawn, whose supporters celebrated Sunday night with flaming torches and the Nazi salute.

Yes, you read that right – Nazi salutes. And Golden Dawn will enter Parliament for the first time.

Members of the Greek neo-Nazi Golden Dawn Party celebrate in Thessaloniki on Sunday.

Members of the Greek neo-Nazi Golden Dawn Party celebrate in Thessaloniki on Sunday.

A scary development, but in all honesty, while the press here – elsewhere – speaks of a “downturn” or a “recession” in Greece, Spain, Portugal, etc., the unemployment numbers and business statistics indicate that this is essentially an economic depression (in Greece, unemployment has reached 21 percent and GDP has declined by 20 percent in just two years). People are tired of sacrifice that seems to only call for more of the same, and the result will be a resurgence of radical parties on both the left and the right. With all the debate about bailout packages, deadlines and who should pay, the leaders at the center of the crisis have forgotten that people need hope. The austerity measures are clearly not providing it, which will lead people into the arms of those with much more radical solutions.

Greece has reached a breaking point. And the political decisions ahead may well reverberate throughout Europe.

Feb 132012
 
Protests as Greek Parliament Approves Bailout Measures

Protests as Greek Parliament Approves Bailout Measures

With heated debates and recriminations by MPs in Parliament against the muffled sounds of explosions from Syntagma Square, the coalition government in Greece passed the austerity package developed by the IMF, ECB and EU over the past few weeks. The streets outside looked like a war zone with over 45 shops burned and others damaged.

As part of the bailout, Greece still needs to implement the pension and job cuts which will have a significant impact on the economy. And it will have to accept that the upcoming elections are essentially meaningless – they cannot dismantle the agreement.

One major consequence of the turmoil over the agreement (and the same applies to Egypt and other countries over the past year) has been the decimation of the tourist industry. I remember a wonderful dinner a few years back at a cafe in Athens, gazing up at the floodlit Acropolis and the complex cultural history it embodied – we talked into the night about the complicated relationships with Ancient Egypt, Early Christianity, the Roman and Ottoman empires, and the 19th century German scholars who reinterpreted Greece as part of the Western Tradition. Here was a creative and mangled river of broad cultural achievement – influencing others as others in turn appropriated Greek land, ideas, and culture for their own ends.

The history here is long, deep, and fascinating. The beauty of the landscape, particularly the islands, equally so. But it is hard to imagine that many will want to visit a society brought to its knees economically and socially. I’m not sure what the future holds – I’m not sure that anyone knows from the conference rooms in Brussels to the streets of Athens – but I do know the tourists will go elsewhere. And with them goes the money that so much of the Greek economy depends – at least 20% of GDP (and it’s probably significantly higher than that). Tourists usually don’t visit broken societies, unless they’re holed up in resorts isolated from the local population. And sadly, Greece is most definitely broken.

Don’t believe me? Listen to Helena Smith in the Guardian who has reported from Greece for more than twenty years:

The country has reached a crossroads, of that there can be no doubt. But almost two years since it was first “rescued” with €110bn, the nation’s acceptance of this latest lifeline puts it in a perilous place. Politicians, almost without exception, believe they are “damned if they do and damned if they don’t”.

After more than two decades reporting from Athens, I can only concur. For the truth – as unpalatable as it may be for the IMF, EU and European Central Bank, Greece’s “troika” of creditors – is that, far from plugging the country’s budget black holes, the harsh austerity pursued in the name of deficit-reducing goals has pushed it towards economic and social collapse. Relentless wage and pension cuts, tax rises and cost-cutting reforms have left the country a shadow of itself. In its fifth successive year of recession, Greece is a hollowed-out version of what it once was, coming apart at the seams a little more with each day. Men and women forage through rubbish bins late at night. More sleep on the streets.

Late this evening, the stock markets are reacting positively and we will hear the pronouncements of success from the IMF, ECB and EU leaders during the coming days. But as leaders pat each other on the back and breathe a collective sigh of relief, Greece continues its slide toward economic and social collapse.

Feb 112012
 
Demonstrations in Athens Greece - 2-11-12

Demonstrations in Athens Greece - 2-11-12

A second day of protests in Greece as Parliament edges closer to a vote on Sunday. The Cabinet approved the agreement negotiated with the EU on Saturday.

A few MP’s have resigned in protest but it appears the majority coalition still has the votes to approve the austerity package.

Three measures are up for a vote tomorrow according to Aljazerra:

. . . . recapitalise Greek banks, an authorisation for Papademos and the finance minister to sign the eurozone bailout, and a bond swap with private creditors designed to wipe out around $131.9bn from Greece’s $461bn debt. 

But we’ve been down this road before and even if approved, this is hardly the end of the story. Ultimately, the entire bailout package could be implemented only to come unraveled with possible elections in late spring.

