Athens News is reporting today that the Greek government will not cut public sector wages any further, the government will not cut pensions any further and the government will not fire any public sector workers.
And in addition to this, the Greek government wants to speed up the sale of its revenue generating assets such as the state-owned electricity and gas companies.
Given all this, it begs the question, how does the Greek government expect to avoid a default?
Cuts to the public sector workforce is one of the main ways the government can cuts it costs and yet it is ruling it out.
This on its own means any reforms in the government will be meaningless.
the government is also expected to tell the troika that it is committed to undertaking …… mergers of state agencies
Okay, mergers of state agencies sounds great, but if these mergers are not going to lead to redundancies it is hard to see why they will bring any benefits.
In short the Greek government seems to be in complete an utter denial with regards to their predicament. The bailouts the government is receiving from the Troika is making the situation in Greece worse not better. The only thing that is maintaining itself is the government, the private sector is crumbling.
There is only one logical outcome to this course of action.
Either everyone in Greece will either end up being dependent of government welfare or having the Greek government as customer, much like Albania under Hoxha. Or businesses will simply be unable to pay the taxes and the government ends up owning everything, much like Albania under Hoxha.
If the free market was allowed to operate the private sector in Greece would have been protected, but when you have taxpayers from around Europe propping up the Greek government the private sector in Greece is the thing that suffers through increasing taxes and high regulation.
The longer the situation continues the more confused I am about the mission of the Troika.
They can see that the situation in Greece has only got worse since they intervened. The Greek government could not service its debt at 2008 GDP levels. We are now in 2012 and the GDP of Greece is probably going to be 20% less than it was in 2008, in short, the government debt in 2012 is even more unmanageable than it was in 2008 despite the Troika pouring hundreds of billions of Euros into the Greek government.
Unemployment is also at epic levels. 21% of people of working age are claiming state benefits, the actual unemployment I am sure is much higher than 21%.
Since 2008, the Greek government has been allowed to continue with its same self destructive spending programs at the cost of the Greek taxpayer.
The Troika see this, it is impossible not to and yet they continue to keep the Greek government on a drip feed, despite the obvious damage that is being done to the Greek private sector.
So what exactly is the goal of the Troika and why do they continue to fund a government that is blatantly opposed to cutting spending?
The only explanation I can see is that the whole program is simply designed to finance banks by making sure they get repaid for the loans they made recklessly. It is not possible to argue that the behaviour of the Troika is in any way geared to ensuring the long-term sustainability of the Greek economy.
European politicians cannot be blind to the damage that is being done in Greece so you would imagine that they are expecting a pretty big pay-day at the end of this episode in return for their support of actions which are only serving to help banks.
What this pay-day will look like, your guess is as good as mine.
“Given all this, it begs the question, how does the Greek government expect to avoid a default?”
Who told the government is trying to avoid default? What the government is doing (and in fact what happens in all countries that are visited by the IMF) is making sure the economy disintegrates to point that it’s irrepairable so that the country is forever dependent on the troika’s bailouts.
“the actual unemployment I am sure is much higher than 21%”
That’s correct, the actual unemployment is much higher but ELSTAT in collaboration with EUROSTAT are doing everything possible to conceal the real size of the destruction.
The public sector in Greece isn’t as big as you may think or as the media wants you to believe but I admit it’s very unproductive owing largely to the clientism that prevailed over the past 3 decades. However you can’t expect the current government to fix that because a)these are the exact same guys that created this and b)it’s exactly this clientist state of affairs that helped ND get elected(I have proof of that)
Here’s some of the proof I was talking about
The translation and description may not be 100% accurate but you still get the idea I think.
I’m afraid that the kind of “privatization” they have in mind is like when they sold OTE(telecommunications) to Deutsche Telecom a company that belongs to the german public! Yep, this is what Merkel, Oli Rehn and the other eurocrats mean when they call for privatization…
And never believe the government telling you they wont cut wages and pensions any further. They’ll certainly do it, they’re just taking their time and waiting for the right moment because passing all the unpopular measures at the same time could spark massive unrest.