Economist Paul Krugman applauds decision to hold referendum on bailout deal

Athens - Paul Krugman, the American liberal economist, has been consistently critical of the austerity program demanded by the Troika as a condition of releasing the final funds of the Greek bailout that expires on June 30.

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Krugman in his New York Times blog notes that until now every Greek government has given in to the demands of the Troika no matter what they had said during the election. Krugman refuses to use the term "institutions" to refer to the European Commission, European Central Bank(ECB) and the International Monetary Fund(IMF) or Troika. After the Greek government refused to meet with the Troika after being elected, they were rebranded as "institutions" presenting the radical Syriza government with at least a linguistic victory. Krugman's refusal to go along with this game is refreshing.

The continuous caving in to Troika demands has damaged the credibility of centre-left parties and no doubt is a factor in the success of Syriza, a more radical leftist umbrella group. Krugman suggests the Troika thought that the Syriza government would abandon most of its anti-austerity program or the government might fall. The Greek government did abandon most of its austerity program and almost all of its red lines. They have followed the usual pattern. However, the Troika has pressed for more and abandonment of any red lines. It is as if they needed to humiliate the party to show that a radical leftist party is helpless. They must be taught to respect their superiors.

The call for the referendum should have been a wakeup call for the Troika. It was not but an occasion for the usual moralistic blather about Tsipras being irresponsible. Krugman thinks that Tsipras did the right thing. Krugman has been arguing that the Troika has been doing the wrong things all along. In fact, he claimsthat if Grexit happens, it will be because the creditors, especially the IMF wanted it to happen. This may be correct but there are certainly risks for the eurozone and Troika if there is a Greek exit (Grexit) from the zone. If Greece defaults on debt payment the ECB and IMF will suffer huge loan losses. There is also the possibility of contagion. If over the longer term Greece recovers and grows, this would encourage resistance to austerity and the rule of the Troika in other countries. The Troika must hope that somehow they will persevere without yielding much if anything even at this late stage.

Krugman approves the referendum for two main reasons. First, a referendum will give the Greek government democratic legitimacy in any future negotiations. Most Greeks are still very much for staying in the zone it seems even if their anti-austerity demands are not meant. However, given the recent increased demands and the fact that Syriza, and no doubt other parties such as the Communists, will campaign for a rejection of the Troika proposals there is no guarantee it will pass. Even if it does pass and a deal is then negotiated it would not be a long term solution to the Greek problem but kicking the can down the road again until another bailout is needed. Meanwhile social discontent might rise to the boiling point. Krugman claims that democracy still matters in Europe. Of course it does not when it comes to the power of the Troika over individual countries. The referendum is the exception not the rule. Krugman's second reason for approving the referendum is that it will solve the dilemma that the governing party Syriza faces. Syriza faces citizens who voted for anti-austerity measures but are not willing to leave the euro zone. Syriza has achieved very little if anything in the way of relief from austerity policies and so it is now quite fitting that they should ask Greeks whether they want to bow to the Troika demands and accept their offer or to turn it down. This will provide Tsipras a mandate to cave as others have done or to develop a plan B for default and possible exit from the euro zone.

Many critics have argued that a plan B should have been planned long ago when it became obvious the Troika was giving little or nothing to satisfy demands for relief from austerity. The negotiations were filled with bluster, useless rhetoric, and false optimism that a deal was close. Having the referendum at this late date creates huge problems for Greeks that would not have been as severe were it held much earlier, say on the earlier proposals of the Troika. If held then there would not have been a huge payment coming due as that to the IMF the end of June, days before the referendum. The move to hold a referendum and the lack of a plan B show that Syriza is guilty of poor planning or perhaps no planning at all. Now Greeks face a bank holiday on Monday and capital controls. In the appended video from January of this year, Krugman was even then predicting a Greek default on its debt well before the election of Syriza.

Syriza government in Greece tries to sell sell out as a success

Athens - After presenting proposals for a debt deal that reneged upon most of Syriza's campaign promises that were rejected by Germany, the Syriza Greek government claims it won the battle for the debt deal.

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In actuality, with Germany taking the lead, Greece was forced to accept extension of the original bailout deal that includes all the bailout conditions of the original memorandum of agreement. It did not receive a six-month loan period as it wanted but only four months. The loan period could not expire at a worse time since large debt repayments will be due shortly after. This will provide leverage for EU officials to press even more demands on the beleaguered Greek government. The Syriza government had insisted that it did not want an extension of the existing bailout agreement nor would it deal with the Troika of the European Commission, European Central Bank or the International Monetary Fund. It has agreed to an extension of the original bailout and supervision by the Troika but under a new name. They are now called simply "institutions." There will be no debt write off, one of Syriza's key campaign promises. Greece agrees to honor all its debt obligations.

