A Short Story About The Greek Credit Crisis: A European Morality Tale

Let's imagine a situation. Let's imagine that times have been good for you and you decided to buy a house, a house that you always dreamed of, a place that you can call home. The only problem is that this place is a bit pricey, certainly a stretch financially but what the hell, times are good, your credit rating is just fine and the guys at the bank just love you.

Alas, the economy takes a downturn, your job isn't as secure as it used to be and the boss is muttering darkly about downsizing and wage cuts. Now those mortgage payment instead of being steep become vertical so you go to the bank and decide to ask them if some kind of deal can be made. They look at you aghast, they had no idea that you are unable to meet your financial commitments, otherwise why would they have sent you all those credit card applications or phoned so insistently wondering if you want a loan for a new car/holiday/kid's dental work/shopping/home extension. They are shocked, shocked to hear that you have been so profligate with their hard earned cash, how on earth could you have deceived them in such an underhand manner?

But rather than lose a long standing customer (and a house they'd never sale for money you paid for it) they decide to offer you a loan to cover your debts. The problem is that this loan comes with some pretty severe conditions, no more outings, eating in restaurants is a thing of the past, also the kids really should leave home, they're a drain on your resources and frankly, granny's presence puts the family budget over the edge.

Grudgingly, you accept the terms, what else can you do? The problem is that the job market is still not getting better, the boss is demanding ever greater "flexibility" when it comes to salaries and that loan you just took out to cover the mortgage is still just beyond your pay grade. No matter how low the interest payments are, they are piling up and up.. So you go back to the bank and explain the situation, maybe rather than foreclose they could be persuaded to cut the total loan and allow you to pay, at least some of it whilst keeping a roof over your head. The mere suggestion is enough to make them choke on their mid-morning lattes and you get the impression that all is lost.

Yet, these are finance professionals and they know that a foreclosure would not only look bad for the bank, it would also not do their careers any good at all so they come up with a compromise solution. this time they'll issue you a credit card to draw upon when you need to pay the next installment of the loan you took out to cover your initial mortgage. Your kid's college fund will have to go, and that pension plan you took out is way too extravagant for a family of YOUR means. While you look dumb struck, they add a final condition,"you have to sell the family car". But how will you get to work or find a better job without a car? "No", they say, "a car is simply a luxury you can no longer afford, the price of petrol alone means it's not a viable option. Have you considered cycling to work?"

Without a car you cannot earn enough to pay off the credit card installment which you needed to pay off the loan you took out from the bank to pay back the mortgage you had with them. You refuse, saying the conditions are unacceptable. 

Welcome to Greece.

EU believes puts its faith in guns not aid

According to a secret document released on 25 May 2015 by Wikileaks the EU is in the process of implementing a plan for the use of military force in order to deal with the growing refugee influx from Libya to Europe via the Mediterranean. The plan devised by the EU Politico-Military Group aims to "disrupt human smuggling networks" and  "to contribute to systematic efforts to identify, capture and destroy vessels before they are used by traffickers".

Given the turbulent nature of Libya in the aftermath of the NATO - sponsored overthrow of the Gaddafi regime, how yet more European military intervention is going to affect the situation on the ground is unclear. This, in turn leads to the problems of identifying "traffickers" (as the document calls those taking migrants to Europe) in a fluid, often violent civil conflict in which different factions are vying for advantage. It is all too easy in these cases to be misled by groups hoping to use European military force to even the odds by way of air strikes. As the West's debacle in Iraq and Afghanistan, shows ignorance of local history, customs and political realities is often fatal for civilians. 

Yet even if EU manages to avoid the mistakes of the past it is hard to imagine how such actions will do anything more than temporarily limit numbers from Libya. The operations are being marketed as a way of saving refugees from the dangers of a taking a route which has cost the lives of thousands, but refugees are perfectly aware of the risks they take when crossing the Mediterranean. With the expansion in ownership of smart phones worldwide, modern refugees can often contact home via services such as Viber and Facebook, so ensuring valuable, potentially life saving information can be shared. Faced with the choice of drowning on a leaky vessel and going back to the war torn homes they fled, they are opting for the former, given the fact the EU immigration rules have given very little chance of choosing a safer alternative.

