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Everything is Getting Gummed up in Greece

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com

Tourism, Greece’s second largest industry after the shipping industry, and already in a downdraft, is taking another hit as tour-bus drivers will go on strike next week; wage negotiations have deadlocked. Owners demand that drivers take an additional 50% cut in pay and benefits on top of the 20% cut they’ve already suffered.

The National Organization for Healthcare Provision (EOPYY), Greece’s state-owned health insurer, hasn’t paid pharmacists for months and owes them €540 million. In turn, pharmacists are refusing to sell medications to insured patients, including cancer patients, unless they’re paid in cash—and even hospitals are reporting shortages.

Greece’s ship repair and shipbuilding industry, a highly competitive activity in a global market, has collapsed. Over 90% of its union workers are jobless—though Greek shipping companies own 16% of the global merchant fleet, more than any other nation. They’re just not having their ships built and repaired in Greece anymore—whatever the reason, high cost of labor, lack of investment, changing shipping routes, strikes. A sign that there are fundamental problems related to competitiveness that a bailout, no matter how generous, won’t be able to solve.

And yet, President Barak Obama—whose reelection hinges on the US economy, which is wobbling, and on the jobs picture, which remains dismal—blamed European leaders, specifically German leaders, for refusing to bail out Greece and the rest of the tottering Eurozone at taxpayers’ expense, just so he could sail to four more years. Everything in the book, from the loss in US manufacturing jobs to cancelled IPOs, was “attributable to Europe and the cloud that’s coming over from the Atlantic,” he said at a fundraiser in Chicago.

German Chancellor Angela Merkel shrugged off the bullying and just said no to Eurobonds, again. Despised in Germany, they’re seen as an insidious transfer from bleeding German taxpayers to other countries. Instead, her government wants struggling Eurozone countries to overhaul their economies with utmost speed—and Germans are willing to dole out hundreds of billions of euros to make that possible—but it’s proving to be impossible, at least in Greece, and very painful everywhere, to unwind years of an economic gravy train fueled by cheap euro debt. Read.... Germany Walks Away From Greece.

And unpaid bills are now threatening Greece’s electricity supply. State-owned Electricity Market Operator (LAGIE), a clearing house for power transactions, hasn’t paid independent power producers for electricity it bought from them. They, in turn, haven’t paid their natural gas supplier, Public Gas Corporation (Depa), which now doesn’t have the money to pay its supplier. Payment is due on June 22. Alas, its supplier is Gazprom in Russia, and they insist on getting paid. If not, they will shut the valve, and Depa won’t get the gas to supply the independent producers, which will have to take their power plants off line, removing about a third of the country’s electricity production.

But Germany isn’t even worried about Greece’s return to the drachma anymore—a fait accompli. It’s worried about Spain and Italy. Greece simply is the model. The costs appear to be steep, but most of the actual costs have already been incurred. They’re hidden in Greece’s debt, now held largely by European institutions, such as the ECB, and in the infamous Target2 balances within the European System of Central Banks. Hundreds of billions of euros. They were spent on everything: social benefits, German frigates, inflated wages, now weedy and abandoned Olympic facilities, profits, bribes, votes. What remains aren’t productive assets to service this debt, but simmering unrest and the debt itself.

International companies have long been preparing for Greece’s return to the drachma, quietly and in secret, but occasionally word seeped out. According to the latest revelation, Heineken NV has moved excess cash out of Greece, doing what the Greeks themselves have been doing. And currency traders were surprised on Friday to see the new identifier for the drachma (XGD) on their Bloomberg terminals; a test, the company said, so that it would be ready for trading drachmas.

When Alexis Tsipras, leader of the Radical Left Coalition (Syriza)—in first place with 31.5% in the latest poll—laid out his program, he left no doubt: his first action if he won the June 17 elections would be to annul the bailout memorandum signed by the previous government. The memorandum spelled out the structural reforms Greece would have to implement in order to receive further bailout payments. He’d stop the privatization of state-owned companies, undo wage and pension cuts, lower the Value Added Tax, offer debt relief to households, raise the minimum wage back to the original €751, raise unemployment benefits.... His program had vote-buying promises for practically everyone. And yet, he wanted to keep the euro and expected taxpayers of other countries to fund his promises. Program of “dignity and hope” he called it.

