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Time to Put the Citizen First?
Submitted by Leo Kolivakis, publisher of Pension Pulse.
Bloomberg reports that George Papandreou is favored in polls to unseat Prime Minister Kostas Karamanlis in Greek elections today, extending his family’s political dynasty and inheriting an economy on the brink of recession:
More than 9.8 million Greeks are eligible to cast ballots in the vote. Polls opened at 7 a.m. Athens time and close at 7 p.m. when exit polls will be released.
Papandreou’s Pasok party led Karamanlis and the New Democracy party by between 6 percentage points and 7.5 percentage points in the three final polls of the month-long campaign, which were published on Sept. 18. He has held the lead since September 2008. The surveys indicated Pasok may win a majority in the 300-seat parliament.
“I am certain that together we can change Greece” Papandreou, 57, said today after casting his ballot in Athens, the capital. “We want to, we can and we will.”
Karamanlis, who was hobbled by a one-seat majority in parliament, last month called the vote two years early, saying he needed a new mandate to confront a weakening economy and growing budget deficit. He pledged wage and pension freezes to trim the shortfall, currently twice the European Union limit of 3 percent of output. Papandreou offered higher wages and more public spending, saying he would still tame the deficit.
‘Decision of Responsibility’
“Today Greeks take a decision of responsibility,” Karamanlis, 53, said after casting his vote in the northern Greek city of Thessaloniki. “They are deciding on policies which are difficult but guarantee a dynamic jump-start in the race for growth from 2011 onwards.”
The two, scions of Greek political dynasties, are facing off for a third time in national elections. Karamanlis won encounters in 2004 and 2007. The U.S.-born Papandreou is the son and grandson of former prime ministers, while Karamanlis is the nephew of the founder of the New Democracy party.
The winner will inherit an economy set to contract this year for the first time since 1993, ending a run of annual growth of about 4 percent. The global recession has slammed shipping and tourism, the country’s biggest industries, and public debt is set to rise to more than 100 percent of output next year, Europe’s second-biggest debt load after Italy.
Standard & Poor’s cut Greece’s credit rating to A- in January, the lowest rating among the 16 countries using the euro.
Public Finances
The premier’s efforts to improve public finances, which included new taxes, tighter pension rules and selling stakes in state-owned companies, have prompted strikes and protests. Corruption scandals further undermined his administration. In December, the government came in for criticism after youths rampaged through Athens and other cities following the police shooting of a teenager.
Papandreou says government mismanagement, not just the global recession, is to blame for the slump. He’s pledged to revive growth by spending 3 billion euros ($4.4 billion) on public works, increasing education spending by 1 billion euros in the first year, raising taxes on the wealthy, and collecting 31 billion euros through a crackdown on tax evasion. The ruling party has called the plans “unrealistic”
Unemployment Gains
With unemployment at a three-year high of 8.9 percent and about twice that for young people, Papandreou’s promise to focus on youth joblessness resonated with some voters.
Yannis Daskalakis, 23, who earns 5 euros an hour handing out free newspapers in central Athens, says he hopes voting for Pasok will help him get what he wants most: a permanent job providing home assistance for the elderly.
“Papandreou says he’ll create jobs,” Daskalakis said. “He says in the first 100 days he has a plan. People expect those promises to be kept. They lost faith in Karamanlis because he made promises he didn’t keep even after they gave him a second chance.”
Some of Papandreou’s other promises may rattle investors. He risks further widening the deficit with his plan to step up public-works spending and raise wages. That could increase the premium bondholders demand for buying Greek debt over comparable
German securities, which is currently about 138 basis points.
When Karamanlis won re-election in September 2007, the spread was about 30 basis points.
Papandreou has also said he may seek to renegotiate the sales of some state companies such as Olympic Airlines SA and Hellenic Telecommunications Organization SA, known as OTE, to private partners such as Bonn-based Deutsche Telekom AG.
On Thursday, China View reported on Papandreou's calls for change:
Addressing the last big rally of PASOK ahead of Sunday's elections at Pedion tou Areos Square in the center of Athens under the cheers of thousands of supporters of the party who waved flags, he asked that "no vote will be lost and everyone will go and vote on Sunday and take part in the new battle to rebuild Greece."
The scion of a big political dynasty and former foreign minister, Papandreou repeated his vision on running the country with "respect and meritocracy" if PASOK wins the elections, as most political analysts expect, asking people to check his policy platform
point by point as it is posted on the internet from Thursday.