Feb 102012
 

I remember living in Paris some two decades back and my friends (and everyone they knew) in France, Italy and Greece didn’t have much good to say about the European Union. There had been protests in the 80′s as once separate political entities lurched into something approximating  a political and economic union. No one loved what was happening except perhaps those at the top (the 1%) who would benefit most from the free flow of currency and harmonization of archaic national laws and practices. The common refrain I heard: the EU is no good; but it’s surely better than more of the past. And the past in 1989 was still close enough (as it always is in Europe) with bullet holes and plaques marking the liberation of Paris from German occupation and the endless cemeteries holding the two million French (4.3% of the population) who died in World War I only twenty years before. Europe was a political swampland and a killing field in desperate need of a solution.

Fast forward to the present and the grudging optimism of this-is-the-only-doorway-with-a-future attitude is gone. Germany will happily remain in (and control) the Euro zone as long as they don’t need to bail everyone out. France, Spain, Italy are increasingly confronting their own economic woes and trying to stabilize a present that is really a previous generation’s vision of the future. Continue reading »

Jan 102012
 

A sad story from BBC News – mothers abandoning their children in Greece due to the financial crisis. In the past children went to foster care mostly due to drug or alcohol abuse; now it is due to parents unable to find work. One mother’s account:

“Every night I cry alone at home, but what can I do? It hurt my heart, but I didn’t have a choice,” she says.

She spent her days looking for work, sometimes well into the evening and that often meant leaving eight-year-old Anastasia alone for hours at a time. The two of them lived on food handouts from the church. Maria lost 25kg.

In the end she decided to put Anastasia into foster care with a charity called SOS Children’s Villages.

“I can suffer through it but why should she have to?” she asks.

She now has a job in a cafe, but makes just 20 euros (£16) a day. She sees Anastasia about once a month, and hopes to take her back when her economic situation improves – but when that might be she has no idea.

Greece’s woefully inefficient economy and tax evasion practices that amount to a national pastime are indefensible. But at the moment, Greece would run a budget surplus if it were not for the interest payments on the debt. And the future? It depends entirely on interest rates which, in turn, depend on the perception of lenders.

With all the discussion in the media over the euro zone – see the articles this morning in the Wall Street Journal (paywall), or yesterday from Reuters - the International Monetary Fund (IMF), European Central Bank (ECB), austerity measures and private sector involvement (PSI), not covered is the impact on families and especially, the children. And with Greece possibly spending bailout money on military purchases, there’s more than enough blame to go around for this mess.

Dec 212011
 
Hram-pametnik Aleksander Nevski (St Alexander Nevski Memorial Church)

Hram-pametnik Aleksander Nevski (St Alexander Nevski Memorial Church)

I will be heading East from the States (to Warsaw, Sofia, and possibly Istanbul or a few towns in northern Greece) for the holidays. While I’ll have Internet access  when I’m staying with friends, it will be sketchy at best when I’m on the road. So fewer posts over the next two weeks and a flurry of them here and there when I get online. Will probably try to keep up a little more via Twitter (link is on the right side of the screen if you want to follow) as that may be easier.

What a year it’s been – and I suspect the coming year will be even more interesting and unpredictable in media, politics, technology and its impact on our future. Readership has grown tremendously since marginlines.com started back in April and I’m gratified that you have dropped by. Most definitely hope to see in you 2012.

Wherever life takes you over the next two weeks, please take care and if you are celebrating the holidays this time of year, enjoy. Be well!

Nov 142011
 
Bank of Greece Sign - Central Athens, December 6 2010

Bank of Greece Sign - Central Athens, December 6 2010

Take a look at the work of Reuters Chief Photographer in Greece, Yannis Behrakis, in documenting the protests in the country over the past few years. Working out of an office on Athens’ Syntagma square (Constitution square) where so many of the protests have taken place, Yannis has caught indelible images of the tension and anger in a country where the social fabric is being ripped apart by financial pressures and decisions made elsewhere. There’s a slide show of his work on Reuters and while most of the images will be familiar from the media coverage that is precisely what makes them interesting - so many were taken by the same individual.

As he notes in his blog, for 24 years he has covered war (he was almost killed in Sierra Leone in 2000), and now he covers one in his own country:

Being a photojournalist who has covered wars with Reuters for over 24 years I feel sad to be covering a “financial war” in my own country but at the same time I know that I must remain unbiased and objective until the end of it.

Speaking to her own Christian Democrats (CDU) Party in Leipzig on Monday, German Chancellor Angela Merkel said that “Europe is in one of its toughest, perhaps the toughest hour since World War Two.” The images of Yannis Behrakis record one of the current flash points of this time. As Europe spins out of control, there may sadly be many more.

