Jurgen Habermas, famous German philosopher and sociologist on the European Union

Berlin - Jurgen Habermas is a famous German philosopher and sociologist now 86 years young. He still believes in the possibility of rational discourse on issues and rejects post-modernist views.

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Unlike many modern thinkers Habermas does not reject the Enlightenment but considers it an "unfinished project" to be corrected and added to rather than discarded as a basis for understanding. Although Habermas was influenced by the Frankfurt School of Marxism he moved beyond it and rejected postmodernism as well considering it too pessimistic and radical. He was influenced by American pragmatism, and the analysis of speech acts in philosophers such as John Searle, and John Austin and numerous other groups. One of his talents is to meld together diverse threads of thought into some type of unity. Habermas has always spoken out on important issues of the day often in language that is much simpler and clearer than in his academic writing.

Lately he has been speaking out on the issue of Europe. He sees what he thinks of as the European ideal as being destroyed by inept politicians and forces of the market. In a discussion at the Goethe Institute in Paris Habermas says:"I'm speaking here as a citizen. I would rather be sitting back home at my desk, believe me. But this is too important. Everyone has to understand that we have critical decisions facing us. That's why I'm so involved in this debate. The European project can no longer continue in elite modus."

Habermas finds that the EU dictating debt terms to Greece violating its sovereignty "simply unacceptable". He lashes out at politicians complaining that they have no political substance and aspire to nothing except to be re-elected. He accuses EU politicians of cynicism and rejecting European ideals. He recently wrote a booklet on the issues facing Europe "On Europe's Constitution".

Habermas argues that under the pressure of markets the essence of democracy has changed. As a result political power has shifted from the people and voters to bodies that have questionable democratic legitimacy such as the European Council. One might add the European Central Bank. Habermas claims that power has been usurped by technocrats. This is seen in Greece where in return for a bailout Greece must bend to the will of the Troika with the legislature simply being an instrument to legitimize what is commanded.

Habermas argues that an agreement between German Chancellor Angela Merkel and then French president Nicolas Sarkozy in 2011 gave political supremacy to the European Council creating what he calls "post-democracy" in Europe. The European parliament he sees as having little influence. Habermas sees a Europe driven by markets with the EU technocrats exerting huge influence on formation of governments in Italy and Greece. Habermas seems to have forgotten the most elementary aspects of Marxist analysis. It is not markets that are driving the changes but the needs of capital. The power structure is meant to serve the interests of the ruling class. When these interests are seen as deregulating labor markets, reducing welfare costs and social programs etc. then this is what is demanded using debt as leverage. The technocrats are simply servants of these interests. Of course there are opinion differences on what these interests are with some liberal economists wanting to save capitalism from itself and anti-austerity programs that they regard as against the interests of capital. It has nothing to do with markets per se. Indeed free trade agreements have as a key feature enforcement of intellectual property rights that are intended to reduce market competition not foster it.

Habermas is a voice in the wilderness with his continuing belief in reason and the power of public uncoerced discourse in the public sphere. He is not one to try make himself a spectacle or a performer as with a philosopher such as Slavoj Zizek. He believes people discussing political issues and then being able to act within a democratic framework can make things better. He is angry that this is not happening and feels he must speak out with others as a way of eventually changing the situation. He offers no magic bullet to a better future, the only way forward is through discourse and the creation of structures that make the democratic will powerful again.

Greece manages to scrape up funds for another payment to the IMF

The Greek government managed to scrape together enough cash to pay off $222 million that was due to the International Monetary Fund yesterday.

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To raise the cash, the government has been borrowing from pension funds and also from the reserves of local governments. The government is also placing a surcharge on withdrawals of cash and financial transactions. This surcharge will not only raise revenue but also discourage capital flight. Greece is also considering a special levy on the country's 500 richest families to collect more cash.

Next Tuesday, Greece faces an even larger payment of 770 million euros to the IMF. Greece also is required to pay salaries and pensions later next week. Greek officials have been talking with their creditors and EU officials to help push for a release of funds from their bailout loan, but so far creditors have insisted Greece must present and implement reforms that have been demanded as part of the original bail-out agreement. The reforms include changes to pensions and in the labor market that so far the government has refused to countenance and would go completely counter to their election pledges. Alexis Tsipras, the Greek Prime Minister, discussed with French President Francois Hollande how negotiations could be fast forwarded.