Even if, by some miracle European war planes/ships do manage to target just smuggler ships what exactly happens to those intercepted in international waters? Will they be forced back to Libya, fired upon if the crew refuses to heed warnings, foisted off on some third nation's territory following Australia's example?

Should this measure work then the next step would be the switch to smaller, less easily detected vessels even less suitable for making a long sea crossing and hence we have the possibility that a successful interdiction policy will lead to even more drownings of men, women and children in the Mediterranean, now the most dangerous stretch of water for refugees in the world. Alternatively, the flow of those willing to risk all for a better life will be channelled elsewhere to places such as Spain and Greece whose close proximity by sea to other non-EU nations make them impossible to seal off unless the most draconian of war time precautions are employed.

Already, Greece has become a transit spot and many unable to fly or use other forms of transport are walking across the Balkans in order to reach places such as Germany and Holland. In cities in the north the parks are now temporary home to groups, often composed of families with young children taking a short break before continuing their arduous trek north (see previous post). In an era when air travel has become more affordable than ever before we are faced with the sight of groups of people attempting to cross a continent on foot.

On a deeper, more moral level the idea of using military action in a humanitarian crisis is a symptom of a malaise in Europe, instead of providing aid and relief to those fleeing war, poverty and other disasters in places such as Syria and Yemen The EU, which won the Nobel Peace Prize in 2012, is authorising the use of force against some of the poorest and most desperate people on the planet. 

The deliberate conflation of the terms "smuggling" and "trafficking" by European politicians and mainstream media outlets is part of the current media strategy aimed at legitimising military action to deal with, what in essence is a refugee crisis. The idea is that people who smuggle others (angels by no means|) over a border are the same as those who are little more than modern day slavers.This, itself the product of the hardening of attitudes to newly arrived migrants, minorities and other groups of the poor who have suffered the brunt of austerity measures implemented since the 2008 financial crisis. Often the poorest are pitted against each other in a bitter fight for basic resources such as employment, health care and housing

Attitudes to immigration, once the preserve of far right fringe groups such as the ultra-right British National Party are now to be considered respectable enough to be part of mainstream political discourse and even worse are becoming the basis for initiatives that remind us of the darker days of Europe's recent past. 

Walking North - Europe's crisis of conscience.

Today it was lentil and tomato soup, some bread and cheap chocolate croissants for the kids. As welcome as the home cooked food was, what most of the refugees that have chosen a park in the northern port city of Thessaloniki were interested in was Wi-Fi passwords and a place to charge their smart phones. We live in a schizophrenic age when people are forced to walk halfway across the European continent as if in a 1940's newsreel yet are guided by the latest Google apps and can tell family and friends back home that they are safe via Facebook and Viber.

At a time when flying from Greece to Berlin, Oslo or Rome can cost less than the price of mediocre restaurant meal the EU's draconian immigration regulations and the ever coarsening attitudes of northern European nations to refugees means that thousands are trekking across the Balkans, hiding in forests, sleeping rough in parks in the hope of escaping the wars Europe has been so eagerly fostering directly or indirectly in North Africa, the Middle East and Asia.

Along with groups of young men now the parks in the northern Greek port city of Thessaloniki,  and other cities across the Balkans are playing host to entire families, some with young kids also making the same arduous journey north. Hence the food my friend and I have been distributing, along with the advice on getting internet access. Not much compared with what they have face in the coming days and weeks but something, a remainder that Europe is not just home to frightened xenophobes, happy to forget their own horror stories of war and dislocation every time political carpet baggers and publicity hungry media bigots want to grab votes and headlines.

