Krugman wipes the floor with the two pro-austerity guests:
And the segment where Krugman detailed his view of the current situation to the BBC host:
UPDATE: There was another segment with Paul Krugman and an ex finance minister of Greece. It’s at the 6 minute mark:
And here’s the entire BBC program:
The Greek people went to the polls yesterday and the pro-austerity parties didn’t fare well. Democracy isn’t conductive to austerity. Wikipedia has the election results:
Summary of the 6 May 2012 Hellenic Parliament election result Party Leader(s) Votes % +/– Seats +/– New Democracy Antonis Samaras 1,191,989 18.85% –14.62 108 17 Coalition of the Radical Left Alexis Tsipras 1,061,158 16.78% +11.15 52 39 Panhellenic Socialist Movement Evangelos Venizelos 833.456 13.18% –30.74 41 119 Independent Greeks Panos Kammenos 670,550 10.6% New 33 33 Communist Party Aleka Papariga 536,045 8.48% +0.94 26 5 Golden Dawn Nikolaos Michaloliakos 438,910 6.97% +6.68 21 21 Democratic Left Fotis Kouvelis 386,090 6.11% New 19 19
So, the Coalition of the Radical Left gets 17% of the vote while the conservative New Democracy gets 19%, but that translates to 52 seats for the Coalition and 108 seats for the conservatives. If you keep reading the Wikipedia article, you learn that the party that gets the most votes, gets a 50 seat bonus. That’s one screwed-up electoral system. I should note that the Panhellenic Socialist Movement is socialist only in its name. It and New Democracy are the two pro-austerity parties. In the 2009 Elections they combined for 77% of the vote (44% for the Movement and 33% for the conservatives).
International experts with the task of compiling a crucial review of Greece’s fiscal progress ran into trouble before they could even start the job as public-sector workers protesting against wage cuts, layoffs and higher taxes locked them out of office buildings.
Inspectors from the European Union, International Monetary Fund and European Central Bank were greeted on Thursday with banners deploring the “barbaric measures” the so-called “troika” has meted out in exchange for propping up the moribund Greek economy. At the finance ministry – the hub of talks between the debt-stricken country and creditors – protesters shouted “take your bailout and leave” and prevented auditors from entering the building.
“We are sending a loud message to the government and the European Union that we have reached our limits, that it is the workers in our country and especially workers in the public domain who have carried the burden [of cost-cutting policies],” said Costas Tsikrikas, president of Adedy, the union of civil servants.
Following the socialist government’s announcement of a new wave of austerity measures last week, the total drop in purchasing power for public-sector employees would exceed 50%, he added.
It was an embarrassing start to discussions that had been suspended in a row over missed budget targets earlier this month. The monitors’ review is critical to Greece receiving the further aid needed if it is to avert bankruptcy.
The government, in a step that highlighted lenders’ distrust of Greece over a year after it secured €110bn (£95bn) in rescue funds, had been required to outline new deficit cuts in a letter to the EU and IMF before the inspectors agreed to return. The written assurance is believed to have contained a promise that the country would push ahead with privatisations.
But the surprise sit-ins, which began with civil servants declaring that they had taken over six ministries at 7am, meant that Evangelos Venizelos, the finance minister, was forced to hold the talks on the 2012 budget elsewhere.”The measures being pursued by the government are totally counter-productive. It is obvious to everyone that they have failed … all they have achieved is the impoverishment of Greeks,” said a member of Adedy’s executive board. “These occupations are symbolic but what is not is our determination to overturn policies that have driven us into deadlock. In the last two years 300,000 small and medium-sized businesses have closed and by December we estimate there will be one and a half million unemployed. That’s one person per family.”
Unions, including Adedy, which represents more than 800,000 civil servants have vowed to step up resistance to the measures. A general strike and other protests have been planned for October.
Did you catch the “socialist government” characterization? If the Greek government was truly socialist this surrender to the IMF/EU wouldn’t be happening. This is a hardcore capitalist government.
PS. If purchasing power goes down by 50%, what do you think will happen to the economy? Hint: growth won’t begin with a positive sign.
Greek athletes may have to abandon training and start looking for jobs as the financial crisis slashes sports funding in the birthplace of the Olympics.
“Athletes are being forced to stop because they can’t get by financially,” said Stella Lazarou Tigka, the president of the Vouliagmeni Nautical Association, a sports club in a seaside resort south of Athens. Eight of its members were on the 13- strong national women’s water polo team that won the gold medal last week at the FINA World Championships in Shanghai.
Greece can no longer afford to support athletes while they train. With the country in its third year of recession, state spending on sports has been slashed. Funds to the Greek Olympic Committee for 2009-2012 were cut to 8 million euros ($11.3 million) from 30 million euros in the previous four years, Hellenic Olympics Committee President Spyros Capralos said.
