Greek Economy Suffers Record Collapse In February

Tyler Durden's picture

There are those who recall that not ten days ago, according to the IMF's Greek (un)sustainability analysis, worst case scenario no less, Greek GDP would somehow miraculously post just a 1% drop in 2013. Unfortunately this won't happen. According to the overnight PMI update out of Europe (where was saw the jobless rate at the highest since 1997), the Greek economy just imploded at a record pace. This follows the already horrendous budget revenue data from January which came in down 7% on expectations of a 9% rise. Sure enough, as expected the fact that the entire country has taken the rest of 2012 off with no incentive to actually work, will do miracles for Greece. From Reuters: "The Markit Manufacturing Purchasing Managers' Index (PMI) for Greece fell to a survey low of 37.7 points in February from 41.0 in January, staying below the 50 mark that divides growth in activity from contraction for each of the past 30 months. Production and new order volumes fell at the sharpest pace in the near 13 year history of the survey as austerity sapped demand. New export orders fell for a sixth straight month and at the steepest rate since May 2010." Translated: the situation is hopeless and getting worse. Expect the German, pardon Troika, Kommissar to be shocked, shocked, to find out that not only do banks in Greece have no deposits left, but the entire economy picked up and left.

Some disturbing charts validating the sad reality of Greece:

More from Reuters:

Greek manufacturing shrank at its fastest rate in at least thirteen years in February as production and new orders declined at record rates, driving the sector deeper into recession and forcing firms to shed more jobs, a survey showed on Thursday.


Greece will apply additional fiscal austerity to shore up its finances as part of a new rescue package it agreed with its euro zone partners and the IMF to avert a chaotic default and emerge from a severe debt crisis.


Greece's 215 billion euro economy shrank by an estimated 6.8 percent in 2011, its fourth straight year of recession. It is seen contracting this year as well.


"The latest survey provided another stark reminder of the difficulties the Greek economy is facing. Problems of accessing credit, combined with austerity, are undermining activity and demand with little evidence of this situation improving anytime soon," Markit senior economist Paul Smith said.


Greek firms struggled to access working capital and meet vendor demands for cash payments to deliver inputs. The fall in production led to more job losses.


"While companies are trying to maintain employment via reduced working days and hours, the inevitable impact of rapid declines in output and sales are further cuts to payroll numbers, which fell at a marked and accelerated pace," Smith said.


Greece's unemployment rate hit 20.9 percent in November, the latest available data, highlighting the pain of higher taxes and cuts in public sector pay and pensions which suppress economic activity.

So if wondering what is sending markets higher, it is the return of the expectation that the global economic collapse (whereby sliding US consumer spending and income somehow drives consumer confidence higher) will force banks to do what they do best: CTRL+P.

Full PMI release here.

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Stackers's picture

You mean Greece actually manufactures something ? Uh, learn something new everyday.

ISEEIT's picture

Yeah, olive oil..Duh!

markmotive's picture

This is the paradox of austerity. They are damned if they spend more, damned if they spend less.

I repeat what Kyle Bass said..."There is no way out".



Azannoth's picture

That's not the paradox of austerity but a debt based monetary system and a socialist/communist economical system

markmotive's picture

From the Greek perspective I'd say it's a paradox. Once you get into a situation where the bond market is dictating austerity, I'd say it's too late.

However, austerity as a preventative medicine is the right solution. The time to save is while you still have a job, not after you get fired.

