Greek Economy Faces Total Collapse As Doctors Flee, Retail Sales Plunge 70%

Tyler Durden's picture

Back in May we outlined the cost to the Greek economy of each day without a deal between Athens and creditors.

At the time, a report from the Hellenic Confederation of Commerce and Enterprises showed that 60 businesses closed and 613 jobs were lost for each business day that the crisis persisted without a resolution. 

Since then, things have deteriorated further and indeed, with the imposition of capital controls, businesses found that supplier credit was difficult to come by, leading to the very real possibility that Greece would soon face a shortage of imported goods, something many Greeks clearly anticipated in the wake of the referendum call as evidenced by the lines at gas stations and empty shelves at grocery stores.

As a reminder, here’s what WSJ said earlier this month

Wholesalers can’t pay for supplies. Importers’ foreign counterparts won’t trade. 

 

Greece’s cash crunch hit small merchants first. They are less able to get credit from their suppliers, especially those dealing in perishable products that are continually imported. Christos Georgiopoulos owns a gourmet supermarket in Plaka, a picturesque Athens neighborhood frequented by tourists. He sells Champagne and Russian crab legs. 

 

Nobody is buying. "I haven’t had a single customer in two days," he said Wednesday. He is shutting down his shop and says he doesn’t know when he will reopen. He gave some crab legs to his workers and is taking some home. "I haven’t paid my staff and don’t know if and when I will," he added.

And then there was this rather disconcerting commentary from AFP:

Greece's dive into financial uncertainty is forcing struggling businesses to take unusual steps to survive, including hoarding euros in cash.

 

Businesses which import their raw materials have been the hardest hit, says Vassilis Korkidis, head of the National Confederation of Hellenic Commerce (ESEE).

 

As unease spreads, getting ones hands on cash has become a sort of national sport, with businesses from restaurants to car mechanics telling customers paying by card is no longer an option.

The inevitable result of the above is that banks’ already stratospheric NPLs are set to rise further meaning that with each passing day, the banking sector’s recapitalization needs grow as the economy sinks further into depression. 

Perhaps now that the "Quadriga" (the new moniker for Athens’ creditors which was ostensibly adopted to reflect the fact that there are now four institutions involved rather than three but which incidentally conjures images of the triumphant statue atop the Brandenburg Gate in Berlin) has touched down in Athens, creditors’ "technical teams" will get a good hard look at what happens when you force deep fiscal retrenchment on a country whose economy is collapsing and then rub salt in the wound by cutting off liquidity and enforcing capital controls. 

Here’s some color on just how dire the economic situation has become, via Kathimerini:

Turnover in retail commerce is posting an annual drop that in some cases amounts to 70 percent even though the market is in a sales period. Capital controls have prevented Greek consumers from shopping, while even foreign tourists appear reserved due to the increased uncertainty on developments in Greece.

 

An extraordinary meeting of the board of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE) on Monday heard data from representatives of local associations that pointed to an annual drop of between 40 and 70 percent since the capital controls were imposed.

 

In Athens, the decline came to 40 percent, while in markets outside the city center it was even greater. Thessaloniki and Piraeus reported a 60 percent fall and Trikala, in central Greece, a 60-70 percent shrinking. Even tourism hotspots such as Rhodes had a 50 percent decline in turnover.

 


And a bit more from Greek Reporter:

The Athens Medical Association (ISA) warned about major shortages in medical staff over the next years, since an increasing number of Greek doctors, especially those working in highly specialized fields, and nurses are looking for jobs abroad and leaving the country.

 

According to the association’s figures, more than 7,500 doctors have migrated to other countries since 2010. It was reported that in the first six months of 2015, ISA issued 790 certificates of competence, an official document required for medical sector employees who wish to work abroad. However, the report also noted that up until 2009, on average, 550 doctor were taking jobs abroad each year.

 

"One of the biggest losses in the crisis has been that of great minds," ISA chief Giorgos Patoulis stated to Greek newspaper Kathimerini. "In a short time, the national healthcare system will have an aged personnel and will be unable to staff services."

 

Furthermore, the data showed that a total of 8,000 unemployed Greeks have been forced to look for job opportunities abroad. The Greek Nurses Union announced that it issued 349 certificates just last year, 357 in 2012 and 74 certificates in 2010.