In spite of all this Alexis Tsipras, the Greek prime minister, said in a TV interview: "Yesterday we took a decisive step, leaving austerity, the bailouts and the troika behind." Tsipras is wrong on every point. Even Reuters notes the discrepancy between what Tsipras claims and the reality:Tsipras declared Greece was "leaving austerity, the bailouts and the troika behind". Nevertheless, government plans must still be approved by the re-named troika, although Tsipras won election last month on a pledge to end the humiliation of foreigners dictating Greek economic policy.

The new loan is in effect a tranch of the old bailout and he has to present reforms the Greek government intends to implement — and these must be approved by his EU partners and the IMF, in effect the old Troika under a new description: Finance Minister Yanis Varoufakis said the reform promises would be ready on Sunday and submitted to Greece's EU and IMF partners in good time. "We are very confident that the list is going to be approved by the institutions and therefore we are embarking upon a new phase of stabilization and growth,"

It will be interesting to see what these new reforms will be. I expect that some will deal with fighting corruption but there will also probably be tax reform of some sort. Greece has always had trouble with tax collection and both the government and the EU would like to see tax revenues increase. One thing is certain the type of reforms that Syriz demanded in its campaign for the recent elections will not be on the table. Only reforms acceptable to the Troika — sorry I meant "institutions" — will be on the table. These will not include rehiring laid off public workers, increasing minimum wages, or stopping key privatizations. Even Tsipras remarked: "We won a battle, not the war.The difficulties, the real difficulties...are ahead of us."

The Irish finance minister, Michael Noonan, noted that the deal simply gives the Greek government a short reprieve even after reversing their electoral position and gaining virtually nothing from the EU in return. However, it did avoid bankruptcy and having to leave the euro zone.

One promise that Tsipras and his finance minister Vourafakis did keep and that was to do whatever was necessary to achieve a deal. Even though Tsipras kept abandoning campaign promises during negotiations he at the same along with his finance minister often spouted radical rhetoric completely at odds with what he was doing. About 80 percent of Greeks supported the tactics used by their government negotiators.

The vast majority of Greeks do not want to leave the euro zone and no doubt are relieved that at least a deal has been made to keep them in the zone for now. Tsipras said:"I want to say a heartfelt thanks to the majority of Greeks who stood by the Greek government ... That was our most powerful negotiating weapon. Greece achieved an important negotiating success in Europe.".One veteran leftist, Manolis Glezos, was critical of the deal. Glezos is a Syriza member of the European parliament. On his blog he wrote: "I apologize to the Greek people because I took part in this illusion. Syriza's friends and supporters ... should decide if they accept this situation."In contrast, Finance Minister Varoufakis was confident even about the reforms he was forced to submit on Monday: "We are very confident that the list is going to be approved by the institutions and therefore we are embarking upon a new phase of stabilization and growth." An anonymous official said that the reforms included a crackdown on tax evasion and corruption. There is no mention of reforming austerity conditions since the Greek government has already agreed those will continue for at least four months. After the four months many predict that Greece will need another rescue program. As the Irish Finance Minister Noonan put it: "Once you get them into the safe space for the next four months, there'll be another set of discussions which will effectively involve the negotiation of a third program for Greece."

Costa Panagopoulos, head of the polling firm Alco, said that the initial reaction to the deal was relief that Greece would remain in the euro zone. He thought that Greeks might even accept Tsipras' claim that the Troika was no more. After all, the term does not appear in documents. The appended video demonstrates Varoufakis' skill in portraying the reality as something completely different. Perhaps, Varoufakis could be featured in a new Monty Python comedy skit.

Greeks in Thessaloniki protest austerity measures

Thousands of Greeks mount protests at new austerity measures imposed to meet terms of the bailout provisions imposed by the Troika

In Thessaloniki, Greece's second largest city, protesters marched by the thousands during an annual fair. The protest was against a new round of wage and pension cuts demanded by the international lenders, the Troika, in exchange for more money to stave off bankruptcy.

Fifteen thousand trade union members and leftists took part in the protest against the almost 12 billion euro package of austerity measures. Prime Minister Antonis Samaras has introduced the savage cuts to convince EU and IMF inspectors that Greece is making progress on reforms required to receive more funds.