Greek officials are meeting with members of the Troika, the European Commission(EC), European Central Bank(ECB), and International Monetary Fund(IMF) or as they are now called "The Institutions" before a meeting of the Eurozone's 19 finance ministers next Monday at which the group could decide whether Greece has done enough to merit release of the remaining 7.2 billion euros of their bailout loan. In Brussels, technical talks had been extended beyond yesterday. An unidentified Eurozone official claimed that there had been visible progress after weeks of stalemate. The Greek Finance Minister Yanis Varoufakis was in Rome to discuss issues with the Italian Finance Minister, Pier Padoan and was then to talk with Spanish finance minister Luis de Guindos. Prime Minister Tsipras consulted with EC president Jean-Claude Juncker yesterday and they both affirmed that "constructive talks should continue."

Tsipras and Juncker issued a joint statement that seems to indicate that Greece may be reconsidering its opposition to demands for pension reform. The two spoke of the remaining reforms Greece needed to implement. These included modernizing the pension system "so that it is fair, fiscally sustainable, and effective in averting old-age poverty". The EC will no doubt stress the fiscally sustainable aspect aspect. The Troika have been demanding pension reforms that Greece has so far resisted. The other main issue was labor market reform and that also the two agreed must be addressed and they said they had discussed "the need for wage developments and labor market institutions to be supportive of job creation, competitiveness and social cohesion."

While the statements sound optimistic, there are reports members of the Governing Council of the ECB are growing impatient at Greece's reluctance to agree to and implement reforms demanded. They also worry about their exposure to Greek bank debt and are reluctant to bend the rules any further to help Greece out of its cash difficulties. German Finance Minister, Wolfgang Schaeuble, who has taken a hard line against Greece said that it was in Germany's interest to help Greece but not at any cost and that just giving more aid without changing the conditions under which Greece was operating made no sense. He also said that Greek demands for World War II reparations were nonsense. We should find out next week whether there is any breakthrough in negotiations. If there is a breakthrough, it would appear that is because Greece has basically caved in to the demands of the Troika.

Rating agency downgrades Greek credit even further

Greece's credit grade is already in junk status but on April 15 rating agency Standard and Poor downgraded the status of Greek credit even further.

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Standard and Poor downgraded Greece from a B- rating to CCC+ and even that was with a negative outlook due to "further worsening in liquidity for the sovereign, the banks, and the economy." The agency also warned that Greece's financial commitments would be unsustainable without "deep economic reform or further relief." The rating agency had raised Greek's ratings last year as the economy showed signs of recovery.

There have been constant withdrawals from Greek banks and the Greek stock market declined by almost two percent on Wednesday. Standard and Poor said of the business, financial, and economic conditions in Greece:"In our view, these conditions have worsened due to the uncertainty stemming from the prolonged negotiations between the almost three-month-old Greek government and its official creditors."

New data released on Wednesday showed that Greece fell far short of budget reduction targets in 2014. The predicted deficit for Greece had been 0.8 per cent but in actuality it was 3.5 per cent of GDP. After the cost of interest payments on debt is taken out, the surplus was a mere 0.4 per cent rather than the 2 per cent predicted.

The rating agency estimated that the Greek economy was again contracting over the last six months. The agency also said that the economic situation could worsen if talks between Greece and its creditors do not result in an agreement soon. Greek authorities hope that there will be an agreement when the Eurogroup of finance ministers meet in Riga, Latvia on April 24. If Greece fails to come to an agreement then it could very well run out of cash within a period of weeks without new funds.

European Commission Vice President, Valdis Dombrovskis, who is responsible for the talks said that chances of striking a deal at the upcoming meeting on April 24 are low. He said that the group is more likely to assess progress with a decision on whether to release funds coming at the next meeting of Eurozone Finance Ministers on May 11. A main sticking point is that so far Greece has not agreed to pension and labor market reforms demanded by creditors. Unless more cash is released Greece could run out of funds by May 1. Dombrovskis said of the talks:"Currently, there is some progress but unfortunately those negotiations were in for a slow start, time is short and there is a lot of ground to be covered.”Euclid Tsakalotos, deputy minister for economic relations, claimed that Greece aimed to conclude talks before the April 24th meeting so that a decision could be made tjen:“We are working very hard on the good scenario, and by then, Greece needs to have had some movement on its funding, on the money that is owed to it by the International Monetary Fund (IMF) and the other institutions. We are doing our best to reach a new deal for what we think is good not just for the average Greek but for the average European,”

International Monetary Fund complains that Greece is its most uncooperative client ever

Officials from the IMF, the European Central Bank, and the European Commission, complained in a conference-call Tuesday that Greek officials are not adhering to the conditions of the bailout extension deal or cooperating with creditors.