Lord save us from the fury of the Northmen; The official EU prayer(southern version)

Lord save us from the fury of the Northmen" The official EU prayer (southern version), a photo by Teacher Dude's BBQ on Flickr.

The traditional Catholic prayer from the 9th century

"A furore Normannorum libera nos, Domine"

True facts! How the EU got away with the perfect crime!

True facts! How the EU got away with the perfect crime!, a photo by Teacher Dude's BBQ on Flickr.

We're as mad as hell and we're not going to take it any more - European youth's message to the EU

We're as mad as hell and we're not going to take it any more - European youth's message to the EU, a photo by Teacher Dude's BBQ on Flickr.

What's next for Greece?

Greece's latest round of elections has been, paradoxically, its most important in decades and its most low key. In contrast to previous votes, there has been a a conspicuous lack of campaigning on the part of most parties. Few public rallies, little canvassing and even less leafleting. This is, in part due to lack of funds and partly due to the fact that PASOK and New Democracy, the two parties that dominated Greece's political scene for four decades are just a shadow of their former selves, victims of their support for pro-austerity measures over the last three years.

Instead the most likely winner of Sunday's elections will be SYRIZA (Radical Left Coalition) who will most likely see their share of the vote exceed 30%. This is nothing short of a revolution in Greek politics as until recently the party (or rather a coalition of a diverse band of smaller leftist groupings) was seen as a marginal player, rarely polling more than 5%. Similarly, on the right, Independent Greeks, a newly minted right of centre party created by New Democracy defector Panos Kammenos has also risen from nowhere to become a major factor in the domestic political scene. Despite their ideological differences, both have benefited from their unwavering opposition to the austerity packages foisted upon Greece by its EU, ECB and IMF creditors.

However, with the chance of SYRIZA coming first in the polls and therefore winning the extra 50 seats guaranteed by the constitution, the media war against the party both at home and abroad has ratcheted up, with daily stories attacking its leader Alexis Tsipras for putting Greece in mortal danger. For most of last week the mainstream media in Greece, which is with few exception extremely hostile in its reporting of SYRIZA, accused Tsipras of having links with terrorists, using as evidence a Youtube video by former SYRIZA candidate, Ifikratis Amiras calling upon Greeks to take part in an armed struggle. The fact that Amiras no longer has any formal links with the party did not stop the media taking the story through several news cycles. Even eccentric Slovenian philosopher, Slajov Zizek who shared a panel with Tsipras recently in Athens was accused of promoting extremism amongst SYRIZA ranks during a news report by the state run NET TV channel who stopped just short of accusing him outright of being him a terrorist.

On the other hand the fact that leading New Democracy supporter, Panagiotis Psomiadis called the neo-nazi Golden Dawn, " a brother party" and suggested that parties develop closer ties in a radio broadcast in Thrace this week  went unremarked in the media. Nor did the fact that party leader, Antonis Samaras was promoting a deeply divisive anti-immigrant program designed to wean voters from the far right by taking on board many of their policies

Of course, dirty tricks, spin and flagrant misrepresentations of the truth are part and parcel of Greek electioneering which may be one of the reasons that despite this barrage voters remain unconvinced that the world will end on Sunday if SYRIZA comes first. After two years of the media telling them that the sky is about to fall down ,many have either stopped paying attention or welcome an alternative to the slow, painfully drawn out process of social collapse that has gripped the nation.

So what happens next?


Although Greek law forbids the publication of polls in the two weeks leading up to elections the last ones published showed that new Democracy and SYRIZA were neck and necks, with one exception. a GPO poll commissioned by the conservative daily, Kathimerini  which put SYRIZA well ahead at 31.5% and this is what I believe the will get (For an excellent blog post on how many Greek polling companies played fast and loose with last elections predictions see here). My hunch is based on the consistent under - reporting of SYRIZA support (about 6-7%) and the conviction that the currently media onslaught shows that the Greek establishment is fighting to limit damage caused by a SYRIZA victory.

