“A harder Default To Come”

Wolf Richter's picture

Wolf Richter   www.testosteronepit.com

“We owed it to our children and grandchildren to rid them of the burden of this debt,” said Greek Finance Minister Evangelos Venizelos about the bond swap that had just whacked private sector investors with a 72% loss. While everyone other than the bondholders was applauding, the drumbeat of Greece’s economic horror show continued in its relentless manner.

In central Athens, a stunning 29.6% of the businesses ceased operations, up from 24.4% in August; in Piraeus 27.3%, a 10-point jump since March. The whole Attica region lost 25.6% of its businesses. “This worsening of the survival index in the commercial sector ... shows that resistance is waning,” said Vasilis Korkidis, president of the National Confederation of Hellenic Commerce. And fourth quarter GDP was revised down to -7.5% on an annual basis. The Greek economy has shrunk about 20% since 2008.

Unemployment is veering toward disaster: 21% in December, announced Thursday, was horrid enough, but youth unemployment rose to a shocking 51.1%, double the rate before the crisis. A record 1,033,507 people were unemployed, up 41% over prior year. Only 3,899,319 people had jobs—a mere 36.1% of a total population of 10.8 million!

No economy can service a gargantuan mountain of debt when only 36.1% of its people contribute (by comparison, the US employment population ratio is 58.6%, down from 64.7% in 2000). Hence, another bout of red ink. The “cash deficit” at the end of 2011 hit €24.9 billion, 11.5% of GDP, far above the general budget deficit. Government-owned enterprises, such as the public healthcare sector, couldn’t pay their bills. Total owed their suppliers: €5.73 billion.

Yet, forcing down the deficit is one of the many conditions that the bailout Troika of EU, ECB, and IMF have imposed on Greece. And: "If the Greek people or the Greek political elite do not apply all of these conditions, they exclude themselves from the Eurozone," said Luxembourg’s Finance Minister Luc Frieden. All of these conditions. Then he added the crucial words: "The impact on other countries now will be less important than a year ago." Read.... Firewalls In Place, Markets ready: Greece Can Go To Heck.

Under pressure to cut its healthcare budget, the government reduced the prices that the industry can charge state-owned insurers. So wholesalers are selling their limited supply outside Greece, while out-of-money state-owned insurers delay payments to pharmacies and hospitals, which then can’t pay their wholesalers for the medications they do get. Wholesalers turn off the spigot. And the system locks up.

Even Health Minister Andreas Loverdos conceded that there were shortages, but that they were limited to lower-priced medications. Of the 500 most common drugs, 243 have disappeared from the shelves, including antibiotics. The Panhellenic Association of Women with Breast Cancer, for example, received many complaints from patients who claim they weren't treated due to lack of oncology drugs. And the world’s largest pharmaceutical companies are worried that Greece might not be able to pay them at all.

A bright spot: tourism. In 2011, receipts rose by 9.5% over prior year as the Arab Spring scared tourists away from destinations such as Egypt and Tunisia. In October, receipts jumped 15%. Alas, in December they declined 4.9%. And that reversal has now infected 2012. Tourist arrivals so far this year are down 10.7% in Athens and 6.7% for the country. Greece's last growth industry has hit the skids.

With unemployment climbing, production and consumption tanking, businesses shutting down, and tourism nose-diving, there is only one way for tax revenues: down. Budget deficits will be worse than promised. Greece’s debt—now largely to taxpayers of other countries—will continue to balloon. The standard of living of the vast majority of Greeks will get slammed, though the elite that are negotiating these deals will do just fine.

“We still don’t have a solution for Greece, so there will be a harder default to come,” predicted Charles Wyplosz, director of the Geneva-based International Center for Money and Banking Studies. Yet, in a bitter irony, Germany—the country where tax dodging is a national sport—decided to send 160 employees of its Ministry of Finance to Athens to fix the tax collection system. For that whole debacle that will endear the already reviled Germans even more to the Greeks, and for just how long a tax dodger can abuse the courts, read.... Final Bout of Spastic Greco-Teutonic Wrestling.