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The officials did not want to be identified since the call was private. A letter was also sent by the European Commission objecting to legislation that would give free food and electricity to households in poverty and also to allow tax arrears to be paid in instalments. The letter said that the laws were in violation of the bailout agreement. since they were not cleared by the Troika. International Monetary Fund(IMF) officials claimed that Greece was the most unhelpful client they had dealt with in their entire history. German finance officials said trying to get the Greek authorities to present a rigorous economic reform policy was like trying to ride a dead horse.

According to a Reuters report the teleconference was supposed to allow Greece to report on its reform process but instead Greek officials insisted that discussions should be held at the upcoming European Union summit on Thursday. One anonymous euro zone official said that for many people the teleconference "could be something of a last straw."

If the Greek government does not implement the unpopular austerity provisions of the bailout extension required by creditors, Greece may end up not getting the money needed for its upcoming debt payments. Tsipras is hoping to have a meeting with Mario Draghi, head of the ECB , Angela Merkel German Chancellor, French President Francois Hollande and Jean-Claude Juncker the head of the European Commission later this week in Brussels. Tsipras wants a political deal to unlock funds from the $254 billion bailout, but the euro zone officials may be in no mood to grant Greece any leeway as the Greek government goes ahead with reform policies without getting approval from creditors. Without concrete proposals and evidence that reforms the creditors want are being implemented, there will be no political agreement to release the funds. There may however be political agreement not to release the funds.

The Dutch Finance Minister Dijsselbloem said that Greece might require capital controls as happened in 2013 in Cyprus. His remarks helped Greek bank shares to lose over 5 percent. The Athens stock exchange lost 1.8 percent and interest on Greek bonds rose to a whopping 20.5 percent. Progress of technical personnel from the Troika working in Athens has been very slow. They too complained of the Greek government passing legislation whose implications for Greek finances was not at all clear and without consultation, a clear violation of the bailout extension agreement. Greece has large payments due as early as this Friday.

German Finance Minister Schaeuble said that time was running out for the Greek government. He noted also that Greece has insisted it does not want a third bailout program. He said: "We have the impression, and everyone who is dealing with the question shares the impression, that time is running out for Greece. They obviously have certain problems."

It is not clear how Greece could possibly continue to pay its debts without further loans.

As well as talking with European officials and meeting with Angela Merkel in Berlin, the Greek Prime Minister, Tsipras, also intends to visit Putin on April 8. Some worry that Greece's debt problems may lead the country to form alliances outside the west including with Russia. The US sent Victoria Nuland , the assistant secretary of state for European and Eurasian affairs to Athens to meet with Tsipras. She was active in seeing to it that Ukraine turned toward Europe. Now she no doubt will warn Tsipras not to cosy up to Putin.

The Greek government faces the impossible task of trying to implement its election promises, to show Greeks that the government can improve conditions, and at the same time convince its creditors that it is carrying out the reforms demanded as part of the bailout deal. But reform measures by the Greek government continually violate the terms of the bailout deal. The government then call the demands of the creditors blackmail. In a further slap in the face to the Troika or "institutions" the Deputy Finance Minister Nadia Valavani said that proceeds from any privatizations will be used ,not to repay debt as desired by the creditors, but for social programs. She said:"There will be a new Sovereign Wealth fund ... and the revenue will be used to fund the government's social policies and to support the social security system."Having annoyed all those parties who hold the purse strings, it seems unlikely that Greece will be able to get any concessions at all from euro zone officials.

Greek Prime Minister insists that Greece will not seek a third bailout

Alexis Tsipras, the Greek Prime Minister, announced that Greece will not seek a third bailout when the extension of the present bailout runs out in four months time.

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Tsipras, the leader of the major government party Syriza, made the announcement in an address to parliament that was on Greek TV. Tsipras has just four months to negotiate something to deal with the large payments coming due shortly after the four month period is ended. Tsipras, may simply have announced another name change as happened with the Troika. Tsipras and his finance minister, Yanis Varoufakis, refused to extend the bailout originally and would not meet with the Troika of the European Commission, European Central Bank, and International Monetary Fund to renegotiate an extension of the bailout. Varoufakis did meet with the Eurogroup of finance ministers and the "institutions" that included the Troika were also involved and eventually reached a deal under the original terms so that in the end there was a four month extension of the original bailout agreement. The plan may be to remove the term "bailout" in any new agreement. The old wine will be put in new bottles but with new labels as well. Tsipras' remarks came just a few hours after German legislators had approved the four month extension of the present bailout but with some votes against the extension.