Some protesters burned EU flags but the protests were largely peaceful and about 3,500 police simply looked on. Nearly one in four Greeks are now jobless. Thousands of businesses have closed down as well. At the festival Samaras made only a brief appearance to defend the planned cuts rather than making an annual economic policy speech as was the custom.Samaras said:

"We are trying to minimize the pain from the cuts as much as possible but we have to make the cuts, because there is no other way..I am telling you the truth, there is no other way."

The leader of the main opposition party Alexis Tsipras of the SYRIZA party criticized Samaras for his short low-key speech:"

The prime minister came and left like a thief - perhaps he is ashamed,"

SYRIZA opposes the bailout terms. While Samaras and his Finance Minister Yannis Stournaras have won praise from some European officials for attempting to meet the terms of the bailout they face growing opposition within Greece. Samaras is hoping that Greece can be given two more years to implement the austerity measures. As of now they are slated for 2013 and 2014. Already the economy has been in recession for years. In this year alone the economy is expected to contract by 7 per cent.

As the Troika conclude a review of Greek progress in the coming days more protests can be expected. The results of the review will determine if Greece will receive the next installment of bail out money. If it does not receive the money Greece could default on its debt.

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.

Greek election results Sunday are uncertain

A day before the election on Sunday June 17th many Greeks are angry now and anxious about the future. Stathis Psillos a philosophy prof. at the U. of Athens said:“People are in agony about their savings; their jobs, their safety, their future (and their children’s future),”

Polls have not been allowed for the last couple of weeks of the campaign but the two front runners New Democracy that is in favor of the bailout deal and Styriza that would rip it up and start over are very close to one another. Even New Democracy the center right party that came first last time wants to change some of the terms of the agreement although it voted in favor of the original deal.

The party that comes first gains an extra 50 seats in parliament under the Greek system so is the most likely to be able to form a coalition. However New Democracy was unable to cobble together a coalition last time around. If Styriza comes first there are several parties that it could probably bring into a coalition and form a government that would want to renegotiate the whole bailout deal. This result might result in markets falling throughout Europe and elsewhere. However as of the close Friday U.S. markets were still positive.

Many analysts are now predicting that Greece will eventually be forced into leaving the euro, that this is just a matter of time. For more see this article.

Greece:New Democracy and Syriza parties neck in neck

The last polls before polls ceased showed that the left Syriza party and the right of center New Democracy party were quite close. The very last poll showed Syriza ahead but only slightly. The elections are on June 17.

Syriza rejects the austerity plan negotiated by New Democracy and PASOK the socialist party who before were a coalition. However Syriza wants Greece to stay with the Euro as do most Greeks even those who reject the austerity provisions. New Democracy is in favour of the bailout plan. Neither party will probably have a majority on their own. However whomever comes first gets 50 extra seats which will make it easier for them to form a coalition with another party. New Democracy may be able to make a deal with PASOK as before but this is not at all certain. Syriza may be able to enlist the help of the Democratic Left or perhaps the Communist Party. However last election the Communist Party showed no sign of wanting to joing a coalition. For more see this Al Jazeera article and the attached video

Syriza jumps into lead in Greek polls

There are still more than two weeks left before the June 17 Greek vote but public opinion is trending back in favor of Syriza the largest anti-austerity party that came in second during the last elections.

The poll published by Kathimerini shows that Syriza has 31.5 per cent of the vote a gain of 1.5 per cent over a week. Support for the first place finisher last time New Democracy is at 25.5 per cent, little changed over the week. The Socialist Party PASOK that together with New Democracy support the austerity package has decline 2 per cent to 13.5.

The Democratic Left had 7.5 per cent and Independent Greeks 5.5. The Communist Party (KKE) also had 5.5 per cent The right wing Golden Dawn had 4.5 per cent.

Seat projection on the basis of the percentages would give Syriza 134 seats. Presumably this includes the 50 seats for coming first. New Democracy would obtain 68 seats. PASOK 36. The Democracit Left would obtain 20 and the Communist 15.

The same poll surprisingly shows that 58 per cent of Greeks think that New Democracy will win and only 34 per cent see the left as winning. The leader of the Democratic Left is far more popular than the leader of Styriza Alexis Tsipras.

If the seat projections are correct then Syriza could gain a majority in coalition with the Democratic Left. The Communist Party so far has ruled out joining a coalition.

Earlier polls indicated that New Democracy could win. If Styriza wins the austerity deal will be repudiated and Syriza demands renegotiation. Until the actual election happens markets will no doubt remain volatile. Many analysts think that Greece dropping the Euro is most likely. 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.