He finished his speech with the main slogan of his party's campaign "It's time to put the citizen first."
Time to put the citizen first? Nice slogan but the reality is that both the left-leaning PASOK and the right-leaning New Democracy party have put their interests first way ahead of those of Greek citizens.
I have been traveling to Greece for over thirty years and I have never seen the level of cynicism that I saw this past summer. Greeks are optimistic people by nature, but the endless scandals in the New Democracy party (PASOK has had its share of scandals too) and the global economic slowdown have raised the level of angst among Greeks who see little hope in the future.
More worrisome, according to Capital.gr, Greek pension funds are facing liquidity problems:
Greece's largest Insurance and Pension Fund (IKA) as well as the fund of the self-employed (OAEE) say they may not be able to pay pensions for November, December as well as the Christmas bonus.
The heads of the two funds have submitted official requests to the Greek General Accounting Office, asking for emergency funding, according to official documents brought to the public eye by a opposition trade unionist.
OAEE asks for 232 mil. euro, while IKA requests a 300 mil. euro funding.
Since the beginning of the year, OAEE has received a total of 705 mil. euro in regular and emergency funding.
It is noted that publicly, IKA says that it does not face liquidity problems.
In a written statement, Minister for Employment says that IKA requested 300 mil. euro because it has not yet received, due to the early polls, a 4.6 bil. euro sum that it is owned by the Greek State while “for the same reasons OAEE asked for 48 mil. euro.”
And now to add insult upon injury, we have Michael Scott, a classicist at Cambridge University, who is claiming that ancient Greece's heroes were not that at all:
Spartans! Prepare for, well, embarrassment. It seems that far from being elite, noble warriors, each worth 1,000 of any rival soldiers, King Leonidas' crack troops were a bunch of bullying thugs. And Alexander the Great? A mummy's boy: in fact, his mum was a better fighter by a long chalk and died a soldier's death on the battlefield.
They and other figures from antiquity are to have their reputations shattered by a new British study which reveals the "truth" behind long-established legends. Michael Scott, a classicist at Cambridge University, points to evidence that could change the way we think about our classical heroes.
The heroic Spartans of Thermopylae, whose valiant standoff with an enormous Persian army is immortalised in the Hollywood film 300, are unmasked by Dr Scott as little more than war-mongering bullies of the ancient world who policed Athens with near-mindless violence, destroying anything they took a dislike to.
Alexander the Great, remembered for his conquests across the known world and spreading Greek civilisation to the east, is dismissed was a "mummy's boy" whose endless stream of letters from the battlefield to his mother Olympias infuriated his generals.
Despite the fact that Alexander was recently voted the greatest Greek of all time by in a poll in Greece, Dr Scott charges that his successes were merely opportunistic exploitation of foundations laid by his father, Philip II.
Olympias, sympathetically portrayed by Angelina Jolie in the film Alexander, was a violent and fearless warrior to put her son to shame, according to Dr Scott.
It's even suspected that she may have murdered her husband, Philip of Macedon. She was finally captured in battle and put to death in 316BC by Macedonian comrades of those whom she had slain in battle.
The Greek philosopher Isocrates also suffers under scrutiny. Until now he was thought a steadfast believer in democracy in Athens and is widely believed to be one of the greatest orators and political commentators of his time. But, late in life, Isocrates realised democracy no longer worked in Athens and threw in his lot in with Philip of Macedon when Philip became king.
Even the great "Golden City" of Athens itself is not spared a kicking from Dr Scott. He argues that its early successes have, over time, obscured a darker history that mirrors societal problems in 21st-century Britain. Far from being a major world player, fourth-century BC Athens imploded under the weight of a crippling economic downturn, while politicians embroiled themselves in fraud. Meanwhile, they sent the army to fight unpopular foreign wars and struggled to cope with a surge in immigration.
"If history can provide a map of where we have been, a mirror to where we are right now and perhaps even a guide to what we should do next, the story of this period is perfectly suited to do that in our times," Dr Scott said yesterday.
"It shows how an earlier generation of people responded to similar challenges and which strategies succeeded. It is a period of history that we would do well to think about a little more right now – and we ignore it at our peril."
Professor Scott is right that we ignore history at our peril, but his claims smack of scholarly opportunism and they will be rebuked. In many ways ancient Greece was far more advanced than our modern democracies. And his theory that great economic powers implode under a crippling economic downturn is hardly new.