Tsipras said: “The bailout agreements are over, both in form and in essence. Some people are betting on a third bailout in July … but we will disappoint them.”

Some leftist groups in Greece such as the Greek Communist Party oppose the Brussels agreement, so Syriza must describe their policy in a positive fashion and as being a replacement for the hated austerity conditions of the original bailout deal. Any new deal in July must also have a positive new description even though it will be very much like other bailouts and will be described as such by the Eurogroup.

Tsipras claims that Greece has been successful in separating the loan agreement from the "disastrous" austerity conditions imposed by previous governments. That is far from the truth. Indeed the terms of the extension were based upon the existing agreements. As a Eurogroup statement put it:

The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments. The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions. This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece.The MFFA is the original bail out plan "underpinned by a set of commitments" which would include the austerity reforms. Interestingly, the Eurogroup statement already refers to a "possible follow-up arrangement" rather than a bailout. The best that Tsipras can take from this is that the "given flexibility" might be employed to change some conditions but only with the agreement of the EU group.

At a two-day meeting of the Syriza central committee, Tsipras said that Syriza had won the battle for an extension of the loan agreement even though the party sold out on most of its key commitments during the election campaign and did not actually manage to forge a new agreement outside the original agreement.Tsipras noted that many forces were against the new government: "We joined the battle in Europe with every step undermined. The most aggressive European conservative forces, in cooperation with the (ex-Premier Antonis) Samaras government, had sprung up a trap to derail us before we had even governed.They had everything set up to shipwreck us ... and the country."

Tsipras singled out Spain and Portugal as countries opposing Greece, since both countries worry that any gains by Greece could encourage anti-austerity forces in their own countries. Spain in particular faces upcoming elections with the anti-austerity party Podemos growing in strength. Tsipras claims: "We found opposing us an axis of powers ... led by the governments of Spain and Portugal which for obvious political reasons attempted to lead the entire negotiations to the brink,Their plan was and is to wear down, topple or bring our government to unconditional surrender before our work begins to bear fruit and before the Greek example affects other countries. And mainly before the elections in Spain."

Greece did come close to what was an unconditional surrender. However, when it comes to politics, rhetoric often trumps reality.

Standard and Poor downgrades Greek credit rating

  On Tuesday rating agency Standard and Poor revised Greece's credit outlook to negative. The agency said that the debt-ridden country might need even more aid from creditors. The Troika(IMF, European Commission and European Central Bank) has demanded that the country meet its obligations to impose austerity policies before it can receive more money. However, given the economic and political situation this may be impossible.
    In a statement S and P said:. "We are revising the outlook on the long-term ratings on Greece to negative, reflecting the possibility of a downgrade if Greece fails to secure the next disbursement of the EU/IMF Program,"  Greece has made budget cuts but members of the Troika will be returning in September and will decide then if conditions for further aid have been met. After their visit the inspectors said:. "We see the likelihood of shortfalls, owing to election-related delays in the implementation of budgetary consolidation measures for the current year, as well as the worsening trajectory of the Greek economy," The coalition government that won the recent election has been asking for changes and more time to meet the conditions set earlier for aid..
  S and P said that the Greek economy will shrink10 to 11 percent over the 2012-13 period even after a recession that has lasted years. Greek credit is at CCC a speculative rate already.  Fitch rating agency gives Greece the same grade. This is eight levels below investment grade. GDP has shrunk for five years now.Unemployment has risen to 22.5 per cent and is much higher than that among young people. However, the Troika wants Greece to cut even more state jobs to help balance the budget. Creating even more unemployment and fewer jobs is hardly a recipe for generating more revenue that could be used to pay down debt.  Just to tide it through this year Greece may need up to 8.7 billion U.S.  For more see this article.

Will Greece receive more funds from the Troika?