Attempt to form Greek coalition government fails again

According to this article the third attempt to form a coalition government has failed. The PASOK socialist leader Evangelos Venizelos was able to bring the major New Democracy party into his coalition and at first it seemed that he had also the agreement of the Democratic Left a smaller party to join in the coalition.

However, the Demiocratic Left insisted that the 2nd place leftist Styriza party also be part of the coalition. Stryiza is strongly against the austerity plans and refuses to be part of any pro-bailout coalition.

Venizelos will speak to the president tomorrow:"I will brief tomorrow the president of the republic. I hope that during the phase of talks with the president, everyone will think more maturely and more responsibly," The deal with the Democratic Left would have given the coalition 168 seats in the 300 seat parliament. However if any one of the three were to vote against a measure along with the opposition a bill would fail.

Assuming there is no last minute agreement to form another coalition when Venizelos reports to the president, the president himself will try one last time to form a emergency salvation government by summoning all leaders. If that move fails then the president could call new elections as early as Sunday or Monday.

Styriza probably has little interest in forming a coalition. Opinion polls show that if new elections are held that its vote would go from 16.8 per cent to almost 28 per cent and win about 128 seats. The first place finisher gets 50 extra seats and this would give Sytriza enough seats to rule on its own. If that happens goodbye bailout deal. For more see this article or here.

Second attempt to form a Greek coalition government fails

The leader of the second place finisher in Greek elections the Syriza party has admitted failure today in his attempts to form a coalition government. Alexis Tsipras said he failed because he insisted on rejecting the austerity measures required by the Troika in return for new bailout money.

Tsipras talked only with New Democracy and PASOK the first and third parties in election results. He might have tried a left coalition but the Communist Party has indicated it would not join in a coalition.

The leader of the third running party Evangelos Venizelos now has his turn although it seems unlikely he can be successful. If he fails then there will be elections in June and a long period of crisis. There may be a great deal of pressure on PASOK and New Democracy to form another coalition to avoid elections and carry on with reforms.

If Athens rejects the austerity deal the money that was promised in June will probably not be given. Both the EU and Germany have made it clear they expect Greece to keep its commitments if it expects to have new money.

In the short term the EU will provide an installment of 6.7 billion to meet immediate debt obligations. Representatives of the Troika (European Commission, European Central Bank and International Monetary Fund) have aborted a trip to Athens that was to happen in mid May. No date has been set for another meeting. The Troika are obviously standing by until the situation in Greece becomes more stable or at least clearer! For more see this article..

Greece: No coalition government in sight as yet

Alexis Tsipras leader of the 2nd place Styriza party has so far been unable to form a coalition government. Given that the two other largest parties support the bailout deal while his party opposes it, it seems unlikely that he can form a government. If he fails then the task will fall upon the third place PASOK socialist party. However, it too is unlikely to be able to form a coalition. If this happens there will need to be new elections in June.

The leader of the New Democracy party Samaras was himself unable to form a coalition earlier. International creditors have been warning Greece that if the austerity measures are not implemented then bailout money will not be forthcoming in June. The uncertainty resulting from Greek politics is one of the reasons stock markets in many countries have declined of late. Greece has also promised that it will pass new austerity measures worth 18.9 billion next month as well as implement agreed upon measures. Given the political situation it seems quite unlikely that this will happen.

The Communist Party has refused to join any coalition government and the right wing New Dawn party has not been contacted by any one as yet since it is regarded as too extreme apparently. Tsipras wants Greece to pull out of the bailout agreement. This position puts him at odds with both New Democracy and PASOK. The New Democracy leader said"Denouncing the agreement, as [Tsipras] proposes, will lead to immediate internal collapse and international bankruptcy, with the inevitable exit from Europe," However, Samaras was open to amending the agreement.

Greece received two bailouts worth 312 billion dollars. In return salaries and pensions have been cut, state jobs eliminated, and new taxes imposed. The result has been continued recession now lasting five years.

The German foreign minister said that Greece will not obtain any further loans unless it continues its austerity policies. He said:"Germany would like to keep Greece in the euro zone but whether Greece actually does remain in the euro zone or not lies in its own hands," However it looks more and more as if Greece will not meet the demands of the EU and will end up bankrupt and leaving the Euro zone. For more see this article.

Greece: Leftist Syriza party to try to form government

In spite of warnings from the EU that Greece must stick to the bailout deal the country seems in no mood to fall in line with those demands. Greece is in its fifth year of recession and the populace is fed up with austerity policies.