Austerity measures pledged by the government in exchange for a 110 billion-euro May 2010 bailout plan from the European Union and International Monetary Fund may make matters worse. Beyond hurting the competitiveness of its athletes at the 2012 Olympic Games in London, the biggest economic upheaval in a generation may put Greece decades behind as discretionary spending on activities such as sports is deemed not a priority.
Wussies. So a few athletes have to get jobs and can’t train in their sport? We gave up the shuttle program and certainly other more important things than athletes. It’s what tough he-man economies do when the going gets tough. These athletes can always ask to be athletes again when they’re reincarnated next time.
Seriously, this article is the perfect example of what happens to a society that chases the almighty buck, whether it is Greece or its creditors. Greed definitely is not good. I pity the athletes who are in their prime and have only one shot in their lives. The world is much less interesting when the austerians run the joint.
They don’t want to work, they want to retire at 50, they want a free bailout, they want, they want, they want… I imagine Fox News is ready to light the fire. But once again, there is a problem with the narrative: It is not true. I came across a naked capitalism cross-post to a post at sturdyblog via dday at fdl and I thought I should share it.
So let me deal with some of that media Mythology.
- Greeks are lazy. This underlies much of what is said and written about the crisis, the implication presumably being that our lax Mediterranean work-ethic is at the heart of our self-inflicted downfall. And yet, OECD data among its members show that in 2008, Greeks worked on average 2120 hours a year. That is 690 hours more than the average German, 467 more than the average Brit and 356 more than the OECD average. Only Koreans work longer hours. Further, the paid leave entitlement in Greece is on average 23 days, lower than most EU countries including the UK’s minimum 28 and Germany’s whopping 30.
- Greeks retire early. The figure of 53 years old as an average retirement age is being bandied about. So much, in fact, that it is being seen as fact. The figure actually originates from a lazy comment on the NY Times website. It was then repeated by Fox News and printed on other publications. Greek civil servants have the option to retire after 17.5 years of service, but this is on half benefits. The figure of 53 is a misinformed conflation of the number of people who choose to do this (in most cases to go on to different careers) and those who stay in public service until their full entitlement becomes available. Looking at Eurostat’s data from 2005 the average age of exit from the labour force in Greece (indicated in the graph below as EL for Ellas) was 61.7; higher than Germany, France or Italy and higher than the EU27 average. Since then Greece have had to raise the minimum age of retirement twice under bail-out conditions and so this figure is likely to rise further.
- Greece is a weak economy that should never have been a part of the EU. One of the assertions frequently levelled at Greece is that its membership to the European Union was granted on emotional “cradle of democracy” grounds. This could not be further from the truth. Greece became the first associate member of the EEC outside the bloc of six founding members (Germany, France, Italy and the Benelux countries) in 1962, much before the UK. It has been a member of the EU for 30 years. It is classified by the World Bank as a “high income economy” and in 2005 boasted the 22nd highest human development and quality of life index in the world – higher than the UK, Germany or France. As late as 2009 it had the 24th highest per capita GDP according to the World Bank. Moreover, according to the University of Pennsylvania’s Centre for International Comparisons, Greece’s productivity in terms of real GDP per person per hour worked, is higher than that of France, Germany or the US and more than 20% higher than the UK’s.
- The first bail-out was designed to help Greek people, but unfortunately failed. It was not. The first bail-out was designed to stabilise and buy time for the Eurozone. It was designed to avoid another Lehman-Bros-type market shock, at a time when financial institutions were too weak to withstand it. In the words of BBC economist Stephanie Flanders: “Put it another way: Greece looks less able to repay than it did a year ago – while the system as a whole looks in better shape to withstand a default… From their perspective, buying time has worked for the eurozone. It just hasn’t been working out so well for Greece.” If the bail-out were designed to help Greece get out of debt, then France and Germany would not have insisted on future multi-billion military contracts. As Daniel Cohn-Bendit, the MEP and leader of the Green group in the European Parliament, explained: “In the past three months we have forced Greece to confirm several billion dollars in arms contracts. French frigates that the Greeks will have to buy for 2.5 billion euros. Helicopters, planes, German submarines.”
- The second bail-out is designed to help Greek people and will definitely succeed. I watched as Merkel and Sarkozy made their joint statement yesterday. It was dotted with phrases like “Markets are worried”, “Investors need reassurance” and packed with the technical language of monetarism. It sounded like a set of engineers making minor adjustments to an unmanned probe about to be launched into space. It was utterly devoid of any sense that at the centre of what was being discussed was the proposed extent of misery, poverty, pain and even death that a sovereign European partner, an entire nation was to endure. In fact most commentators agree, that this second package is designed to do exactly what the first one did: buy more time for the banks, at considerable expense to the Greek people. There is no chance of Greece ever being able to repay its debt – default is inevitable. It is simply servicing interest and will continue to do so in perpetuity.
