"One must come to Eleusis stripped of the barnacles which have accumulated from centuries of lying in stagnant waters. At Eleusis, one realizes, if never before, that there is no salvation in becoming adapted to a world which is crazy. At Eleusis one becomes adapted to the cosmos. Outwardly Eleusis may seem broken, disintegrated with the crumbled past; actually Eleusis is still intact and it is we who are broken, dispersed, crumbling to dust. Eleusis lives, lives eternally in the midst of a dying world."I begin my post with this wonderful passage and will circle back to it at the end. Ekathimerini reports, EU casts safety net for Greece:
- -Henry Miller, The Colossus of Maroussi
French and German leaders emphasized during a teleconference call with Prime Minister George Papandreou on Wednesday that Greece remains an “integral part of the eurozone” despite feverish media speculation about the country’s imminent default, government spokesman Ilias Mossialos said late Wednesday night.
“Despite the recent rumors, all sides emphasized that Greece will remain in the eurozone,” Mossialos told state TV channel NET.
He added that German Chancellor Angela Merkel and French President Nicolas Sarkozy had expressed their conviction that new austerity measures announced by the Greek government over the weekend - chiefly a new tax on property - would ensure the country meets deficit reduction targets set by its international creditors and secures a sixth installment of emergency funding on which the country’s solvency depends.
According to sources, Papandreou reassured Merkel and Sarkozy during the 25-minute phone call that his administration would do everything possible to speed up reforms voted through Parliament this summer.
In an emergency meeting ahead of the conference call on Wednesday, Papandreou sought to rally his troops, stressing that foreign creditors and markets were watching Greece’s every move.
Earlier in the day, there had been a flurry of diplomacy by US and European officials aimed at sending out a positive message.
European Economic Affairs Commissioner Olli Rehn said that “a default or exit of Greece from the eurozone would carry dramatic social, economic and political costs... not only for Greece, but also for euro-area member states, other EU states, as well as global partners.”
US Treasury Secretary Timothy Geithner, who is to attend a summit of EU leaders in Poland on Friday, said he was confident that Europe could overcome its debt crisis. “The people who are concerned that this is beyond their grasp are mistaken. The size and the challenges that they face economically are completely within the capacity of the stronger European members to manage,” he said, adding however that “they are going to have to do more” and “move quickly.”
Sarkozy too, ahead of the teleconference call, emphasized that France “would put everything in place to save Greece” though he expected Athens to make good on its commitments. Merkel is believed to have pressed the same point during the call.
Sarkozy and Merkel did exactly what I expected them to do. The only reason why they're "saving" Greece is because they don't want to risk deflation/depression in Europe. Moreover, it looks as if euro bonds are coming to the market soon but there are questions on whether they can solve Europe's debt crisis. Not surprisingly, China has already stated it is willing to buy euro bonds from countries involved in the sovereign debt crisis “within its capacity.”
One of the benefits of writing my blog from Greece -- apart from the great food, weather and beaches -- is that I get to talk to all sorts of people like shop owners, cab drivers, business people, hotel workers, and self employed professionals. I like talking to everyone and try to get something from each conversation.
One of the people I love talking to while visiting Crete is my dad's first cousin, a self-employed engineer who is probably one of the smartest and well informed persons I know here (my dad's brother in-law in Athens is another self-employed business person who I listen to carefully because he reads everything, and there are others too).
Lately, I've been beating up on Greek policymakers for introducing austerity measures. My uncle agrees with me that austerity measures are counterproductive at this point, throwing the country deeper in recession, but he painted a far darker picture of the Greek economy, one that you will never read in mainstream media. Below, I will go over some key points.
The real Greek disease: The cancer affecting Greek society is an overbloated public sector which has developed from years of partisan politics where the two major parties promised goodies to their constituents to get elected, regardless of the economic cost. Sound familiar? It should because this takes place everywhere but in countries like Greece, it's endemic, widespread and pathological.
According to my uncle, the private sector has borne the brunt of this recession. The cuts in the public sector "have not gone deep enough; in fact they haven't even started." He thinks you need to cut at least 50% of the civil servants across the board but that's political suicide for any party, which is why it won't happen.
