Greece's economy shrank by 7.1 percent of GDP last year and is expected to shrink by 6.6 percent this year, higher than what was previously thought, according to new figures released yesterday by the Hellenic Statistical Service (Elstat). The 2011 recession had been believed to stand at 6.9 percent, and the 2012 figure at 4.8 percent.And German Chancellor Angela Merkel's government intends to see that the cycle continues, as he reports in Germany Demands Strict Oversight 10/24/2012. Pasok, the social-democratic party that is part of the ruling coalition but which is sinking toward non-existence in the polls, released a document that it says are the demands Germany is making for conditions on further aid, including:
Those revisions in turn worsen the deficit figures submitted by the government, because they are presented as percentages of GDP. As the economy shrinks, the deficit figures rise, making deeper cuts in public spending necessary, which in turn shrink the economy further, faster - a vicious cycle that has plagued Greek efforts to balance the budget since 2009.
Not that it made Reichenbach popular in Greece. In fact, he was nicknamed "Third Reichenbach" because of his role as enforcer of the massively destructiveness austerity program imposed by the EU (read: Germany).
- A designated account into which Greek bailout assistance is paid by the International Monetary Fund, the European Commission and the European Central Bank would come under the sole purview and control of the ECB.
- On months when it met its tax revenue targets, Greece would advance the surplus to this account.It would not be able to transfer surpluses to cover deficits across the year, but would have to make adjustments on a monthly basis.
- An external auditor, such as the European Commission, would have to approve any loan applications made by the Greek central government or even local governments. This means that Greece would not be able to refinance itself on the open market without the permission of its primary creditors.
- A new team of inspectors would be deployed across the Greek government to oversee implementation of Greece's bailout obligations. This is the return of a German proposal brought forward in 2011, after it became apparent that Greece was off track, causing an outcry at the time. To his credit, Horst Reichenbach, the leader of the European Commission's Task Force, already deployed in Greek ministries to provide technical assistance in an ongoing administrative overhaul, refused to double up as an enforcer at the time.
Euro finance ministers are scheduled to finalize an additional credit amount for Greece on November 12, required because of the economic forecasts being worse than expected, Griechenland bekommt mehr Handelsblatt 25.10.2012. This is in addition to an already-approved €130 billion tranche of assistance coming in February. The German Bundestag will have to approve the additional aid, providing yet another opportunity for disputes over how badly to punish Greece for being not as rich as Germany.
But at least that's safely past the US Presidential election.
Oh, and there's this, the eggs that Angie laid in Greece, from cartoonist Yannis Ioannou 10/22/2012. Among the signs lying in the ruins is Παιδεια (education), part of the across-the-board devastation the EU
Psaropoulos writes about the rise of Golden Dawn (Χρυσή Αυγή/Chrysi Avgi) in Golden Dawn glows amid Greece gloom Aljazeera English 10/25/2012, also at his blog, and how they are successfully exploiting the economic crisis.
David Dayen, who has been following the Greece situation for a while, writes, "The country is in a state of crisis. The unemployed have no health benefits and must pay out of pocket with money they don’t have. And the number of the unemployed continues to rise. Economic growth is not expected for years." (Greece Attempts to Pass Another Round of Austerity FDL News 10/25/2012).
Heckuva job, Angie, heckuva job.
Tags: angela merkel, austerity economics, eu, euro, european union, greece