So let's put my money where my mouth is.

Syriza willl get about 30%, New Democracy, 25% and PASOK 10%. I think that the recent attack by Golden Dawn MP on fellow politicians during a live TV show will affect their share but they will still get enough votes to pass the 3% threshold which guarantees them seats in parliament. As for the other parties I believe that their share will stay more of less the same as the previous elections.

However, being the largest party will not automatically mean that SYRIZA will be in a position to form a government, since the Greek Communist party have ruled out any form of coalition that means Tsipras will have to approach either The Democratic Left party who are lukewarm about co-operation or perhaps disgruntled PASOK MPs, which will not play well internally as many are already portraying SYRIZA as a new PASOK in sheep's clothing.

On the other hand, political gossip has it that the remains of the old regime have already accepted that SYRIZA will come first but believe the PASOK, New Democracy and a third party will be able to keep them out of power by forming their own administration in the name of national salvation. How much legitimacy such a move would have and how long such fragile alliance will last is anyone's guess.


Supposing Tsipras does form a government then the real battle will begin and all the ugly scenarios that the international press has so gleefully propagated may turn out to be true. The EU has absolutely no interest in allowing a successful rejection of its economic program and will do everything in its power to force Athens into a compromise. Most likely this will take the form of shutting off all further financial aid which will quickly cause chaos in Greece's weakened economy as wages, pensions and benefits will not be paid. In addition the health system will grind to a halt as hospitals run out of supplies (though that particular problem has been around for over six months).

Without money Greece will also no longer be able to import staples such as oil and that will lead to panic buying, queues and the kind of scenes usually associated with times of war. Faced with this, Athens will either have to knuckle under or, as it seems the Germans are hoping, exit the Euro and re-adopt the drachma.

On the other hand the sight of Berlin and Brussels wrecking havoc with a fellow EU member will have immense ramifications for the image of European Union across the continent and will lead to searching questions about what exactly European unity means. The political costs for Brussels may be far greater than they could possibly imagine in the long run. In the short run the markets may also respond to Greece's economic demise, not as a one-off acts but the taste of things to come as other southern EU countries such as Spain slip deeper and deeper into recession and stop reaching their austerity imposed targets. In such a case the outflow of capital from the Eurozone may prove unstoppable.

The Greater European Co-Prosperity Sphere

The Greater European Co-Prosperity Sphere, a photo by Teacher Dude's BBQ on Flickr.

IT LIVES! Eurozone comes back from the dead.

IT LIVES! Eurozone comes back from the dead., a photo by Teacher Dude's BBQ on Flickr.

Trekonomics - The German finance establishment's contribution to the Dismal Science

The term Trekonomics (neologism derived from Star Trek & Economics) was inspired by the article, Germans and Aliens in the New York Times by economist Paul Krugman. In a nutshell Krugman argues that the insistence by German leaders on all EU members producing a budget surplus can only be achieved if we start exporting off-world.

"But the Germans believe that their own experience shows that austerity works: they went through some tough times a decade ago, but they tightened their belts, and all was well in the end.

Not that it will do any good, but it's worth pointing out that Germany's experience can only be generalized if we find some space aliens to trade with, fast."

New York Times

Welcome to the EU Think tank

Welcome to the EU Think tank, a photo by Teacher Dude's BBQ on Flickr.

Greek PM's press conference fails to convince voters

Greek prime minister, Giorgos Papandeou (left) leaving the St Demetrios cathedral - Thessaloniki, originally uploaded by Teacher Dude's BBQ.

Last night Greek prime minister took part in a Q & A session with journalists from the country's largest TV stations. The decision to organise such an event in the run up to the local elections in November was criticised by opposition parties who consider that the Papandreou is campaigning on behalf of his beleaguered PASOK party who have been trailing in the polls, affected by the harsh austerity measures that have seen living standards plummet as job losses, higher taxes and galloping inflation have combined to make for a perfect storm for those on lower incomes such as the unemployed and pensioners.