Antonis Samaras, leader of the conservative New Democracy—in second place with 25.5%—also laid out his program. He’d renegotiate the bailout memorandum, though he stressed that Greece should stay in the euro—whose flood of cheap debt had made the Greek elite rich, and certainly he wouldn’t want to stop the gravy train. He promised to raise pensions, private-sector wages, child benefits ... undoing much of the economic restructuring already agreed to. And he threw in some new goodies: unemployment benefits for the self-employed and compensation to Greek institutions for the haircut they’d suffered on their Greek government bonds. Every item on the long list was at the expense of restive taxpayers in other countries.

Greek politicians, even the new generation, are sticking to their time-worn strategy: vote-buying with ruinous promises that can only be fulfilled with an endless flow of borrowed money. Thus, they define themselves as leaders who need a central bank that can print however much is needed to fund these promises, with periodic devaluations or defaults to get a fresh start.

And here is an awesome video by a Greek photojournalist who captured the violent absurdities of 2011.... “Days of Decline.”

 

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Mon, 06/04/2012 - 14:37 | 2492871 SmittyinLA
SmittyinLA's picture

I wonder how Gazprom is handing the Greek receivables?

Did they already count the income from the used gas?

Did they insure the credit risk of Greek buyers?

When the Greek bills dont get paid who loses?

(We know future petro bills will be paid in advance shortly)

But what about current unpaid bills?

WHO EATS THOSE, RUSSIA?

Mon, 06/04/2012 - 11:22 | 2492051 Its_the_economy...
Its_the_economy_stupid's picture

Did anyone doubt the exit of Greece, Portugal, Spain, Italy from the monetary union once the central banks and others off-loaded the sovereign debt of these countries onto the population-at-large via ECB, IMF and ESF hoovering up all of this Euro-trash (bonds). The writing was on the wall as soon as the Euro-trash was swapped at face value long ago. Moral Hazard accomplished. Now banksters socialize the losses and continue merrily on their way.

Mon, 06/04/2012 - 11:23 | 2492058 Its_the_economy...
Its_the_economy_stupid's picture

Everything else is just noise.

Mon, 06/04/2012 - 11:16 | 2492020 Winters75
Winters75's picture

These doom and gloom predictions are almost making me wish for a NWO world government..NOT!

Mon, 06/04/2012 - 09:53 | 2491514 JuicedGamma
JuicedGamma's picture

“dignity and hope” -- "hope and change" Same 'ol, same 'ol.

Mon, 06/04/2012 - 08:59 | 2491275 Stuck on Zero
Stuck on Zero's picture

 

Why doesn't Greece do what Zimbabwe did and just not issue a national currency at al?.  Just allow Euros, dollars, gold, Rubles, Yen etc. to circulate freely.  Modern accounting equipment will take care of conversions instantaneously.  In this way the government will always live within it's means and the people, too.

 

Mon, 06/04/2012 - 08:34 | 2491220 BeetleBailey
BeetleBailey's picture

"And yet, President Barak Obama—whose reelection hinges on the US economy, which is wobbling, and on the jobs picture, which remains dismal—blamed European leaders, specifically German leaders, for refusing to bail out Greece and the rest of the tottering Eurozone at taxpayers’ expense, just so he could sail to four more years. Everything in the book, from the loss in US manufacturing jobs to cancelled IPOs, was “attributable to Europe and the cloud that’s coming over from the Atlantic,” he said at a fundraiser in Chicago."

What a cunt.

Mon, 06/04/2012 - 06:48 | 2491049 Satan
Satan's picture

Greek shipyards have been in decline since the 90's. It is highly unlikely that they will ever recover. Too many of the yards have falling into irretrievable disrepair with most of the equipment and tools stolen/looted.
Experienced shipbuilders have left Greece for other yards taking experience and skill sets with them. You can not learn ship building,
You must be taught...if that makes any sense.

Needless to say, corruption within the unions,fraud, poor workmanship, missed deadlines,use of inferior materials and blatant over billing are ever present hurdles to overcome when dealing with Greek shipyards.

For the record, I work in the shipping industry designing Hydraulic systems for ships and large yachts.

Mon, 06/04/2012 - 05:44 | 2491002 DutchR
DutchR's picture

Interesting,

 

"HSBC has tested its cash machines in Greece to check whether they could cope with the reintroduction of the drachma if the country drops out of the euro."

 

http://js.dailymail.co.uk/money/news/article-2153684/HSBC-tests-cash-mac...

Mon, 06/04/2012 - 03:57 | 2490961 lolmao500
lolmao500's picture

LOL those political promises... you betcha they gonna say the same thing in the US... but there will be less fun in the US since elections are only every 2 years... in Greece, they can have an election every month...