The fact is we are experiencing a global economic upheaval - one that will define the next century. We can learn from history or can repeat the same mistakes, engaging in endless conflicts that will jeopardize the future well-being of the world's citizens.
So keep an eye on what is going on in modern Greece, because I can assure you that it's a reflection of what is going on across the world. The level of angst is unprecedented and politicians better quit the rhetoric and start putting citizens first.
***UPDATE: PASOK wins in a landslide victory***
The London Times reports that Greece's conservative leader quits after gamble on snap election fails:
The Greek Prime Minister, Costas Karamanlis, conceded defeat last night and resigned as leader of the conservative party after a general election victory for the opposition Socialists.
With more than 80 per cent of votes counted the Panhellenic Socialist Movement (Pasok) of George Papandreou had 44 per cent against 34 per cent for the New Democracy of Mr Karamanlis. Turnout was 70 per cent. Pasok needs to win at least 151 of the 300 seats in parliament to form a government on its own. An electoral monitoring branch of the Interior Ministry projected that Pasok would win 160 seats.
If Mr Papandreou wins the majority he will be the third Prime Minister in his family, after his father Andreas and grandfather George. Though lacking in the Papandreou charisma, he forged ahead by promising to ease economic discomfort. He has campaigned for a “green growth” economic model involving investment in renewable energy.
Abstentions were notable among younger people leading to concern that the internet generation could be turning against politicians and considering direct action, as in the riots in Athens last December which led to the creation of violent extremist groups. One of them, named the Nuclei of Fire, is believed to have placed a bomb that went off near Mr Karamanlis’s final rally in Athens on Friday. No one was hurt.
The election result was a personal as well as political defeat for Mr Karamanlis, who had campaigned on a promise of tough financial remedies, including a freeze on salaries and pensions for at least a year. Mr Papandreou, by contrast, made feel-good promises but refused to say how they would be paid for.
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"Leo, you are TOTALLY missing the point of that election."
I have no interest in either political party but I accept your point, it's not going to be radically different now that PASOK is in power. They will spend more but they're constrained as to how much they can spend and they still have to deal with gaps in the Greek pension system. My loyalty lies with Greece and Greeks, not Greek politicians. I am fed up with their rhetoric.
Leo, you are TOTALLY missing the point of that election.
It is the exact OPPOSITE of your interpretation.
It is Dynasty Candidate A vs Dynasty Candidate B
There is no change. It is like going from Bush to Obama with a bunch of hoopla about hope and change.
it's a pressure cooker; and the u.s. is at ground zero(excuse the mixed metaphors). there are two possible routes to release/direct said pressure: at those who ARE the problem - politicians/bankers/militarists; or at those who are MANUFACTURED to appear to be the problem - Islamists, communists, etc. the true provocateurs need a sacrificial lamb to deflect the coming angst. it won't work this time around, thanks to the speed and breadth of communication. this is the true end-game for the so-called western modalities of civilization.
"An entire raft of European countries will follow Greece down."
If you believe this, then short the hell out of the Euro. I think the USD is due for a nice bounce. As for the "inevitable decline" of Greece and other European nations, I wouldn't be so sure. History tells us that they can overcome the most severe challenges.
Greece is suffering from a Roman-scale demographic collapse, which leads to economic collapse. In the past thirty years its birth rate has collapsed to 1.3 births per couple, almost half of the replacement rate. Greece faces constant recession and ultimately national bankruptcy as an ever-dwindling pool of workers tries to support an ever-growing pool of retirees. There is no way out for Greece now. An entire raft of European countries will follow Greece down.
An inverted population pyramid coupled with a welfare state will kill a nation every time. I call this effect the Revenge of Malthus.
True the birth rate is low but there is a huge immigration factor that offsets the low "national" birthrate. It has been rumored that the true population of greece may number in the 12-13 millions. Also, if the government gets desperate they will allow more immigrants to come in. Also, all the old people have these villages to go to where the homes are paid off, living is super cheap, and food is abundant. The road will be bumpy but we will make it.
Be careful what you wish for. It is possible that both of these parties represent the common people. And that will lead to eventual disaster. Greece is a horrendously inefficient and heavilty subsidized unproductive economy.
The suffering, oppressed public? "The people" want more jobs, more money, more social programs, more income supports, more guarantees, more cheap money, more spending. That none of this is sustainable does not matter to the masses nor is it a concern of the politicians making their promises...