        Troika inspectors from the IMF, European Commission, and European Central Bank  are back in Greece meeting with Greek officials. The Prime Minister Antonis Samaras said that he would push ahead with the implementing deep cuts demanded by the Troika. At the same time Samaras lashed out at foreign officials whom he did not name for trying to sabotage Greece's efforts to find a solution to its problems
     Samaras complained about foreign officials who openly said that Greece could not make its commitments. Samaras said:
   The Troika will decide whether to continue providing more scheduled payments of  bailout money to Greece. If they decide not to extend more aid Greece could default on payments and perhaps be forced to leave the Euro zone.  "I say it openly and publicly, they undermine our national effort. We do all we can to bring the country back on its feet and they do all they can so we can fail," 
    Over last weekend on Sunday the German economic minister said he did not expect Greece could fulfill its  obligations under the bailout conditions. As a result, there would be no more money for Greece. Samaras wants to negotiate along with his coalition partners changes to the bailout terms. Samaras faces strong opposition within Greece to the harsh austerity measures imposed by the Troika as a condition for receiving bailout funds.
      The Greek economy has been declining at a rate of around 7 per cent this year after years of recession. Further austerity will likely decrease output further. Unemployment is close to 24 per cent..
   Troika officials claim that the Greek government is not implementing pro-growth measures such as privatizations, tax reform, and opening closed markets and professions. A source from the Troika told Reuters:"The programme has not produced the desired results because it was not implemented. We must first see the government fulfill its commitments and then decide if it works or if it needs to be adjusted." The Troika may be asking for what is not politically possible in the present context. For more see this article.

IMF head Christine Lagarde pays no taxes while critical of tax evaders

Christine Largarde angered Greeks by suggesting they should pay their taxes. While Greeks are reputed to be skilled tax evaders Lagarde herself pays no taxes on her salary and benefits from the International Monetary Fund.

Lagarde's salary is 467,940 dollars per year as head of the IMF but she also receives 83,760 dollars additional in allowances. Lagarde receives more than Barack Obama's salary but he pays taxes on his.

Aricle 34 of the Vienna convention on diplomatic relations says:: "A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal." Lagarde is also entitled to a pay raise every July 1st.

Employees of these international agencies also receive dependent allowances, rent subsidies, education grants for children, travel expenses and subsidized medical insurance. Some of the IMF benefits can be traced back to U.S. influence. The IMF was created in 1944 at Bretton Woods. U.S. officials won the argument for higher salaries over British delegates. The famous economist John Maynard Keynes opposed the higher salaries. However, Keynes was well enough off he would not need one! The justification of the higher salaries was to attract talent. For more see this article.

Greece: New elections to be held on June 17

Panagiotis Pikrammenos Council of State chief will head a caretaker government until a new government is formed after elections on June 17th. Numerous attempts to form a coalition government failed. The resulting uncertainty is roiling markets and caused a run on Greek banks. Many Greeks fear that Greece will return to the Drachma the former Greek currency. The caretaker government will not have the power to make any binding commitments.

About 898 million dollars have been withdrawn from Greek banks. A spokesperson said that as yet there is no panic but there is great fear. Theodore Krintas manager director of a wealth management company said:"I would expect the population to quietly be doing what it has been doing in the last days. In other words, some of the Greek citizens are afraid and are taking a portion of the money, but I'm not expecting a bank run,"

The election on May 6th was a disaster for the two leading pro austerity parties especially the socialist PASOK party. Greeks voted for parties that reject the austerity package imposed upon them by the EU's Troika..

The spending cuts and tax hikes have left the country mired in the fifth year of a deep recession and sent unemployment soaring to above 21 per cent, and many argue the country cannot hope for recovery if they stick to the deal. The Greeks are fed up with austerity measures that have brought a recession lasting five years now and an unemployment rate over 21 per cent. It is much higher among youth.

The Sytriza party ,an anti-austerity grouping, according to polls will increase its vote and come in first in the upcoming election. However, no doubt there will be a great deal of pressure upon the Greeks to vote for the austerity measures both from within and without the country. The prospect of Greece leaving the Euro zone is becoming a real possibility recognized even by the IMF. The IMF head Christine Lagarde said:"If the country's budgetary commitments are not honoured, there needs to be appropriate revisions, which means either supplementary financing and additional time, or mechanisms for an exit, which in this case must be orderly,""

The head of Syriza Alexis Tsipras that came second in the May 6 elections requested "that the caretaker government should not implement measures that would involve further cuts in salaries, pensions and public spending, that would dismantle labour relations or allow privatizations. . I also asked for a freeze on every ongoing process regarding the sale of state property."

Even if Tsipras does not win enough seats to govern alone after the next election his party will receive 50 extra seats for coming in first place and he should easily be able to form a majority with another anti-austerity party on the left. However so far the Greek communist party has rejected the idea of joining a coalition. The next government will in all likelihood reject the austerity agreement reached with the Troika.