No, not here but in Greece. The Guardian reports:
Greece is facing major disruption on Tuesday as unions begin a 48-hour general strike before a parliamentary vote on harsh austerity measures demanded in return for international rescue loans. Protest rallies in Athens are due to converge on parliament as industrial action called in protest against tax hikes was expected to disrupt or halt most public services. More than 5,000 police have been deployed to guard central Athens where anti-austerity demonstrations earlier this month ended in scenes of violence as protesters clashed with riot officers.
“We expect a dynamic and massive participation in the strike and the march to the centre of Athens. We will have 48 hours of working people, unemployed, young people in the streets,” Spyros Papaspyros, leader of public sector union ADEDY, told Reuters. Doctors, paramedics, journalists, postal workers and private sector employees were all expected to join the protest. Stoppages by Greek air traffic controllers are likely to disrupt flights and ferry departures from Athens are also expected to be hit. The unions are angry that the proposed austerity package would raise taxes on minimum wage earners and other Greeks in addition to earlier cuts that have driven unemployment past 16%.
Parliament must approve and implement the programme this week if Greece is to receive a scheduled bailout loan of €110bn from the European Union and the International Monetary Fund. Without the loan Greece risks becoming the first eurozone country to default on its debts – an event that could trigger a crisis in other economically weak European countries and have major global consequences. “These measures are a massacre for workers’ rights. It will truly be hell for the working man. The strike must bring everything to a standstill,” Thanassis Pafilis, a member of parliament for the pro-strike Greek Communist party, told Associated Press.
The fight for Europe’s future is being waged in Athens and other Greek cities to resist financial demands that are the 21st century’s version of an outright military attack. The threat of bank overlordship is not the kind of economy-killing policy that affords opportunities for heroism in armed battle, to be sure. Destructive financial policies are more like an exercise in the banality of evil – in this case, the pro-creditor assumptions of the European Central Bank (ECB), EU and IMF (egged on by the U.S. Treasury).
As Vladimir Putin pointed out some years ago, the neoliberal reforms put in Boris Yeltsin’s hands by the Harvard Boys in the 1990s caused Russia to suffer lower birth rates, shortening life spans and emigration – the greatest loss in population growth since World War II. Capital flight is another consequence of financial austerity. The ECB’s proposed “solution” to Greece’s debt problem is thus self-defeating. It only buys time for the ECB to take on yet more Greek government debt, leaving all EU taxpayers to get the bill. It is to avoid this shift of bank losses onto taxpayers that Angela Merkel in Germany has insisted that private bondholders must absorb some of the loss resulting from their bad investments.
The bankers are trying to get a windfall by using the debt hammer to achieve what warfare did in times past. They are demanding privatization of public assets (on credit, with tax deductibility for interest so as to leave more cash flow to pay the bankers). This transfer of land, public utilities and interest as financial booty and tribute to creditor economies is what makes financial austerity like war in its effect.
The Greek crowds demonstrating before Parliament in Syntagma Square are providing their counterpart to “Arab spring.” But what really can they do, short of violence – as long as the police and military side with the government that itself is siding with foreign creditors?
The most effective tactic is to demand a national referendum on whether to accept the ECB’s terms for austerity, tax increases, public spending cutbacks and selloffs. This is how Iceland’s President stopped his country’s Social Democratic leadership from committing the economy to ruinous (and legally unnecessary) payments to Gordon Brown’s Labour Party demands and those of the Dutch for the Icesave and even the Kaupthing bailouts.
The only legal basis for demanding payment of the EU’s bailout of French and German banks – and U.S. Treasury Secretary Tim Geithner’s demand that debts be sacrosanct, not the lives of citizens – is public acceptance and acquiescence in such policy. Otherwise the imposition of debt may be treated simply as an act of financial warfare.
National economies have the right to defend themselves against such aggression. The crowd’s leaders can insist that in the absence of a referendum, they intend to elect a political slate committed to outright debt annulment. Across the board, including the Greek banks as well as foreign banks, the IMF and EU central planners. International law prohibits nations from treating their own nationals differently from foreigners, so all debts in specified categories would have to be annulled to create a Clean Slate. (The German Monetary Reform of 1947 imposed by the Allied Powers was the most successful Clean Slate in modern times. Freeing the German economy from debt, it became the basis of that nation’s economic miracle.)