The Greek Middle Class: 1955-2012

Reader please note, this is the unofficial obituary . . .

The Greek Middle Class (hereafter “GMC”) passed away last week, after several years of deteriorating physical and emotional condition. Cause of death is currently being investigated, but decades of spousal abuse from the Greek Public Sector (“GPS“ also known as Big Fat Greek Public Sector “BFGPS“) is believed to be contributory to GMC’s early demise, as are, unfortunately, the conditions in the Greek public hospitals, and lack of heating oil.

GPS is the successor to GMC’s few remaining assets, and has successfully fended off claims from GMC’s relatives in America, Australia, Canada, and elsewhere. GPS wrote a moving death notice but requested “that the family’s privacy be respected . . . [and] particularly that these slanderous and hurtful allegations of spousal abuse cease.”

The funeral was a somber affair, paid for from GMC’s estate. Other middle classes, particularly from Italy, Spain, Portugal, and Ireland, were too ill to attend, and GPS pointedly refused to allow the German Middle Class to attend, calling them, predictably, “Nazis.” The Greek plutocrats were well represented, with lovely bouquets in tow. Father X, formerly of Vatopedi and lately confessor to the grieving GPS, gave a moving graveside eulogy pointedly praising the spousal solidarity exhibited by GPS, and asking for forgiveness for the hapless GMC. In spite of GPS’s advanced state of mourning, GPS still managed to record the eulogy on a recently acquired I-Phone 5.

GMC was born via a difficult birth circa 1955, the birth records were destroyed in the 2007 fire that charred the Peloponnesus so exact date of birth is uncertain. GMC and GPS were third cousins, with business and political interests. GMC was a sensitive and articulate adolescent, but constantly in the shadow of the plutocrats and GPS. Some of GMC’s relatives decamped to America and Australia as a result, but after the marriage of GMC and GPS in 1981, a certain domestic harmony ensued. GPS appreciated GMC’s willingness to work and eventually GMC rose to regional manager of the other Balkan Middle Classes, in the latter 1990s.  GMC also bankrolled their daughter’s education in Britain, at City College in London.

According to a copy of GMC’s diary, smuggled out of the house by a relative from Toronto, the trouble really began in the late 1990s when GPS forced GMC to agree to signing off on a false financial statement to join the Euro Club. Membership had its privileges, though, and for the next few years, the couple partied hard, not just in Mykonos with the VIPs, but all over the world. For a poor kid from the village, it was heady stuff. But keeping up with the VIPs, both local and foreign, was hard going and GPS began to skip paying bills while demanding more and more from GMC’s paycheck. Blackmail and verbal abuse became the order of the day, and GPS actively stirred both the poor and the rich against GMC, further isolating GMC. Also, relatives from America and peers in Europe were pushed away, and eventually GPS’s bad manners and temper resulted in GMC becoming friendless. GMC’s long history of enabling GPS also eroded others’ respect for GMC.

Just as GMC’s health began to deteriorate, GPS forced GMC to work harder, and constantly demanded GMC’s pay. GPS’s health insurance proved to be less than effective, because GPS had stopped paying the premiums, and GMC was not allowed to seek help from relatives or from peers. By this summer, GMC’s pallor had turned a deathly grey, even as GPS was planning yet another ponzi scheme. With the first serious cold snap, and no money for heating oil, GMC gave up the ghost. A few days before, neighbors did hear a muffled argument about yet another financial demand from GPS, but GPS insisted that the neighbors misheard.

A few days after the funeral, GPS was seen in Mykonos arm in arm with VIPs, hardly a grieving spouse.  Among those in GPS’s entourage included officials in charge of the inquiry into GMC’s death.  A finding is expected shortly.

We all eagerly await the findings of the inquiry.

Greece under Sanctions? A Yugoslav Deja Vu . . .

 

Greece, like Yugoslavia under sanctions, is starting to be cut off from the world economy.  This time, it is not due to war, but rather economics, and, let’s face it, politics.  The debt binge of the first decade of the new millennium was going to require massive belt tightening to pay under any circumstances, just as it has in Ireland, Portugal, now Spain and likely soon others.