Jul 052011
 

“Regretfully, we are bankrupt” Prime Minister Charilaos Trikoupis, in an announcement to the Greek Parliament, 10 December 1893

Yes, it’s happened before, under equally complicated circumstances, but let’s focus on the present . . . Now that the austerity package worth some 28 billion has passed the Greek parliament, the news is still very bleak for Greece (raising the potential for a broader financial crisis in the euro zone). Here are some of the obstacles that could have this whole thing unravel:

Political cartoon of Trikoupis despairing, National History Museum, Athens

Credit: National History Museum, Athens

  • Greece has promised to sell off 50 billion in public assets in four years. It’s unclear if they can raise that amount and how much public opposition there will be to the sales. Jean-Claude Juncker, PM of Luxembourg, favorably compared the process to the privatization of East Germany’s economy over a four year period which saw the sale of 14,000 companies (and we should point out, the loss of 2.5 million jobs). Of course, as a Reuters article notes, there are vast differences between the two situations, but the German agency overseeing the process ended up with $170 billion in debt instead of returning $900 billion in anticipated profits.
  • Also from Reuters, Standard & Poor will “. . . treat a French bank plan for a rollover of privately-held debt as a default.” This will probably be resolved, but it shows that the resolution of the crisis involves more than just the EU, Greece and the people on the streets.
  • The strong opposition to the bailout in Germany may take a new turn as a constitutional court case gets underway. The plaintiffs are arguing that the bailout agreement violates German constitutional provisions regarding property and democracy. About the only argument the Merkel Government has is that “. . . the stability of the euro is of paramount significance”.  However, Presiding Judge Andreas Vosskuhle announced today that “Europe’s future and the right economic strategy to tackle the sovereign debt crisis isn’t debated in Karlsruhe . . . That’s the task of politicians, not of judges. But the Federal Constitutional Court must consider the limits that the constitution sets the political realm.”
  • Finally, the Greek unemployment rate is already over 16% and over 40% for those 18 – 24. With the number of unemployed expected to increase one can see where the aganaktismenoi, or “Indignants”, as the opposition movement is calling itself, has little investment in a future controlled by bankers in Brussels and elsewhere.

In other words, the vote last week “kicked the can down the road” but hardly resolved the challenges. Indeed, as Kevin Gallagher argues in the Guardian today, there is no agreed upon global mechanism for resolving a debt crisis like the one facing Greece. The EU is in reactive mode and it is unclear how it will proceed given the financial and constitutional issues that stand in the way. And of course, the latest data from the Athens News after last week’s protests reveals another cost hidden in the current situation – 8,000 hotel booking cancellations in Athens in a span of five days. Perhaps minor in the larger scheme of things (though surely not for the hotel owners and employees) but not if the crisis continues. Which it surely will.

Addendum: And the news this afternoon is that Portugal’s debt has been downgraded to junk status. Not a complete surprise, but the markets will now start looking for weakness in Spain and elsewhere.

Jul 012011
 

As you know doubt heard, the Greek Parliament passed the austerity package in two close votes postponing for now a default on its obligations. I’ll confess I was wrong on this one as I thought it would not make it through (particularly the second round of voting on the specific cuts and tax increases). Greece is not out of the woods yet, and the banks may need to rollover a significant amount of debt, but the passage will allow the EU to release the funds. So there is a little bit of breathing room and the markets have remained calm.

But the drama is not entirely resolved, either in Greece or elsewhere in Europe as in London where new strikes are taking place.

Jun 282011
 
Protesters display a banner in front of the Parthenon in Athens (27 June 2011)

from BBC News

The Parthenon may take on a new meaning with banners like this – surely there will be some stunning visuals over the next 48 hours as the trade unions bring the country to a halt. The details so far: protesters are again planning to block entrances to Parliament while Papandreou will try to keep MP’s from turning against his Panhellenic Socialist Movement (Pasok) party (currently holding only 155 of the 300 seats). I have no evidence other than the anecdotal stuff from friends and what I read – but I have a feeling the 28 billion euro austerity measure will eventually fail, sending shock waves throughout the EU economic system. You can only push people so far and when they have nothing left to lose, threats of larger economic disruption carry little weight. This may become an ultimate test of the EU: the premise of joining together to not repeat the stagnation and tragic wars of the 20th Century made much sense a few decades back. But the flip side of that premise is that as part of a broader, regionally controlled economy, decisions made in Brussels impact everyday life from Athens to the little island of Symi. The Guardian summed it up nicely:

Furious Greeks have likened the three-year austerity programme and the attendant international monitoring of their public finances, to a foreign occupation.

Governments in Greece were always shadowy affairs that seemed far removed from daily life, but now, Athens itself feels like a remote island in a tempestuous sea controlled by European politicians and bankers. At that point, the only plausible scenario may be retrenchment, to let Greece be Greece again and control its own affairs. I’m not sure how I feel about that, but I can surely understand it.

www.nytimes.com

 

Jun 162011
 

Anyone following the international news will know that the situation is very tense in Greece. Massive demonstrations yesterday (some of the most violent so far) with the government attempting to pass austerity measures amounting to 28 billion euros ($40.5billion) in cuts and privatization to gain access to additional EU and IMF assistance. And now the Prime Minister, George Papandreou, who may face a revolt in his own socialist Pasok party, has reshuffled the cabinet and agreed to hold elections next year. Markets (and the euro) plunged yesterday and it looks dire.

Demonstrators in Syntagma square and elsewhere in Greece are following on continuing protests in Spain (where protesters in Barcelona blocked access to the Parliament building), drawing upon many of the same symbols and organizing tactics (especially Facebook). I haven’t heard from my friends in Greece – and alert me if good videos surface.