Robert O'Daly of the Economist said:"This will make reaching an agreement between the next government and Greece's international creditors extremely difficult, raising the risk of a Greek exit from the euro and sovereign debt default," "The consequences of this would be dire for Greece and probably the rest of the euro area." For more see this article.

Upcoming Greek election may produce new crisis

The leftist PASOK party and the center-right New Democracy party have been the two most popular parties for decades in Greece and between them have usually formed governments. However both parties support the new austerity measures imposed by the EU and creditors. The result has been a plunge in their popularity.

Although polls up to April 20th at least (see this site) indicate a probable slim majority for the two combined perhaps this may not happen as more and more voters swing to other parties who do not support the austerity measures.

The result is that 8 to 10 different parties are expected to gain seats in the 300 member Parliament. Even if the two main parties are able to form a government it will probably be quite weak. It may be difficult to carry out all the tough demands required to get the 170 billion dollar loan just recently approved.

Desmond Lachman who previously worked as an economist for the IMF says that we are witnessing the calm before the storm as Greece has faded from the headlines. Its debt has even been upgraded!

Lachman notes that over four years Greek GDP has dropped by 14 per cent. In spite of the fact the IMF has already loaned Greece 37 billion dollars it predicts that GDP will drop another 5 per cent this year.

Unemployment in Greece is already 18 per cent but among youth it is a horrendous 40 per cent. This is a sure recipe for more social unrest.

Lachman calls the austerity policies pushed by both the IMF and EU insane. They produce precisely the worst results since the slower economic growth causes the deficit to grow as revenues decrease.

After the election the government has a June deadline to approve another 14 billion dollars in cuts. The spending cuts are equal to 5.5 per cent of GDP.. Even before these new cuts wages and pensions were slashed by up to one quarter. For more see this article.

Russia may buy Greek railway system

Greece has long lost sovereignty to its creditors. In return for loans it has been forced to sell off state assets. No doubt they will go at fire sale prices.

The Russian railway monopoly Russsian Railways is in talks with Greek authorities. The head of Russian Railways said: "We're keeping in contact with the Greeks … They haven't decided on the model yet, so it's too early to talk about our participation."

Romania's largest private railway is interested in the cargo part of the Greek business. Russia has been interested in investing in Greek railways for some time.Proposals made last year were reportedly rejected by Greece. The situation may be different now.

However there are reports that Greece wants a French company to run the railways to service foreign debts. However the French company involved SNCF said through a spokesperson that the operator "is not in the running for the purchase of Trainose, nor is it in the running for the purchase of a railway company or a railway line in Greece".

An EU timetable has tenders for Trainose (the Greek railway system) to be opened in the last quarter of this year. All the assets of the company will be transferred to a privatization fund. The proceeds will go to pay off Greek debt.

Greece: Over 50 per cent of youth unemployed

The overall jobless rate in Greece has risen slightly in December to a record high 21 per cent. In November the rate was 20.9. New austerity measures when introduced will no doubt drive these figures even higher.

Even as stock markets react positively to news of a Greek debt deal the reserve army of the unemployed in Greece is growing by leaps and bounds. No doubt investors see this as positive since labor costs will fall. As the positive spinners will have it, Greece is becoming more competitive.

Youth between 15 and 24 suffered the worst with their unemployment now at 51.1 per cent. Budget cuts required for Greece to get a bail-out loan from the EU and IMF have resulted in many corporate closures and bankruptcies adding to the rolls of the unemployed.

Since 2008 the Greek economy has shrunk by about twenty per cent. About 600,000 jobs have been lost almost one in ten that existed before the recession.

Nicos Magginas from the National Bank of Greece said: "Despite some emergency government measures to boost employment in early 2012, it is hard to see how the upward unemployment trend can be stabilized in the first half of the year," For more see this Reuters article.

Some Greek politicians bailing out of Greek banks

Austerity it seems is for Greek workers not for some of the politicians that are supposed to be representing them. Some Greek parliamentarians are bailing out of Greek banks.

No doubt they are looking for somewhere safer to keep their cash. A watchdog agency reported that one member had already transferred a million euros out of the country. Interesting that a politician has a million euros to move while the government votes to cut the minimum wage by twenty per cent.

Even Finance Minister Evangelos Venizelos reported in parliament that some parliamentarians had transferred sums in excess of 130,000 dollars out of the country. These actions will make the government and politicians subject to even more anger from the Greek populace.