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winter2012's picture

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Lucius Cornelius Sulla's picture

Greece is just a warm up for Spain and Italy.

supermaxedout's picture

Greece has a lot of natural gas. This can change the situation of Greece clearly to the better. 

The problem is, that the UK and US do not like that this treasure is improving the lives of the Greeks. Their plan is to fatten BP etc. and to continue to control these fossil fuels because this control is the base of power for the US.   UK and US are controlling this area from Cyprus and do not want to give it up. Israel is also heavy involved because the giant gas field starts in front of Israel and poor Gaza strip.. Another big chunk of this trerasure lies in front of Lebanon and Syria thus explaining why a regime change in Syria is so welcome for the US/UK. Turkey does also want to have its share.

And now the time is getting short. Europe is already busy going away from gasoline to natural gas for transportation. In the Netherland and Belgium already more than 50% of the cars run on natural gas. And now this trend is affecting also more and more the rest of Europe.   The question now is who is going to deliver this gas to Europe?  Greece would be best positioned since it is already part of Europe, but that would create a situation were energy prices are fixed in Euro not in US Dollars.  This has to be avoided by all means. 

So there is a wrangling and wrestling over the enormous riches of Greece while it is highly doubtful that something of that whealth is ever reaching the ordinary Greek. This is not meant for him, this is meant for other, more powerful parties.  And these powers do not intend to loosen their grip on Greece. So there is no help to be expected nor any constructive develeopment in the near future while the population of Greece is the hostage and victim.

SanOvaBeach's picture

Fuck the Greeks!  Let'em drown in their own feces.  None of those assholes pay taxes.  What the fuck do you expect, stupid assholes!

FeralSerf's picture

Taxes good.  Greeks no like to pay taxes.  Greeks bad.

The average Greek has been fucked over royally by the criminal banks (remember GS?) and the criminal elites, both the local ones and the international ones.  I don't blame them for not wanting to pay for that shit.

margaris's picture

exactly. greeks always had a healthy distrust against their government.

why pay taxes for the crony mafia?

the big elephant in the room is big spending government. And thats not just a greek problem, its worldwide... greece is just the first domino to fall.

Get rid of fascist government with their big bank and big corporate ties.

Olympia's picture

History shall repeat itself in a far greater scale and therefore the benefit for the leading roles shall be much greater. If ancient Greeks won the battle against the barbarity of the East in favour of Europe, then modern Greeks are those who are meant to win the battle against the barbarity of both Eastern and Western world in favour of the human kind. The world has become a little “village” and in this “village” everyone knows what the character of the others is.



tturner's picture

The horror now happening in Greece will someday soon come to our shores.  It will be ugly.



Zero Govt's picture

Excellent (horrific!) discription of Greece crumbling Mr Richter

"In central Athens, a stunning 29.6% of the businesses ceased operations, up from 24.4% in August; in Piraeus 27.3%, a 10-point jump since March. The whole Attica region lost 25.6% of its businesses."

Meanwhile the EU have set up office in Athens with about 4 staff/crones to "vet Govt policy" more closely to ensure compliance!

Amongst the vetting will be asking the Greek Govt to put the hammer down on tax collection... question is will there be any businesses left (to tax) and if there is, how many will stay in business with the States parasites being ever more abusive/thieving of what's left of the private (productive) sector

this is an epic 'Lose-Lose' situation

ElvisDog's picture

Hey, I'll be able to provide first-hand reports on Greece. I'm going there in July for two weeks. Might be one of the few times it will be an advantage to tell people I'm an American.

ali-ali-al-qomfri's picture

travel tip from your freindly Aye-rab,

I’m sorry but there is never an advantage to telling people you are Amerikan (you are on vacation, they are in living hell) when you get home you will know what to expect.

A classical ignorant Yanks, spouting off will likely get you something stuffed up your Thessoleniki.