The harsh new economic reality facing Greeks can be seen in a slew of reports that show that many household are now struggling to pay basics such as power and phone bills. The state run electricity board says that 1 in 4 bills are overdue whilst the OTE telecommunications corporation has 500,000 unpaid accounts to deal with. Even in Greater Athens area, which one of richer parts of the nation 1 in 11 are receiving food handouts via breadlines according to research carried out by the Athens University of Economics recently. In Greece's second city, Thessaloniki, home to over a million nearly half the population is living on either savings or loans whilst another 40% say that they can barely make ends meet.



Even consumption of basics such as bread has dropped by 30% whilst other areas of the economy such as real estate and car sales have ground to a virtual halt. The Greek chamber of commerce says that 4,000 small businesses are closing every month with thousands more being added to unemployment figures.

With such a bleak outlook Giorgos Papandreou decided to hold a press conference to set out his party's policies and to explain to the nation what he believes has to be done to save Greece from bankruptcy.

The interview which was carried out by seven journalists lasted two hours and was followed by millions of viewers nationwide. In the first round journalists were allowed to ask one question and one follow up. A recipe which allowed the PM plenty of wiggle room and produced a predictably sonorific result as Papandreou was free to simply set out party positions that have long been made clear in previous briefings. While the questions were hard hitting, the lack of follow up meant they were easily sidestepped with waffle and set speeches.

The second half of the interview proved more interesting with reporters able to pursue points made and get the prime minister to do more than simple PR.



However,the basic tenet of Papandreou's message remained the same that the current crisis was the results of years of fiscal mismanagement that the previous New Democracy administration had failed to take seriously and that if Greece did not have any other choice but to implement the painful measures set down by the EU and IMF. He also made it clear that his government sees the forthcoming elections as a referendum on the measures intimating that if PASOK suffered a serious defeat then this would be seen as a loss of the popular mandate necessitating national elections in the near future.

For Papandreou the choice is clear; either accept the cuts in public services and wages set out or vote for the opposition New Democracy party led by Antonis Samaras whose brand of populist rhetoric is full of heat and passion but light on concrete proposals on exactly how different his right of centre party would deal with a 400 billion debt load without severe cuts in public spending or higher taxation.



Yet despite growing dissatisfaction with both major parties it seems business as usual with both sides making lavish promises to voter in order to persuade people to support them. The ruling PASOK party has vowed to help local income families and farmer with extra funds before the end of the year, though where exactly the money is coming from is unclear especially with so many employees of the state run organisations and pensioners who have been waiting months to be paid. Next week heating oil distributors have threatened to suspend deliveries from 1st November in protest over delays over the return of tax payments promised earlier. Likewise hospital report running low on basic supplies after pharmacutical companies stopped taking new order until the government pays outstanding debts, some going back years.

However, the 600lb gorilla in the room is the possibility of still harsher cuts when Eurostat revises Greek debt figures for 2009. The organisation delayed publishing figures citing the need for more time to untangle Greece's often tangled web of public spending statistics until 15th November just after the second round of local elections. This has been seen in many quarters are an attempt not to upset PASOK's election chances still further with more bad news. On the one hand Papandreou has stated on a number of occasions that there will be no further measures for wage earners and pensioners whilst European Commissioner Olli Rehn has made it clear that higher than expected debt load will mean more sacrifices on the part of Greece in 2011.

Attending celebrations in Thessaloniki today Giorgos Papandreou was met with boos and jeers by some worshippers outside the Saint Demetrios cathedral and was quickly whisked inside the building with church bells ringing in order cover the sounds of protests from TV crews covering the event. Hundreds of riot police were also on duty in the surrounding area ready to keep disgruntled state employees at a safe distance while people shouting anti-government slogans were swiftly confronted by uniformed and plain clothes officers in the crowd.