Antonis Samaras whose New Democracy party came in first in the polls was unable to cobble together a coalition government. Samaras said:"I did whatever I could to secure a result but it was impossible," Syriza and a small leftist party rejected Samaras' offers. Two other relatively large parties the nationalist Independent Greeks and the Communist Party refused even to meet with Samaras. The PASOK party also could not agree to a coalition.

If no coalition government can be formed new elections could take place as early as June just as Greece has to deal with new austerity measures. In spite of the fact that voters obviously reject the terms of the bailout plan Angela Merkel said:"It is of course of utmost importance that the programmes in Greece continue," The second place Syriza party is attempting to cobble together a government. However any government formed will be opposed to the terms of the austerity plans imposed on Greece by the EU.

The leader of Syriza AlexisTsipras will be given three days to try and form a government. An Al Jazeera reporter said:"There are fewer chances today, I think, of forming consensual government than we had yesterday when the largest party, the Conservatives, was trying its hands at it." Some analysts warned that if no government is formed that supports the austerity measures funds might be cut off and Greece might exit the Euro zone altogether. For more see this article and also this article.

Greece: Anti-bailout deal parties surge in exit polls

Results from exit polls are listed by Bloomberg here. The results so far suggest that even together the two biggest parties New Democracy (center-right) and PASOK(socialist) will not have enough seats to form a coalition government.

Although New Democracy had a slight lead according to one poll it was only between 17 and 20 per cent of the vote. Behind them was the other main party PASOK with between 14 and 17 per cent. However the anti-bailout party Syriza came from nowhere to get 15.5 to 18.5 per cent of the vote. Independent Greeks another anti-bailout party got as much as 12 per cent of the vote as well.

Martin Blum an asset management official at Ituba Capital said:“It’s a meaningful bearish shock to the lazy market consensus that New Democracy and Pasok could form a majority coalition,” The two old line parties need 151 seats to form a majority in the new parliament. It looks as if they may not reach that level.

Greece has received two bailouts amounting to 314 billion dollars altogether. In return the government has imposed pension and wage cuts as well as higher taxes. It is also privatizing state assets. If the new government cannot continue and even increase austerity measures the funds may stop flowing. International lenders want to know by June how Greece is going to achieve 11.6 billion euros in savings in the next two years.

The Greek economy is in a shambles with unemployment at almost 22 per cent. Among youth,, the figure is about 51 per cent. For more see this article. 
   Results are shown as they come in at this site including vote percentage for each party.

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.

Greek coalition partners poised to win May election according to polls

In spite of huge demonstrations against austerity measures and widespread anger at the government the two main parties in the governing coalition may very well have enough seats to renew their partnership.

The PASOK socialist party and the New Democracy conservatives have regained support. One polll shows New Democracy at 21.9 per cent with 108 seats a gain of 4 per cent since February. PASOK the socialist party was up even more at 17.8 per cent and 47 seats versus 9.8 per cent in February.

In total the two would have 155 seats in the 300 seat assembly. That is just over half however and there are two weeks left in campaigning. The final poll could end up with a situation where other parties would need to join the coalition for a majority.

Even with these increases in support the parties are at almost historic lows in popularity. Eight other parties will probably win seats. An extreme right party Golden Dawn could win 14 seats, Fringe parties opposed to the bailout are gaining support.

Polls show that most Greeks favor a coalition of leftist parties but that is certainly unlikely to happen. While many Greeks are wholly opposed to the austerity measures a full 77 per cent want Greece to remain in the Euro zone and do what it takes to achieve this. If that is so then opposition to austerity measures is likely to be without any effect. For more see this article. The Greeks can look forward to a longer recession, cuts in salaries and pensions, and the sell off of their state assets.

More Greek protests over austerity after pensioner suicide

A 77 year old pensioner shot himself outside the Greek parliament buildings yesterday. A suicide note he left criticized the austerity measures implemented by the government including reducing his pension to nothing the note claimed.

Protesters threw rocks and Molotov cocktails outside the parliament buildings. In return police fired tear gas and flash grenades.

The suicide note by the 77 year old read in part:"" "The government has annihilated all traces for my survival, which was based on a very dignified pension that I alone paid for 35 years with no help from the state..."And since my advanced age does not allow me a way of dynamically reacting... I see no other solution than this dignified end to my life, so I don't find myself fishing through rubbish bins for my sustenance."