Azannoth's picture

That too won't work in a debt based system saving(even while times are good) = trouble ahead, that's why Keynesianism is only ever half-implementable(the spending part)

If money had real value saving would not be as bad because it would mean more capital to be lent out to businesses so saving = capital = easier money for businesses to borrow but in a debt based system money = liability => saving = contraction(because without new money you can't pay the interest)

A value based monetary system has a balance between the incentive to save vs. spend one and the other equally balance each other out but in debt based systems only spending is 'sustainable' the problem arises when you have a cyclical(generational) contraction that is too big to paper over(Cntr+P) than you're in deep

Debt Based System = Expand or Die

in this case the monetary base needs to expand hell or high water, and if the economy can't absorb that new money (stag)flation follows

franzpick's picture

I believe the on-the-ground reports that greeks are on a defacto tax strike: from Manos on SHTFPlan - "Today, after two years of screwing and pressing us, most households and businesses have stopped paying. Stopped paying taxes, utility bills, toll fees, or anything else related to the government."

Under such circumstances, negotiations for an austerity-bailout are nothing but a banker's charade.


Hugh_Jorgan's picture

Strange how violent civil unrest will hit a tourism-dependent economy, eh?

Koffieshop's picture

Debt Based System = Expand or Die

Exactly. This is why the existing system will be totally destroyed and replaced by something that can work steady-state. You don't have to be a genius to see this because the population growth will stop sooner or later and the amount of labor one can produce and consume is not limitless. The question is how it will go down exactly. Hopefully slowly but I fear otherwise.

Running on Empty's picture

The greed of mankind won't allow for a steady state system. History has proven that the only system to ever be implemented is the expand till collapse system. This time will be no different, it can't be it's our genetic predisposition.

Koffieshop's picture

Perhaps. Or the survival of the fittest will be become the survival of the must durable.

In either case it will be a zero-sum game or an all-lose game. We wont be colonising another planet any time soon.

_ConanTheLibertarian_'s picture

Bottomline: Keynesianism is the best way for politicians to screw us.

The Big Ching-aso's picture



This PIIG is getting greeced up for a porking!!!!

fourchan's picture

throwing rocks does not an economeia make.

JPM Hater001's picture

I hope everyone took a shot of Jager on the way past 13000.  I'm loading the bowl right now...

If you missed the reference here is its about quarter of the way down:

JPM Hater001's picture

10:35 Est...Bowl time.

This is going to be a long day.

ElvisDog's picture

The Greeks ultimately will have no choice but austerity, with "austerity" defined as "living within your internal tax revenues". Abandoning austerity would mean finding someone to lend Greece money they can't repay forever, and that ain't gonna happen.

Off topic - I'm looking at an Obama 2012 ad featuring Michelle. She has got some god-awful front teeth. They slope outward. You would think when she was a highly-paid "diversity manager" at that hospital she could have had that taken care of.....

Dick Gazinia's picture

That woman is ugly enough to scare a buzzard off a shit wagon.

Cpl Hicks's picture

..or gag a maggot off a gut wagon.

kridkrid's picture

You want so hard to believe that your country is different.  It's not.  If anything... it's worse.  It's unique in that it can print when the world no longer wants to purchase its debt... but that's all.  That's what separates the United States from Greece.

Calmyourself's picture

Umm, few other things 15K nukes deliverable in many ways and forms, complete dominance in all miltary aspects.  You will buy our debt and use our "currency" or we can make you pay, see Libya, Iraq, shortly Iran

kridkrid's picture

Correct.  My "the only difference" was a moment of hyperbolic graduere.  We don't have civil unrest right now because we have 45 million people on food stamps.  We are able to have 45 million people on food stamps because we can print money.  We can get away with prining money because of the reasons you've stated (and we can do the things you've stated because we can print money... it works both ways, I think).  But... this war is going to end some day.

NeoRandian's picture

Why save when your money just loses value in the bank? Buy some PMs, sure. But you can always expect the Fed to print print whenever there is trouble, making your cash savings vanish in the process. The banks don't need your money to make new loans, the fed can and does simply lower the reserve requirement.

kridkrid's picture

Such an important distinction... not for the enevitablity of what we face, but for the understanding of "what just happened" when the whole system implodes.  Austerity and MMT are not at opposition with each other, rather are simply tools used by the same thugs.