Tell’em your Canaydien

Fuh Querada's picture

Re the Greek tourism industry: I was considering vacationing at a hotel on the south coast of Crete that I visited several times in the early 2000s. Latest on-line quote for a cab fare for the transfer from Heraklion airport to the hotel: 204 Euros one way, 388 Euros return. The distance is 120 km. Car rental for 7 days (compact): 410 Euros. No bus route. Result: sorry, but f*** 'em. I scrapped the plans in favor of the Canary Islands. At least Spain has some affordable infrastructure left.

FeralSerf's picture

Try Kayak.  According to them it's only 122 US$ to rent a car for a week there incl. taxes.

ElvisDog's picture

Wow, almost 600 Euros for airport transfer? Ouch. I'm actually spending most of the time in Macedonia, but am spending two days in the Thessaloniki area by the coast. I found a hotel on booking.com for 90 Euros a night. I'm pretty good at traveling cheaply.

Fuh Querada's picture

Good luck, you should be fine with transport on the mainland. Crete is a special case.

ReeferMac's picture

Great Article Wolf, thanks for sharing.

It's clear to anyone w/ a brain that Greece will eventually be kicked out of the European Union. I just can't believe the powers-in-charge are continuing w/ the charade. For who's benefit?

sangell's picture

Well, for one thing, Greece has not disposed of a lot of its state owned assets which it must do to comply with its 'loan' agreements. Until that is done there are still things of value to be transferred. Not sure if I would want to invest in a country in such economic and political turmoil but some might if the price is right.

ebailey5's picture

Concerning safety of using "expired medications":  It is usually safe, with some notable exceptions (e.g. old tetracycline), to use meds that have exceeded the expiration date listed on the bottle or tube.  As the Temporalist correctly cites, there are studies that demonstrate only a slight loss of potency over time but no safety issues.  Why then do we discard perfectly good meds?  Several reasons:  the FDA (nanny statism), Big Pharma (sell more product) and your friendly drugstore (ditto more product).  Now if you are compliant with Rx instructions, you should not have a lot of outdated meds but there are many reasons why you could have left over meds--didn't work, couldn't tolerate, condition improved spontaneously etc.  So, can you safely take those meds for the same future indication--yes.  Alternatively, there are organizations that collect outdated but useful medications for use in other countries they serve--Greece may be joining that list shortly.

Temporalist's picture

I am "A" Temporalist not "The" Temporalist

Olympia's picture

Global Debt Crisis

The greatest private fraud of human history.

Who are the great fraudsters who are becoming the murderers of the human kind?

How does the economy "illness" threaten Democracy and the freedom of people?



World War III - the first Private World in History



Authored by Panagiotis TRAIANOU

masterinchancery's picture

In the real world, after all the socialist nonsense collapses, a country must produce in order to consume. Greece doesn't produce, but wants to retire at 50 with lavish benefits.  Sayonara to that model.

Son of Loki's picture

From International Living:

"An important real estate opportunity you should be aware of is in distressed European markets—in two countries in particular.

But despite what you may have read elsewhere, now is not the time to buy.

Because the banks continue to sit on the inventory and hide the problem, fire sales in this part of the world haven’t played out the way we are seeing with the auctions in Ireland.

Estimates put the total of Spain’s excess supply and distressed inventory as high as 2 million units. Much of this inventory (50% is a reasonable guess) is along the touristy costas."


Sounds as bad as  California....

masterinchancery's picture

Worse, people still want to live in California, despite Governor Moonbeam.

DosZap's picture

Worse, people still want to live in California, despite Governor Moonbeam.

And a fascist state.

IF people love getting FRANKED, let them live there. In less than 10yrs, hispanics will own California again.

