Greeks Go On Strike To Be Allowed To Strike

According to the market, the situation in Greece has staged a tremendous recovery. So much so, in fact, that Greek 2Y bonds are now trading inside US 2Y Treasurys. Yes, according to the market, Greece is now a safer credit than the US.



And yet, a quick peek inside the actual Greek economy, reveals that nothing has been fixed. In fact, one can argue that things are now worse than they were when Greece defaulted (for the first time),

According to statistics from IAPR, unpaid taxes in Greece currently make up more than 55% of the country’s GDP due to - well - the inability of people to pay the rising taxes. Overdue debt to the state has reached nearly €100 billion with only €15 billion possible to be returned to the government’s coffers, as most are due to bankrupt businesses and deceased individuals.

The Greek tax authorities seized pensions, salaries, and assets of more than 180,000 taxpayers in 2017, meanwhile bad debt to the state treasury continue to grow. The Independent Authority for Public Revenue confiscated nearly €4 billion in the first 10 months of this year with forced measures to be reportedly taken against 1.7 million defaulters in 2018.

Bad debt owed to the state in Greece has been growing at €1 billion a month since 2014, and nearly 4.17 million taxpayers currently owe money to the country, which means that every second Greek is directly indebted.

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Demonstrating the full extent of the economic mess, a recent report from Kathimerini revealed  that Greek lenders are proposing huge haircuts, as high as 90%, for borrowers with debts from consumer loans, credit cards or small business loans without collateral.

In the context of the sale of a 2.5-billion-euro bad-loan portfolio named Venus, Alpha Bank is using the incentive of major haircuts in letters it has sent to some 156,000 debtors. The fact that this concerns some 240,000 bad loans means that some debtors may have two or three overdue loans.

Another major local lender, Eurobank, is employing the same strategy for a set of loans adding up to 350 million euros. Most of them range between 5,000 and 7,000 euros each and have been overdue for over a decade. Yes, most Greek are unable to repay a few thousands euros and would rather default.

This means that the banks are expecting to collect a small amount of those debts, coming to 250 million euros for Alpha and 35 million for Eurobank – whopping 90% haircuts - accepting that the rest of the debt is uncollectible.

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But for the most accurate representation of real state of affairs, we go to Reuters which reports that Greek subway workers, dockers and state-employed doctors plan to strike on Friday in the country's first major industrial action of 2018, to protest a new law that will restrict their right to walk off the job.

That's right, Greeks are going on strike to be allowed to strike.

On Jan. 15, parliament is expected to vote through the contentious reform, which would tighten rules on declaring work stoppages, or labor strikes, a condition set by creditors who have loaned Greece billions since 2010. At present, Greek unions can call strikes with the support of one third of their members. The new law would raise that requirement to 50 percent, which creditors hope would limit the frequency of strikes and improve productivity that lags about 20 percent behind the EU average, according to OECD data.

Don't laugh, but strikes are so common in Greece that there is a website dedicated to them.

According to Reuters, Friday's stoppage is being backed by several unions, including GSEE, the largest private-sector one. "It is essentially scrapping the only weapon workers have left to protect themselves, particularly after collective working agreements were shelved," said GSEE spokesman Dimitris Karageorgopoulos.

Stavros Kafounis, head of the Commercial Association of Athens, which represents retailers, said strikes amplified the country's economic problems.

"Every time there is labour action in public transport it shuts businesses down, adding to already slow business," he said.

A majority of lawmakers are expected to vote in favor of the bill, which will be the latest bitter pill to swallow for a government dominated by the leftist Syriza movement, which swept to power in 2015 promising to end austerity, only to accept another, deeper and more humiliating bailout just months later.

Despite the Greek people's protest against depriving them of their constitutional right to strike, Greece needs to pass the regulation and a raft of other measures for lenders to sign off on a review of progress in its bailout programme, which the country hopes to exit this summer. Otherwise all those greater fools who have been buying Greek 2Y bonds on hopes the country will soon be eligible for the ECB's QE will end up nursing massive losses.

And as if the Greeks weren't angry enough already, Monday's parliamentary bill also seeks to introduce electronic auctions that could facilitate foreclosures to wrestle down a mountain of toxic debts weighing on the country's banks, rationalise spending on state benefits, set targets for selling off assets of power utility PPC, and regulations on the operation of casinos.

In other words, with the click of a button one would get a foreclosure notice for a late mortgage payment.

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At the end of the day, of course, it's all for nothing: one union leader said that, regardless of new legislation, workers would continue to strike.

"If they don't like it let them fire us... or arrest us," said Spyros Revithis, head of a public transport workers' union that staged 15 strikes in 2017. "This government is a Trojan Horse of neo-liberalism on labour rights."

We couldn't have said it better.