If I were to offer one change to what you have written... That's not the paradox of austerity but a debt based monetary system.  To add any qualifier to the actual cause of predictament muddies the picture.  The debt based monetary system doesn't care what the political system is.  It is politics agnostic.  It only cares that aggregate debt continues to expand.  Big government... big through a contstant expansion of debt... is just one line item.  

duo's picture

Imagine replacing "Greece" with the US, and "IMF" for ECB in the above.  That's us in 2015, the third year of Obama's 2nd term.

kridkrid's picture

Or sooner.  I've given up on trying to figure out the timeline, but the conclusion in inevitible.  And it's not just Greece and the US or Greece and PIIGS or (fill in the blank), it's all western nations.

Though when I say that the conclusion in inevitible... I suppose it isn't really.  We'll have WWIII first, and some new fiat system will likely arise... or NWO or one thing or another.  But what we think the world is today, won't be for long.

writingsonthewall's picture

Greece is neither socialist nor communist.


Just because a country has free health care paid for by taxes - doesn't make it socialist.


Maybe you just like to use the word 'socialist' in place of the word 'bogeyman'?


There is no paradox - the result of a technological advances means that the profit of companies is under pressure as they replace labour with machines (or computers these days) - the problem is there is less profit in automation (unless you have exclusivity over your rivals) - and eventually the wages paid (collecively) are not enough to buy the goods and services produced.


This leads to recession - and until the wealth is re-distributed - the situation will not change.


Governments who support capitalism are making the situation worse by not redistributing for fear of being accused of impairing freedoms.


We're in a prisoners dilemma - and capitalists and Governments are too stupid to work out the optimal choices for both - they currently grind their heads and mash up the chances of a future.

kridkrid's picture

His error in blaming an "ism" is your error as well.  Blaming capitalism or blaming socialism is a ruse used by central bankers to deflect blame away from them.  There is a reason why that statement, "Permit me to issue and control the money of the nation and I care not who makes its laws" is the most important concept to understand if one wants to understand the events that are unfolding around us.

Straw Dog's picture

writigsonthewall "Greece is neither socialist nor communist."

According to Wikipedia: "George Papandreou, Greece's former Prime Minister was ....... President of the Socialist International since January 2006".

You don't get much more Socialist than that. And this type of leadership almost by definition leads to uncontrolled Government spending and the accumulation of debt.

tmosley's picture

That guy just doesn't want to admit that his system is intrinsically linked with fascism, preferring to think that it is capitalism that is closely linked with fascism.

MillionDollarBonus_'s picture

This is an unnecessary tragedy. Top Keynesian economists including Professor Alan Blinder (Princeton economist), Alan Krueger (Obama's chairman of the CEA) and Dr Paul Krugman (Nobel Prize winner) have been warning about the dangers of cutting government spending. Greece should actually be INCREASING spending on fiscal stimulus programs to boost aggregate demand. If welfare programs are cut, retail sales will drop and many people will lose their jobs in the service sector. It is vital that the government STIMULATES the Greek economy to jump start spending and promote GROWTH.

markmotive's picture

No matter how loud both sides of the spend/save debate yells and stomps, nobody really knows the right answer.

Folks, we are the stars of next century's economics text books.

kridkrid's picture

Not true.  The question isn't "which one is right"... because the answer is "neither".  That's the real problem.  We are somehow conditioned to believe that if we only try hard enough, the solution is out there.  Well it isn't.  Our monetary system is based on infinite growth and we live on a planet of finite resources.  It's not about right vs. wrong... it's simple mathmatics.  Any confusion is by design.  This isn't even complicated.

economics1996's picture

MDB has been reading his Glen Hubbard economics 101 manual again.

economics1996's picture

kridfrid economics is not complex if you do not believe in the fairy tales taught in modern text books.  The first step is to understand what sound money is, gold, silver.

Second what 100% fractional reserve banking is.

Third what 10% fractional reserve banking is.