Instead, those under Papandreou continue to hire more civil servants, making good on promises they made to get elected. It's outrageous but this cancer is spreading during a time of crisis. And he told me that Papandreou and his predecessors are all to blame because while they blow empty rhetoric they all haven't cut anything in the public sector. They keep feeding the bureaucratic monster.
The need to reform benefits: On benefits, he gave me the example of the abuse going on with disability claims in IKA -- the public social security/ state pension system. He said 25% of the population there is receiving some sort of disability payment whereas comparable figures from private sector and European public funds are at 10%. He told me this discrepancy is directly related to partisan politics where ministers make phone calls so their constituents get the claim.
My sister interjected and reminded me of a young lady I met last year with multiple sclerosis. She got her disability claim cut recently and because she's not politically connected, she can't fight the system. She has vision problems and it was only 300 euros a month, but the bureaucratic scumbags decided to cut her assistance. This is what infuriates me about Greek bureaucracy -- those that genuinely deserve help, including the growing number of homeless, are left out to dry while lazy scumbags who are politically connected get away with murder.
My uncle gave me another example in the air force where military staff working in offices are getting the same pensions and benefits as the pilots flying the planes. This is total nonsense! He told me he has friends making more money in retirement than during the time they worked. This is because they get a one shot payment called "EFAPAX" once they retire which is substantial (many civil servants get over 100,000 euros, lump-sum, tax free), and pensions that can be as high as 80% of their annual income. And we wonder why Greece is now bankrupt!
And a side note, he told me many of his friends have been hoarding gold bullion in case anything happens (a classic confirmation of the bubble in gold; when Greeks are long gold, GET OUT!). He also told me to watch out for Turkey and diplomatic waves about creating a Turkish Cypriot state, just like Palestinians are now requesting (Turkish-Israeli relations remain strained and Greece recently signed a security pact with Israel).
On the need to bypass the state: My uncle thinks the only solution is for foreign investors to bypass the state's bureacracy and invest in projects where the state has little or no control. He thinks once the civil servants and politicians get involved, they demand their cut and make the project ten to twenty times more expensive.
He's right, my buddy left his post in a major Greek infrastructure project this past year after seeing it collapse with the crisis. He was working for a major German company but they got angry because the Greek government wasn't paying them their VAT tax claims back. And this is the most important foreign investor in Greece! (they finally did get the claim only after the German finance minister intervened).
On the need to reform education: The education system in Greece is terrible. A bunch of teachers in public schools are overpaid and not working. Worse still, they teach private lessons after school -- charging as much as 30 euros or more an hour cash -- to teach kids what they should have been teaching them during school time. It's an outrage but that's what happens when there is no formal, national evaluations of public school teachers in a system where unions protect them and encourage these abuses. Worse still, these public school teachers constantly complain and they're the ones taking four or six weeks off a year, all paid, going to Turkey, France, Spain, and all over Europe while their private sector counterparts work their tails off and are lucky to take three days off one weekend.
It's a joke and it reminds me of a meeting we had at Industry Canada during my last contract job. They were all complaining about cuts in their budget. I had to listen to them whine and bitch but when it was my turn to speak, I let them have it. "You all have no idea what it means to struggle and hustle for work. You're all protected by your unions and will enjoy nice gold plated pensions meanwhile guys like me, who suffer from a potentially serious medical condition, are having a hard time finding work, hustling to find contract work because nobody, including the federal government or public pensions is going to hire someone with a chronic medical condition for a full-time position with benefits." (they're afraid of law suits and they all discriminate). The room went silent. The Executive Director later came by my office after to thank me for "telling it like it is."
That's my style, I tell it like it is and I don't give a rat's ass whose feathers I crumple. It has gotten me reprimanded, fired, and blacklisted but I am who I am. That's why I don't want to paint a rosy picture of Greece and Greeks while vacationing here. There are serious structural issues weighing down the future of this great country, the biggest one being the cancer of an overbloated public sector. At the end of the day, it's the private sector that makes economies grow and any country which forgets this is doomed.
So while the French and Germans "saved" Greece for now, only Greeks can truly save themselves in the long-run by changing their mentality and getting rid of this culture of entitlement based on partisan politics. They need to focus on the private sector and make the necessary cuts in the public sector. Henry Miller is right, Eleusis lives eternally, but the Greek economy and mentality need deep reforms. Without them, this country which I love to death, is eternally damned.