And don't expect this situation to improve any time soon because despite the passage of two sets of prior bailout measures, still more austerity will need to be pushed through the Greek parliament if Athens hopes to activate bailout funds by August 20, in time to make a €3.2 billion payment to the ECB. Here's Reuters: 

"More reforms are expected from the Greek authorities to allow for a swift disbursement under the ESM. This is also what is being discussed right now," [and EU Commission spokesperson] said.

 

The banks have reopened after the ECB increased emergency funding but capital controls remain in place. Doubts persist about whether a severely weakened Greek economy can support another programme after a six-year slump that has cut output by a quarter and sent unemployment over 25 percent.

 

Among politically sensitive measures held back from the initial package were curbs on early retirement and changes in the taxation of farmers to close loopholes that are highly costly for the Greek state. A source close to the talks said these reforms were expected to be enacted by mid-August.

 

However, touching pensions is sensitive with Tsipras's left-wing Syriza party, which has already suffered a substantial revolt over the Brussels agreement, and the main opposition New Democracy party opposes ending tax breaks for farmers.

In other words, Tsipras is about to go back to parliament and attempt to pass a third set of prior actions that will further imperil Greeks' ability to spend, and he must do so quickly because if creditors aren't satisfied with the progress by August 18, then paying the ECB won't be possible and then it's either tap the remainder of the funds in the EFSM (which would require still more discussions with the UK and other decidedly unwilling non-euro states) or risk losing ELA which would trigger the complete collapse of not only the economy but the banking sector and then, in short order, the government.

And through it all, Tsipras is attempting to beat back a Syriza rebellion (which will only be exacerbated by the upcoming vote on the third set of measures) while convincing the opposition that he's not secretly backing the very same Syriza rebels in their attempts to forcibly take the country back to the drachma. 

The only real question at this point is whether Greece can possibly navigate the next several months without descending into outright chaos, politically, economically, and socially. 

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HonkyShogun's picture
HonkyShogun (not verified) Jul 28, 2015 11:29 AM

Looking for GoldMensch Sachs to own up to their part in this fucking fiasco...

Looney's picture

Oxi! Opa! Ouzo! ;-)

Looney

y3maxx's picture

Send John Kerry to calm the Greek citizenry.

Nobody For President's picture

Send a couple of German Infantry Divisions to calm the Greek citizenry.

BaBaBouy's picture

Tsirapeuasskiss Is Still Around??? WOW Thats Surprising...

Are The Ordinary Greek Sheeple Asleep???

swass's picture

I have an idea the socialists in charge would agree with.  They can just put a 50% property tax on any private Greek island owners that have a last name starting with B and ending in uffett.

El Oregonian's picture

Call in John Kerry? Oh, quit 'horsing' around.

MuleRider's picture

This may be much closer to happening than many of us realize....and it's defintiely much closer to happening than what the "market" is "pricing in"....

stocktivity's picture

Must pay those rich 1% bankers no matter what the cost to the bottom 99%. Fucking bastards!

MsCreant's picture

Think of it as an "infestment" in the future. 

White Mountains's picture

Iceland showed everyone the first step....

doctor10's picture

Tsipras needs to learn to spell "drachma" -and then print them

 

there's a lot of nonsense out there about how "bad" that would be for Greece.  Couldn't be any worse than this-

no1ninja's picture

The reason its going to be bad if they go the drachma route is because the rest of Europe will do everything to stand in the way of it working.    Just to send a message to anyone else thinking about an exit.

 

I have a feeling that is what was said to them behind closed doors, and that is why they did the 180.

Creepy A. Cracker's picture

Total collapse: Going from miniscule to more miniscule.  Nobody but the gubermint dole Greeks and a few shop owners frequented by gubermint doleites will notice.  The rest of the world yawns.

But what about that BOOMING economy of Tanzania?  Man if it collapses look out... 

</s>

KnuckleDragger-X's picture

Economy? What economy? Empty promises made by the government drones, with the backing of the new elite, I feel sorry for the people, but they bought in on the bullshit and now music has ended and the piper demands payment......

Never One Roach's picture

What they need are zero-down mortgages and 50 yrear car loans, etc. However, their biggest problem is inability to print, create out of thin air, their own money.

MsCreant's picture

Here it comes, reality. Strap in.

Supply chains failing, income declining, tax base declining. Oh yeah! 

Mother nature, the Goddess, shows us the truth.