And, that has to be an improvement.

goodrich4bk's picture

You're obviously stuck in the 1960's, man.  I bet your refrigerator is avocado green.  Either that or you haven't been paying attention to Brown's accomplishments is, say, the last 15 years.

steve from virginia's picture


Imagine the same thing happening in the United States. Imagine Florida not being able to pay its bills so that its debts are (near) worthless and multitudes are unemployed. Well ... let's consider Illinois or Michigan, right now.

Does anyone think that the rest of the US would simply 'cut off' Michigan from the rest of the country so it could sink or swim on its own?

So much for a 'United Europe'. Always was a foolish idea, now proven.

This is a variation on the collapse of the USSR, leaving out that there is no 'Solidarity Party' in Greece  ... or Portugal.

 Too bad Greece doesn't have a government. If she did she could issue her old currency (still in circulation, BTW until the end of this month) in sufficient amounts so as to get Greeks back to working. She could keep her precious euro and use it as a reserve. The drachma would be used within Greece only.

 Right now there is no currency in circulation which is the real day-to-day problem. Greece must borrow euros in order to have circulating currency, nobody will lend them to Greece which must 'play by the rules'.

Greece could also issue euros -- she has a central bank and a treasury -- but doing so would be against the precious euro-banker rules. In fact, Greece could crank up the printing press and lend into existence the ten-trillion or so euros needed to end the European credit crisis! Unfortunately, along w/ no government there are really no more Greek banks, there is no transmission mechanism from central bank to euro-land.

There is nothing to prevent Greece from issuing drachmas. The Greek treasury could simply spend them into circulation without the government borrowing them. The drachma could hold a range, not a peg or a complete float w/ the euro. The central bank would manage the float, 'extras' would become cash reserves.

Yes, indeed, there would be extras. The rest of the EU would attempt to flood Greece with counterfeit drachmas to ruin the country: French and German bankers.

Greece could enlists its smugglers to intercept funny-money at the ports ... that would be embarrassing to Germany! In six months or less, Greece would have an economy again.

 But ... Greece doesn't have a government, only stooges of the euro-banks. Coming up, revolution, some sort of 'liberation front' specializing in kidnapping. I would not want to be a European banker from here on out.


PeterLemonJello's picture

Understood, but how bout you use California or New York?  We're actually doing quite well in Michigan now.....bitchez.

jwoop66's picture

My mother saw you at westbury music fair in 1974.   She said you were dreamy.   Rock on, Pete!

Doña K's picture

Imagine the same thing happening in the United States. Imagine Florida not being able to pay its bills so that its debts are (near) worthless and multitudes are unemployed. Well ... let's consider Illinois or Michigan, right now.

How about fiscally responsible nearby states helping Michigan in return of a %age of their state tax? Would that be fair?

mjcOH1's picture

"The Greek treasury could simply spend them into circulation without the government borrowing them. .....The rest of the EU would attempt to flood Greece with counterfeit drachmas to ruin the country: French and German bankers."


As opposed to the Greek treasury printing and flooding Greece with drachmas to ruin the country. 

Maybe the Greeks could sell printing rights?   Everyone who took a haircut when Greece defaulted gets to print drachmas.   The Greek government gets 1% of the fiat as a tax.

Sean7k's picture

You can't fix slavery, you can only kill the enslavers. 

They won't give up there "property" and they have the cat o' nine tails. When people become property or assets, they cease to have value to themselves. Without value, the pride that encouraged their development disappears and they stop asking questions, willing to now accept answers. 

It is the religion of control for the purpose of parasitic feeding. When the colony's production is exceeded by demand, the slaves are the first to be diminshed and die.

It is a truth so simple, but one that requires great sacrifice to resolve. It is the clarion call everyone tries so hard to never hear. In seeking wisdom, we look outside ourselves for answers and end up accepting the wisdom of those that would use it to for their own benefit. They exact a price.

Other creatures function within their environments because they are a part of them. They see the world and learn from it. They don't try to bend it to their will. You cannot fix nature. 