Fourth money inflation.

Then  supply and demand, throw in a few other principals and you got it.

We desperately need to eliminate all  the Keynesian bull shit from text books and re-write the books with heavy Austrian influences.


Hugh_Jorgan's picture

Another way to look at this is that everything we know in our civilization is the product of "fallible man". Perfection is impossible, degradation is inevitable. 

We namby-pamby Americans have been taught the doctrine of earthly wish-fullfillment from day one so we are always waiting for Utopian results from then next brilliant but fallible man. It's called "Cultural Insanity" and history has show that it precedes the collapse in civil governance.


JPM Hater001's picture

Yes and for entertainment monkeys should fly out of Papadamos's ass... all good ideas MDB.

Keep 'em coming.

Calmyourself's picture

Carrying poopy gold bars in their teeny claws, then Merkel, Sarkozy, Draghi etal can shoot them down and viola' everythings fixed..  This is fun MDB keep 'em coming..

writingsonthewall's picture

Totally agree - these politicians are trained to tell the sheepeople that they can provide a solution - regardless of whether they can or not (it's just about votes)

The political system is as short term as the financial system - neither is helping the situation.


I guess the people are going to get what their apathy deserves.




Born Patriot's picture

I have a different take on the Greek situation. To me it is blindingly obvious that Greece's large tourism industry encouraged an excess of multiculturalism. It has been proven throughout history that multiculturalism DOESN'T WORK, and the Greeks are learning this the hard way. America needs to restore freedom of association before we suffer the same fate.

Stackers's picture

There are tons of ways out.

I repeat what John Mauldin said .... "Some choice are bad and some are less, but they're all bad ... if that makes any sense"

markmotive's picture

Was he talking about Greece or America?

Because I believe it's not too late for America, assuming politicians get their act together.

JPM Hater001's picture

No, he was refering to the programming on NBC.

writingsonthewall's picture

Repetition is for idiots.


John Mauldin is probably counting on his security and his wealth seeing HIM through.


He doesn't give a shit about anyone else - that's what capitalism teaches - narrow self interest.


If he had some sense he would look at Greece, look at the riots and then consider that the 'hard choices' are likely to produce revolutions.


This is the problem with capitalists - they forget there is more in this world than money.


WestVillageIdiot's picture

Isn't it funny how you take away the world's largest HELOC and suddenly the Joneses, I mean Papadapolouses, don't seem so rich. 

Multiply this by millions and that is what we have in the U.S.  Lucky for us we have a president that is taking out the world's new largest HELOC on the White House.  Good luck paying that fucker back.  The repo men will have the west wing. 

HagbardC's picture

This actually reminds me of a story my father-in-law told me about his father-in-law just prior to the elder kicking the bucket.

The Elder asks the Younger to take him all over town so he can take out loans against his car and his house.  They hit up three or four banks and by the end of the day and a flurry of paperwork, they have the Elder's collateral so in hock it's ridiculous.

So as they walk out of the last bank, the Younger asks the Elder "What are we doing?  You'll never be able to repay all this?"  The Elder replies "My doctor has given me less than a year to live.  I'm not worried about paying anything back.  Let's go spend some money!"

Rip van Wrinkle's picture

No, but they used to. Didn't you read the article before posting??

nicxios's picture

You mean Greece actually manufactures something ? Uh, learn something new everyday.

They used to manufacture. Then Andreas Papandreou and the socialists came to power. They, PASOK. destroyed Izola, Pitsos, Eskimo, Pyrkal and others. Shipyards were closed, motor vehicle producers, though small, closed. He made farmers literally throw their produce into landfills, and gave them a pittance from EU subsidies for their effort. A slow, but complete destruction. Poeticically his son came on to the scene 2 years ago to put the corpse in the coffin and let the troika bury it.

non_anon's picture

records are to be broken, bitchez!

fonzannoon's picture

What a freight train this market is. Wow.