Evangelos Venizelos, a former finance minister and now head of the socialist Pasok party that holds a majority in the coalition government, called on politicians to refrain from "political commentary" Venizelos said they should show solidarity and togetherness. Imagine he is calling on all Greek politicians even socialists to show solidarity not with the complaints of the senior about his plight but with financial capital that is imposing these austerity measures so that Greece can obtain bailout loans! Do not make political statements. Of course by his remarks Venizelos himself is making a very significant political statement.

By last night there were dozens of messages written under the tree where the senior killed himself. One message was "It was a murder, not a suicide", and another "Austerity kills".

The protesters today had similar messages chanting "This was not a suicide, it was a state-perpetrated murder" and "Blood flows and seeks revenge". According to Reuters suicides have increased 18 per cent in Greece since the austerity measures. Just in the city of Athens alone suicides increased more than 25 per cent last year.Unemployment is now running at 21 per cent. For more see this article.

The last quarter of 2011 saw the Greek jobless rate hit a record high at 20.7 per cent. Greece received a 130 billion euro bailout. However to receive the bailout Greece had to make severe budget cuts including reducing the number of government jobs.

The public and especially unions are angry. Consumer confidence is declining as well. The statistics agency ELSTAT indicated that jobs were being lost at an increasing rate. The unemployment rate of 20.7 in the last quarter of 2011 compares to 17.7 in the third quarter and 14.2 per cent in the final quarter of 2010.

Worst hit are Greek young people. In the 15 to 29 age range almost 40 per cent are unemployed. A year earlier the rate was 28 per cent itself a very high rate.

The Greek economy shrank 7 per cent in 2011 and is expected to remain in recession in 2012 for the fifth year in a row. Under these conditions it is difficult if not impossible for Greece to increase revenue and pay off its debts. No doubt the solution according to the Troika overseeing the bailout will be to demand further belt tightening.

Greece's December jobless rate was about double the euro zone average of 10.6 per cent. However, Spain's rate was even worse in the last quarter of 2011 at 22.9. For more see this BNN article.

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.

Alain Badiou on the Greek Crisis

Alain Badiou is a French Philosopher and activist. For more on Badiou see this article. The full article titled "Save the Greeks from their Saviors". The article is translated from French into English. There seem to be a few glitches but it is still quite readable on the whole.

Badiou starts by noting the high unemployment in Greece and other features caused by the austerity measures. There are 25,000 homeless in Athens alone. A full thirty per cent of Greeks now live below the poverty line. Under these conditions the saviors of Greece claim that the Greeks are not trying hard enough.

The solution is to increase the dose of austerity. The right to work is abolished through eliminating jobs. The plan makes the poor even poorer and eliminates much of the middle class.

Badiou sees Greece as a model but its not about saving Greece. It is about allowing time to save creditors. NOTE: The creditors however get only a fraction of their investment back! The model is of bleeding public services so that public social services, schools, etc. fall into ruin. Only the rich will be able to access health care and workers will face worse working conditions and ever more precarious job security.

In order for the neo-liberal offensive to carry out this model democracy must be jettisoned. Technocratic government is installed without regard for popular sovereignty. When the former Prime Minister Papandreou dared to suggest there should be a referendum on austerity measures he was forced to resign. He is now replaced by an unelected technocrat. But even that is not enough as Badiou points out.

Badiou sees the Greek situation as one where politicians give a blank check to financial experts and bankers. They give up any power to decide on their own.

The deal negotiated with the Troika will involve an EU account that will be paid directly to Greece but only for servicing debt. Greek revenue will be mandated as having as the first priority payment of the debt. In fact Greek accounts will in effect be managed to make debt payment by law the main priority. As Badiou notes the privatization requirements will be a great boon for buyers.

Badiou notes that with the help of the rescuers the debt has gone into free fall now reaching 170 per cent of GDP. In 2009 it was 120 per cent. This further weakening has created a situation where Greece cannot resist its creditors and feels forced to yield to what he calls the blackmail of austerity.

Badiou portrays the situation in Greece as a war being conducted by finance, politics and law. This is a war in which the financial class takes from the enemy the social benefits and democratic rights of society. A new social model is being developed in which the needs of finance capital triumph over all else

The model will be replicated throughout Europe with austerity measures being seen as painful but necessary and ultimately healthy as restoring countries to being competitive.

In the face of what is happening people must speak up in defense of basic democratic rights and social solidarity. The neo-liberal climate of fear must be countered. While Badiou does not suggest positive solutions to the Greek crisis he notes that the first order of business should be to show solidarity with the Greek people in resisting what is being imposed upon them.