You may be able to achieve a solution that appears miraculous, until the unexpected effects present themselves. Government, banks, fiat currency, social programs, safety nets all seem rather miraculous on their face, promises of security and fraternity. The reality is always much different. Like cancer, it takes time to metastasize. You bombard the problem with radiation and drugs, convinced that if you ALMOST kill the beast the rest will revive. Usually, you just get a little more time.

Still, the doctors (corporations) and hospitals (banks) do make a killing on all those NECESSARY charges. 

Unfortunately, the best treatment was free. Eating a good diet of real food. Living a lifestyle with exercise and social connections. Working to develop wealth for the days when you would no longer be able to produce as much. You may not live as long as some other, but that is genetics- another part of nature.

The balance that exists within nature (and ourselves) creates the healthiest solution for ALL species and even the specie itself. Man doesn't have to fix the problem, he merely has to cease being the problem.

Peter Pan's picture

The black swan should be the national bird of Greece. When governments wherever they are assume rights and roles that rely on ever increasing expenditures, this is what happens.

Hard to see both a time line and what exact events await Greece other than more suffering.

lolmao500's picture

Only 3,899,319 people had jobs—a mere 36.1% of a total population of 10.8 million!

Well the US is at 44.7% (140 million employed/312 million total)... so it's a race... to the bottom!

DosZap's picture

Well the US is at 44.7% (140 million employed/312 million total)... so it's a race... to the bottom!

We're worse take 40 mil off ours, as they are fast food jobs.Remember!!!!!!!!!!!

BILLIONS Sold!!!!!!!!

Dead Canary's picture

I have a heart condition. Anyone know how to stock up meds? This is what worries me the most. I have every thing else I need.

DosZap's picture

Dead Canary

I suggest you go to your Dr, and ask him/her to Double the amount on your scrips,over what you take.

Tell them 40mg of X costs  as much as 80mg of X,(because it damn sure does) and I want a back up supply in case of an emg, or a supply line disruption(even they cannot control that).

Most Dr's will do this, as long as it's not barbiturates.

If not, go to several Dr's, and pay cash for scrips(as if you have ins your screwed doing that),and do not let them know you have another Dr.. Again, barbiturates are a No No.....................

Mexico/Canada get a Dr apt there, and get at least a 6 months supply.

MILLIONS of Americans do this daily.

Cheaper, and fast, and legal.Say you cannot afford the trip?

How much is your life worth?.IF you do not take action, your screwed.

Hell of a way to go, but if its YOUR life, take whatever measures needed.Even if it means going to Mexico ,or Canada, and getting more.

stopcpdotcom's picture

Problem with meds is that most of them have a use-by date.

Temporalist's picture

If I could vote you and SunTzu down again I would because both of you upvoted yourselves and are apparently proud of spreading disinformation and ignorance

sun tzu's picture

Go buy some extra bottles. Most of them have a shelf life of 1-2 years. Keep rotating and taking the older ones before they expire. If TSHTF there might be shortages for 1 year or so until it blows over and we hit the reset button

Temporalist's picture

For people that think that medicine goes bad it doesn't. It loses some potency over time but one can take more if that is the case and in reality it won't matter for years.

"What they found from the study is 90% of more than 100 drugs, both prescription and over-the-counter, were perfectly good to use even 15 years after the expiration date."



This doesn't apply to insulin and nitroglycerine if that is what you are concerned about but read the article canary.

BigDuke6's picture

 'It loses some potency over time'

- its true but lets see how u go with some out of date viagra

a growing concern's picture

The short-dated expirations are just so you will buy more, even though the old medicine is perfectly good.  I try to tell my wife this, but she cannot get over the date listed on the bottle.

John_Coltrane's picture

This is true of almost all chemicals stored at cool temperatures.  Breaking chemical bounds just isn't that easy (its called the activation energy).  Gas and gunpowder will last decades, for example-though they are unstable in the presence of a spark.  Just store in a cool dark place (the major sources of energy to break chemical bonds are heat and light).  With foods, the same applies but exclusion of microorganisms is the major concern as they are major bond breaking entities.