Thomas Klau, from the European Council on Foreign relations said:"The political situation in Greece remains unstable with regard to the ability of this Greek government or future Greek governments to deliver on the assurances given the euro zone partners," Many analysts feel that Greece will default in spite of the bailouts it has received. The economy is set to continue contraction after austerity measures have been imposed. For more see this article.

Greece debt downgraded by Fitch by two notches

As if not facing enough trouble Fitch rating agency has downgraded Greek sovereign debt from CCC to C just one notch above default. At the same time unions are mounting new protests against austerity measures.

Greek unions have staged fresh protests as the country's parliament debates emergency legislation to carry out a euro zone bailout deal and Fitch ratings says the country is close to default. The new bailout deal is worth 310 billion.

The rating agency claimed that a Greek default was highly likely and in the near term in spite of the bailout package. Greece has already been in recession for five years and unemployment is running at 20 per cent. The cuts to the public sector will drive unemployment even higher.

Along with more austerity measures a draft law forecasts the 2012 deficit to be 6.7 per cent of GDP up from an earlier forecast of 6.4 per cent. Nearly 5,700 demonstrators marched in new protests in Athens. Another 2,000 demonstrated in Thessaloniki.

Elections are scheduled for April. Parties both on the left, right and in the middle who support the austerity measures will probably suffer at the polls. The present governmet is a coalition of right, center, and left (socialist) parties. So-callled reforms being debated include cuts to the health care system of 1.3 billion further reducing services as the need for them is increasing.

By the end of February Greece must approve more than 3.9 billion in added cuts to those already agreed to..Even the constitution is to be amended so that debt repayments take precedence over any other government commitments. Health, education, security, pensions, all are subservient to finance capital. Democracy is dead in Greece and the markets cheer. Although the cheering is dying down as many realize default is on the horizon in spite of all this drastic action. For more see this article.

Greece in Chaos due to effects of austerity measures

An audio interview with Burgi is available here. Burgi claims that both individually and collectively Greeks are unable to cope with what is happening in the country due to austerity measures. The welfare state is quickly being dismantled with nothing to replace it. Right across Greece Burgi claims people say:"Who knows what tomorrow will bring?". A small business owner laments: "There have always been difficult times, and we always made it through. But now, all hope has been taken from us,.""

The Greek bureaucracy is burdened with new regulations and is unable to cope. One hapless citizen had to pay 200 Euros and present 13 papers and proof of his identity just to renew his driver's licence ! There has been a large increase in theft and even murders with the police often refusing to respond to calls.

While some salaries are falling by 35 to 40 per cent new taxes are being imposed. Net incomes have often fallen by 50 per cent or even more.

Since the beginning of November both pensioners and public and private employees often cannot anticipate what their monthly earnings will be . Many even go without pay. Between now and 2015, 120,00 public employees over age 53 are slated for semi=retirement. They will receive only 60 per cent of their base pay.

With lost income bills are not paid and consumption is down. Stores are closing throughout the country and unemploymennt is rising. Last May the rate was 16.6 per cent and among the young 40 per cent.

The national health-care system is in crisis as hospital and public health care centre budgets have been cut by 40 per cent. According to unofficial figures the suicide rate has risen 25 per cent from 2009 to 2010 and a further 40 per cent during 2011. The medical journal The Lancet reports increases in prostitution and rates of infection of sexually transmitted diseases. There are now unprecedented numbers of homeless. Sotris Lainas a psychologist at Aristotle University in Salonika said that existing safety nets are tearing and"Everything is falling apart," For much more detail about the horrendous effects of the austerity measures on Greeks see the full article.

Noëlle Burgi, a specialist in French and European social and employment policy, is a senior researcher in sociology and political science at the Centre National de la Recherche Scientifique (CNRS), a member of the Sorbonne's Centre for Political Research, and a consultant. She has worked in the UK with the London School of Economics and the University of Essex, as well as in the US with Harvard's Center for European Studies.

Violent Greek protests against new austerity measures

  The Greek parliament managed to pass the new austerity measures demanded by the Troika. In reaction protesters are out on the streets and some buildings have been set on fire. At least ten buildings have been torched so far.
    Demonstrators have been clashing with riot police throughout the day. The technocratic prime minister Lucas Papademos is urging calm. The austerity legislation is meant to clear the way for a $171.1 billion bailout payment.
   Up to 37 protesters were injured in the protests and many police officers as well. For more see this CBC article.   Another article points out that even if there is eventually a default all is not lost. Argentina defaulted some time ago and now its economy is growing by leaps and bounds.
 