Or will it make it worse since elections can't be called when the people are pissed?? Elections are some kind of release pressure valve... if the valve doesn't work... there's overpressure and an explosion... shall be fun.

Mon, 06/04/2012 - 00:04 | 2490789 rufusbird
rufusbird's picture

It can't happen here...

Mon, 06/04/2012 - 00:16 | 2490812 knukles
knukles's picture

Zats right.  We're Humericuns an history don't hupply ta us.

Yeah, cum ta think of it, we're them Humerican Exceptionalism folk, jus' like them Germans wuz bee-for the war.

Mon, 06/04/2012 - 00:00 | 2490780 Gordon_Gekko
Gordon_Gekko's picture

I'm SICK and TIRED of this. Just fucking DIE already you worthless, corrupt, ponzi, piece of s**t "global economy". Its like a fucking zombie - keeps on limping and crawling no matter how many bullets you shoot at it. Die bitch, DIE.

Mon, 06/04/2012 - 09:45 | 2491448 SokPOTUS
SokPOTUS's picture

I'm with ya' Gordo.

 

Double Tap this Bitch.

Mon, 06/04/2012 - 01:49 | 2490900 RockyRacoon
RockyRacoon's picture

Tell it, Gordon. 

Mon, 06/04/2012 - 00:58 | 2490857 StychoKiller
StychoKiller's picture

Long time no see!

Sun, 06/03/2012 - 23:58 | 2490775 JOYFUL
JOYFUL's picture

Nice to see Mr Wolf back on the path towards responsible journalism. This one is not bad, and by his recent [lack of] standards, pretty darn good actually!

Trouble is, the whole story is a false narrative, propagated by the usual suspects in order to delude the audience into believing that there is some kind of 'financial crisis' going on - rather than a grand heist perpetrated by characters as completely wacked out as any cartoon villain you've ever seen...steal\cackle...plan new outragreous broad daylight theft...repeat/take proceeds home to Ma Beagle.

Greeks(like everybody else) have been livin high on the hog for a long time...now that petro-energy(the stuff that u use to heat with, instead of wood n dung\get around with, instead of horse\donkey...make ur food out of-instead of growin it...etc.) prices have been jacked up by the oilgarchs, party is over, and the savings of past generations stolen. Now come the hungry times agin. Some will survive, too many will not. End of story.

Everything else is just verbiage employed by mediaots in need of copy.

Mon, 06/04/2012 - 00:01 | 2490782 Gordon_Gekko
Gordon_Gekko's picture

Oversimplification.

Mon, 06/04/2012 - 04:20 | 2490971 JOYFUL
JOYFUL's picture

Yur right...

but guys in suits aren't my target audience. The urban detrius of the 'developed world' is already done. Greece is a psy-op designed to condition yáll in Euromerika to slowly accepting diminishment and then paralysis of will. It's goin down without yu even knowin.

There's a few of yu who have already made a few steps in the direction of survival, and need a reminder to stay the course...everybody else is welcome to stay home in their airconditioned condos and wait for the end. They'll prolly watch it "live" n "as it happens", on CNN, and expect to debate it next day on ZH.

Sun, 06/03/2012 - 23:45 | 2490751 world_debt_slave
world_debt_slave's picture

ho, hum, waiting for shit to hit the proverbial fan

Mon, 06/04/2012 - 06:24 | 2491024 AnAnonymous
AnAnonymous's picture

Time to apply US citizen recipes and pour that too much of US citizens onto another country, US citizen style.

Mon, 06/04/2012 - 10:04 | 2491608 LFMayor
LFMayor's picture

Hey Anon, do you know what anniversary day this is?

That's right bitch, Tianamen Square!   Go look it up, but be careful when you peek past the firewall.  If your minders catch you then you'll get hauled out back and shot.

Mon, 06/04/2012 - 08:54 | 2491263 JOYFUL
JOYFUL's picture

Once cut off from their resource-rich imperial hinterlands of Tibet\Sinkiang\Mongolia, ChineseCitizens will wither on vine like bitter melon gone bad.

Khambas are sharpening swords as we speak...Chinbot is feelin the heat!

Mon, 06/04/2012 - 09:57 | 2491559 TheFourthStooge-ing
TheFourthStooge-ing's picture

JOYFUL said:

Once cut off from their resource-rich imperial hinterlands of Tibet\Sinkiang\Mongolia, ChineseCitizens will wither on vine like bitter melon gone bad.