Fuck the manipulators. Pontificate and strategize all you like. The truth comes home to roost.

BandGap's picture

Greece was paying it's drug bill with bonds two years ago. Pfizer and other companies told their business end to cash these out ASAP. Drug and medical device companies no longer sell current products into Greece unless it's a dire emergency.

This is the end of the road in a very big way. How much is Greece starting to resemble a 3rd world country?

Winston Churchill's picture

Wrong, 4th world.I never had problems getting meds in 3rd world ones.

Scripts rarely needed either.

Deathrips's picture

1st world refers to countries with central banks....the scale is skewed.

that said greeces ass is getting fucked.

RIPS

pods's picture

This is like watching Intervention when you know the subject ain't gonna make it.

pods

813kml's picture

Some people just gotta hit bottom headfirst.

Ignatius's picture

Gary Busey comes to mind.

you enjoy myself's picture

I thought they voted against both collapse and austerity though. Why does reality hate democracy?

StychoKiller's picture

A poster from the 1970's explained that:  "Eat Sh!t, 320 Billion flies can't be wrong!"

JustObserving's picture

70% fall in retail sales?  How much has the economy shrunk by?  What happens to tax collections?

As for doctors, about half of Greek doctors never paid any taxes - so that is not such a big loss.

the phantom's picture

So doctors do more than pay (or not pay) taxes.  You know, the whole "help sick/injured people" thing.  Windex can't cure everything you know.  

Madcow's picture

The Euro-crats are close to completing their mission. Greece was a test pilot and is ready for "Stage 4" - where the IMF comes in with DSK, rapes the pouplation, then chops up everyone and sells their organs on the black market. 

Its the only way to save the "economy"

 

Madcow's picture

The Euro-crats are close to completing their mission. Greece was a test pilot and is ready for "Stage 4" - where the IMF comes in with DSK, rapes the pouplation, then chops up everyone and sells their organs on the black market. 

Its the only way to save the "economy"

 

Creepy A. Cracker's picture

"...are looking for jobs abroad and leaving the country."

Obamaville here we come!!!

 

Forward!!!

 

WINNING!!!

kw2012's picture

Obama wants to run for a third term. And why wouldn't he? His loving idolizer John Boehner willing gives everything Obama wants.

Kaiser Sousa's picture

and to think - all the CITIZENS had to do was kill the bankers and the politicians that betrayed them...

i can not feel sorry for the Greek people though i would like to....

just sayin.

10mm's picture

Down voted ya. Until it happens by example in the US, I cannot say anything against another country. 

FreeMoney's picture

People dont act until the pain is personal and extreme.

lolmao500's picture

Soon coming all over Europe, Japan, North America... Me thinks Muricans aren't gonna take it laying down like the greeks...

DeProgrammed's picture

Only till iShit stops working, then watch out. Revolts and mass suicides.

10mm's picture

The longer the wait, the harder the fight. Most are oblivious. 

directaction's picture

This brain drain will crush Greece unless it's stopped.

The situation is dire but there's an easy fix: a serious fence. 

What Tsipras and the rest of the wanna-be communists in his party need to do is follow the lead of the real communists in the party. They need to exit the EU and proclaim a soviet-style communist revolution and nationalize everything, including what remains of the banks, the ship industry, farming, and all the rest, right down to the (empty) corner market.

Then build a fence around the entire country and use red guards to prevent anyone from leaving.

Problem fixed.  

FreeMoney's picture

Im not so sure thats gonna work.  Looks lie China, Russa, Vietnam....have all walked away from that path.

fainzilberg's picture

no way out. 

greece is the blow for the Titanic West. the chaos will come in due course

roisaber's picture

Nothing short of naked, violent revolution will end the EUSSR looting of Greek civilization.

scatha's picture

It will be even worse if Greeks keep burring themselves in even more debt as troika wants it. The only solution is to default on all debts immediately. Crash European markets and threaten introduction of drachma backed by Russian and Chinese investments that would flock immediately after default. But time for that seems gone so only more misery without hope to come.

For answer why we are where with our with never ending Greek tragedy read:

https://contrarianopinion.wordpress.com/greek-odyssey-through-debt/

Soul Glow's picture

Greece is fucked.

williambanzai7's picture

Which is why they need to stay in the EU, so all those docs can move elsewhere in Europe and work.