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Greeks take to the streets and Troika agreement in Limbo

   Thousands of disgruntled Greeks are taking to the streets in a two day protest against new austerity measures demanded by Greek creditors as a condition for receiving bailout money. If the money does not come through Greek could be bankrupt by March.
   Yesterday reports were that party leaders had agreed to austerity measures demanded by the Troika. Today the deal is in limbo. Led by unions Greek workers are demanding that the deal not go through. The measures have reduced the minimum wage by 22 per cent and cut 20 per cent of government jobs. This is all to make Greece more competitive i.e. more attractive to investors.
    Creditors complain that Greece has not yet met all demands made. The government has been given until the middle of next week to meet all the demands. This assumes that the government can even survive until the middle of next week. Workers are trying to make sure that the country cannot function.
     Most public services are disrupted. There are no railway or other public transport services operating. Hospitals are on a skeleton staff.  As well as cuts to government jobs and the minimum wage pensions are also cut and there are reductions in spending on health and social security. Even military spending has been cut!
   Unemployment is a 21 per cent and the Greek economy is in its fifth year of recession. The cure, more cuts. For more see this article.
   

Greece: Government agrees to fire 15,000 workers

Not content with replacing an elected prime minister by a EU favored technocrat the Troika has insisted that the state cut even more jobs as part of new austerity measures. Earlier the government had agreed to sell off state assets.


Up to now the government has resisted cutting more jobs. The result will likely be even more civil unrest and demonstrations. The cuts are part of a deal so that Greece can receive a 170 billion dollar bailout from the EU and IMF. Without the bailout Greece would default on its bond payments.


Earlier in May of 2010 Greece received a 145 billion bailout package. Even with the austerity measures banks have had to forgive 131.6 billion in Greek debt. Greece had agreed to cut public sector employment by 150,000 by the end of 2015 but was going to do it through attrition and not firings. Apparently that was not acceptable to the Troika


Angela Merkel chimed in : "'I want to make clear once again that there can be no deal if the troika proposals are not implemented. They are on the table, time is of the essence. Something needs to happen quickly." Greece is now already in its fifth year of recession. Cutting jobs and demand is a sure way of maintaining the recession. For more see this article. Even though the government agreed to further cuts there will be talks on Tuesday aimed at finalizing the agreement. No doubt there will be frantic activity among party leaders and others behind the scenes.

    Reports indicate that the leaders of the Greek parties must respond by tomorrow morning at 11 AM (Monday Feb. 6) to the demands of the Troika for further economic austerity measures. These include more wage cuts. No doubt there will be more protests.

    The Greek Finance minister Evangelos Venizelos said talks with the Troika were very difficult and that . “We are on razor’s edge.” On some issues such as selling off state assets there was agreement but there was still disagreement over labor and fiscal policy for the year. 

 Imposing even more austerity and weakening labor even further is bound to create more social unrest. Greece faces a 19.1 billion bond payment March 20th. There may be general elections as soon as April. Parties that support further austerity measures may face voter anger and defeat at the polls. For more see this article. A German bank official noted: that the collapse of the Greek economy would be like opening a Pandora's Box that could kill any European area recovery. Some analysts think that even if the bailout goes through Greece will eventually default in any event.

Greece: Goodbye Democracy

 The European policymakers who are attempting to force Greece to develop a budget that will satisfy investors are now discussing ways to directly intervene in Greek budget decisions. This is just another step in recent decisions that ensure that democracy is subservient to financial interests.
   The former prime minister of Greece George Papandreou decided that Greek citizens should be given the opportunity to have their say on austerity measures being imposed by the Troika, of the European Commission, the European Central Bank and the International Monetary Fund. He proposed a referendum on the measures. This irritated those who count in these matters no end. Papandreou was forced to cancel the referendum and resign. He was not a suitable servant of those who matter.
       Papandreou's government was replaced by one headed by an unelected technocrat Lucas Papademos.   Nine in ten Greeks are unhappy with this government. Elections may take place in April. Whatever happens in elections those that count want to make sure the right decisions are made.
    European officials want to have the power to implement austerity measures and also want veto powers over budget decisions. This transition from democracy to a type of dictatorial technocracy designed to protect investors has drawn little criticism from politicians outside Greece. The U.S. is not speaking out about the necessity that there be an orderly transition back to democracy. Democracy that is not in the interests of high finance is a luxury that even nominally democratic countries cannot afford. No doubt it is a reasonable aspect of the necessary austerity measures. For more see this article.