This movement towards entitlement socialism or social fascism(for want of a better word) and away from confronting financial reality will be repeated around the world.
That's so 90's (or 50's?) saying the problem in our financial system is socialism. Gimme a break. The problem is corruption, cronyism and a mafia-like mentality in government. The ones with their hands in the cookie jar don't give a crap what window dressing you put on the political system.
Of course people want jobs. That's the whole point.
A bailout is a socialist (or fascist) solution. That is a problem.
Great Depression,
Youth unemployment is the biggest problem plaguing Greece. The same thing in Italy and other European countries. This is also happening here in North America. When the younger generation sees no jobs, no hope, then it's a national tragedy.
As for household debt, I question how much better off they are in Greece. Up until a few years ago, very few people had credit cards in Greece. Now, the average Greek has a few credit cards, all maxed out, and they owe billions to the banks.
Drive to the airport in Athens and on the way you'll see lots full of cars that were repossessed because people were unable to make their payments.
Far too many Greeks are living paycheck to paycheck, getting help from family and friends to make it by. A buddy of mine who works as a CFO in Athens told me he often gets requests by employees to advance their salaries by several months so they can pay off debts.
What they do have on the islands and villages of Greece is fresh food and vegetables that they can buy at decent prices. Unlike Athens where food is becoming very expensive for the average Greek, the folks living in the outskirts can make it by eating very well on a reasonable budget.
The structural problems facing Greece are deep. The new government will have to face these challenges head on. I hope they make wise decisions for the long-run.
Ta leme,
Leo
Lefkada is a beautiful island. I am from Crete and I'll share with you what several taxi drivers told me this summer: "Tha pesei pina afto to xeimona" ("hunger will strike this winter"). The Athenian taxi drivers told me that if they're saying that in Crete, known for its tourism, then it will be ten times worse in Athens.
Leo:
Are you aware that recent scientific evidence now strongly supports ancient Crete (Minoans) being the source of Plato's legend of Atlantis? That a nearby volcanic eruption perhaps 5 to 10 times the size of Krakatoa (by far the largest eruption in history) caused a series of waves that destroyed the entire civilization?
Fascinating article by the way...
On a micro level, Lefkada was packed this year with tourism up 25% YOY due to the construction of the tunnels from Thessaloniki to Ioannina. These tunnels give northeastern greeks access to the west. Basically, its only a 5 hr trip now from Thessaloniki to Lefkada. Including Larissa, Volo, Katerini and all the other towns Lefkada was banging. Also, no ferry costs becuase Lefkada is connected to the mainland with a free bridge. 50 eu ticket per person, a family of 5 saves at least 500 eu by taking the car to Lefkas. So thankfully, my family out there is making big euros becuase of the tourism boom.
With regards to Athens, things will get tough out there. However, do realize that household debt is very low in Greece. Student loans are non-existence. Most people own their own homes. Credit cards are a problem but not like the states. Some builders got overleveraged and they will feel the pain. All in all, the government will have to balance its expenses but there is so much "mavro xrima" in GR that more extensive tax regulation can solve this problem.
Greece GDP 224 Billion Euro
Greek Household debt 89 billion Euro
Household debt is 40% of GDP. Much lower than here.
So bottom line I think the ellines will deal with the upcoming crisis pretty well. And remember, as greeks are known yia "to kripsimo" theres alot of other GDP that has to be factored in.
Great work Leo.
Tha ta ksana poume
Leo apo pou eisai? Ego eimai apo ti Aitoloakarnania, konta stin Lefkada. Paw kai gw sinexia stin ellada. Egw pantos eida ta pragmata mia xara..
Yes, we keep hearing about that the German economy escaped relatively unscathed but I strongly doubt it. As for the Euro, there will come a time to short it heavily in the next few months. I think it's ridiculously high, crippling the economies of many European nations, not just Greece.
Obama on his Change Agenda...
http://www.youtube.com/watch?v=yqJbjLIzykU
***UPDATE: PASOK wins in a landslide victory***
The London Times reports that Greece's conservative leader quits after gamble on snap election fails:
2010 will be an interesting year for the Euro. There are several countries that pre-Euro would have devalued their currencies buy now but, that option is off the table. I'll speculate that the Euro will at best, be a basket currency 10-years from now - sort of like a Trans-European SDR. The Germans will return to the D-Mark.
Let's see,
up to now the banks got loads of fresh money and for the people deflationary medicine like cutting jobs and wages.
Leo,