Yes, and that day may come sooner than they expect. The adventurism of Chinese citizenism in Tibet is damming up quite a reservoir of bad karma. The dam is cracking, though, and this in turn will awaken from long slumber the mighty Yeti.

The rampaging Yeti rage will descent like a torrent upon the land of Chinese citizenism, covering the land like great Yangtze River floods from fabled past.

Khambas are sharpening swords as we speak...Chinbot is feelin the heat!

The Yeti awakening draws near. Chinese citizenism is no match for enraged rampaging Yetiism.

 

Mon, 06/04/2012 - 10:39 | 2491800 JOYFUL
JOYFUL's picture

Ah, the fabled Yeti-citizenism...made me chortle...

some say he is man, some say beast, but really, he be neither, yet both...

for the Yeti be the escaped survivors of Tocharia, the original blue eyed, red headed devils what created an oasis of culture in the middle of a desert of Han citizenism...and though their city of Kucha was long ago imperialized by the barbarians from the east, it is said that their spirit lives on, in the high mountain passes of the Kulun Mountains...where their descendants mated with the fierce Dakinis of the Protector Realm!

rah-hoom-rah....rah-hoom-ram...Han citizens quiver under their quilts as the sound of Yetis marching toward their tower gives them terror!

Mon, 06/04/2012 - 06:30 | 2491030 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Time to apply US citizen recipes and pour that too much of US citizens onto another country, US citizen style.

Time to apply Chinese citizenism recipes (but not for powdered infant longevity pills) and pour that too much of Chinese citizens onto another country, Chinese citizen style.

Tibet is the example, African farmland is the next target.

 

Sun, 06/03/2012 - 21:32 | 2490494 Oldrepublic
Oldrepublic's picture

It has been 3747 days since the Drachma was legal in Greece. Let's start a contest to see when it will be legal again in Greece!

Mon, 06/04/2012 - 14:51 | 2492922 Roland99
Roland99's picture

and make a Drachma worth a brazillion Euros

Mon, 06/04/2012 - 05:50 | 2491005 Ghordius
Ghordius's picture

why not a wager? I keep hearing that it has been some thousand(s) days since the British began betting on the exit of Greece from the EUR and that the bookies closed their books a while ago... http://uk.reuters.com/article/2012/05/10/greece-bets-idUKL5E8GA4RN201205...

though I still don't see any coalition in the future voting for a Greexit, do you?

Sun, 06/03/2012 - 21:16 | 2490466 El Oregonian
El Oregonian's picture

Oh piss on it, I'm going to go get drunk tonight... We'll be in a lot shittier mood tomorrow with a well deserved hangover.

Sun, 06/03/2012 - 21:24 | 2490463 Davalicious
Davalicious's picture

Socialist countries which reach a tipping point must inevitably tumble into the black hole. The electorate can't resist voting themselves a share of other people's money. When they run out of people to loot, they implode.

Countries rightfully belong to the productive. We need to shift to a system that gives more votes to entrepreneurs and less to social parasites.

 

Mon, 06/04/2012 - 13:19 | 2492506 crawldaddy
crawldaddy's picture

step away from the radio. Turn off Rush, your IQ just increase significantly by doing so.  Stop saying the word and phrase " socialism" you dont even understand it.  For if you did, you would understand it is NOT the cause of this economic calamity. 

Now go to the library and start studying Monetary policy and creation.

 

Why anyone relies on some college dropout drug addict that never held a relevant job in their life for their information is beyond me.

Mon, 06/04/2012 - 08:55 | 2491264 LawsofPhysics
LawsofPhysics's picture

You better define "productive" first.  Lots of paper-pushing fucknuts believe that coming up with new "financial products" of mass destruction is being "productive".  Fuck them.  Unfortunately this scum has bought your representation.  The last thing a truly productive person is worried about is politics, therein lies the rub.

Mon, 06/04/2012 - 10:56 | 2491930 barroter
barroter's picture

Agree... The business world has chosen to get at your assets via FRAUD.  Today's business just seems to be bent on how to dig deeper into my pockets by any means possible.  I remember when the Bush admin was backing a regulation that would allow credit card companies to fee you for NOT using their cards.  What horseshit!

"Financially Innovative Products," isn't "producing" in my book.

Mon, 06/04/2012 - 01:45 | 2490896 Freddie
Freddie's picture

Happened in the US with the UAW getting taxpayr money and ditto govt union workers.  The EUSSR and Goldman Sachs man in Italy are pushing a fuller integration so teh Greeks and others can share in German and probably Dutch taxpayers wealth.    All done by corrupt politicians with the state's guns backing them.

Sun, 06/03/2012 - 23:34 | 2490734 Uchtdorf
Uchtdorf's picture

Remember when only land owners could vote in the US? That got us off to a good start but of course the socialists had to eliminate that idea.

Mon, 06/04/2012 - 03:13 | 2490938 LowProfile
LowProfile's picture

I recall that it was also restricted to white men.

Trouble is, that voting bloc was a tyranny to the non-voting bloc.

You want to fix this?  Simple:

1.) Let GOLD trade free of taxation and derivatives.  No more levered futures contracts.  1:1 allocated only.  No tax on gold sale, capital gains or otherwise.  Do it with silver too, while we're at it.

2.) Impose a national progressive real estate tax with a super high threshold, say $10,000,000.   No federal taxation below that level.  Amend The Constitution to allow the threshold to rise based on the true rate of inflation measured against gold, silver, energy and food.  Amend The Constitution so that the states cannot tax real estate below a threshold of $5,000.000.

3.) Ban all other forms of taxation (including fees, tolls etc.) with a Constitutional amendment.

I would include an amendment that the Fed Gov't cannot own more than 15% of the country's land, and the states cannot own more than 15% of their respective state's land AS ASSESSED BY DOLLAR VALUE....

That fixes the problem for about 1000 years.  Taxation is progressive, but only above a very high threshold, allowing those who want to live simply and self-sufficiently to do so if they wish.  This forces the monied elite to deploy their capital towards CAPITALISM (seeking profit via production of goods and services), as opposed to their current method of seeking a return on their money, COLLECTING RENT.

 

-=---
Labor, entrepreneurism, investment or rent.

The three former are through hard work and ingenuity, the latter is through government privilege.

Via Death and Gravity From http://www.zerohedge.com/news/guest-post-why-left-misunderstands-income-...

-=-=--

Mon, 06/04/2012 - 11:02 | 2491952 barroter
barroter's picture

Here's a voting scheme that'll endear some.  For every $ you own, you get ONE vote.  Net assets total $20,000? You get 20,000 votes.  I can see some with billions just voting in our best interests and looking out for us! You can trust them!

 

Mon, 06/04/2012 - 07:30 | 2491109 jeff montanye
jeff montanye's picture

i wonder how far one would get with just limiting campaign contributions to actual registered voters in the constituency.  of course according to the supreme court we would also need a constitutional amendment.  

didn't need one to assassinate citizens by executive fiat though.  odd, that.

Sun, 06/03/2012 - 20:56 | 2490420 q99x2
q99x2's picture

At least a couple hundred years ago you could pull up stakes and move away from the banksters. Which was probably good for shipbuilders. Maybe they can build a really big ship, get on it and just sail around.

Mon, 06/04/2012 - 08:10 | 2491159 duo
duo's picture

how do you think Texas was settled?.  Debtors from the East who couldn't afford passage to CA.

 

Sun, 06/03/2012 - 23:33 | 2490728 Uchtdorf
Uchtdorf's picture

Watch out for that really big torpedo.

Mon, 06/04/2012 - 03:07 | 2490934 LowProfile
LowProfile's picture

This time I vote we fill the ship with banksters.

Mon, 06/04/2012 - 11:04 | 2491968 barroter
barroter's picture

then slam a Sunburn cruise missile into it...to make a nice artificial reef...

Mon, 06/04/2012 - 03:54 | 2490962 lolmao500
lolmao500's picture

And send them on the moon... or Mars.. or the Sun...

Sun, 06/03/2012 - 20:28 | 2490339 El
El's picture

If Obama's reelection hinges on the economy over the next five months after all we've been through these past few years, then people are dumber than a bag of rocks.

Mon, 06/04/2012 - 13:15 | 2492486 crawldaddy
crawldaddy's picture

this election hinged on republicans actually nominating one of the only humans in america actually worse than Obama. Republicans gave this election away by cowering to their imbreds on the far right.

Mon, 06/04/2012 - 07:25 | 2491098 jeff montanye
jeff montanye's picture

yes and yes.  one would think making bipartisan an orwellian police state really put in motion by the second worst president in history, g.w. bush, would be enough to defeat the scoundrel.

Sun, 06/03/2012 - 20:07 | 2490284 Debeachesand Je...
Debeachesand Jerseyshores's picture

XGD here sooner than you thing.

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