The inability of Greece to reform, and even, on May 6, to elect a coherent government has resulted in the market taking the situation into its own hands.  Greeks are taking advantage of the EU’s lack of currency controls to take their money out of the country, by the billions.  Investors are cutting and running.  Those who sell to Greece demand payment up front; commercial insurers, refuse any Greek business.   And just days after the election, Russian Natural Gas behemoth Gazprom warned that the spigot will be turned off if Greece does not pay up.

Effectively Greece is under economic sanctions, dictated not by politics but by the market.  A nation with a huge trade deficit in energy and even food is basically being cut out of world markets.  This harkens back to Yugoslavia in the 1990s, though the Serbs had the advantage—an important one—of being utterly self sufficient in food and had a far, far lower level of economic integration with the rest of the world.  Though they had serious indebtedness (which contributed not a little to Yugoslavia’s demise) their debt and trade deficit was far less than their Greek neighbors have today.  As such, though the politics are different and (thus far) there is no war and violence, the sanctions effect on Greece may be eerily similar.

Of course, Yugoslavia in the 1990s suffered some of the highest inflation in world history, which thus far Greece has not.  True, but whether this element of the Yugoslav equation comes into play is entirely a matter of what happens on the June 17 election.  If Tsipras comes out on top and puts his imbecilic and ill-defined plans into play, Greece will likely be bounced from the Euro and hyperinflation will no doubt begin, complicated by not having a legacy currency already in existence and by the scarcity of vital products (food, medicine, fuel) due to the virtual sanctions on Greece.

Nearly twenty years on, Serbia is still reeling from the twin blows of sanctions and hyperinflation.  The damage to national wealth and, perhaps more importantly, the national psyche, is palpable everywhere.  Greece today is at the threshold of similar pain, and real prudence is necessary to avoid the abyss into which we now stare.  One of the shoes has already dropped, the other is teetering at the edge.

Tsipras must not win.

Greek Public Sector Unemployment, or Lack Thereof

According to The Economist, dated 14 January 2012, of 470,000 jobs eliminated in Greece since 2008, “not one has been from the public sector.” Reformwatch.gr seeks to chronicle and to track the pace of reform in Greece necessary for the country to survive as a developed nation in a community of developed nations. If the above figure is true, or even remotely so, there has clearly been no reform.

Actually the quote is not technically correct as there have been many contract employees released from public sector and especially local government administrative slots over the past 18 months, but Minister of Public Sector Reform Reppas has indicated that no public sector employee will be dismissed, in the purest form of cheap electoral politics. Clearly, some Greeks are more equal than others.

We are distressed by the relaxed approach the PASOK elements in the current Greek government have taken to mergers and eliminations of non-essential public sector entities (originally laid out under George Papandreou and handed to Vice PM Pangalos for actual implementation), choosing to “except” a large number of the personnel that had been designated for firing or the “labor reserve” once their employing agencies were abolished/merged.

As Solon beautifully expressed in last month’s Private Sector Death Spiral posting, the current existential financial crisis in Greece has become an opportunity for the Public Sector to squeeze the life out of the remaining private sector, with the apparent blessing (or gross negligent disregard) of “The Troika.” The insanity of this situation ought to be self-evident. We are frequently asked why the Troika allows such back-pedaling on administrative reform. It is as if “Reform” in Greece has taken a page from Stalin’s Five Year Plan playbook. Stalin destroyed the kulaks, the small independent farmers, to finance his industrialization drive. In Greece, the private sector and the entrepreneur might not be going to the gulag, but they are increasingly out on the street, homeless, in order to finance the unproductive but protected Public Sector. This lack of logic would offend even Stalin.

Not only do figures like those quoted by The Economist demonstrate that the purpose of reform has been defeated and perverted, it also opens wide the possibilities for severe social unrest, as the private sector who suffers the bulk of the pain sees that the Public Sector is either partially shielded from its effects, or, more ominously, dishes it out. All of this at a time when Greece, still in extensive deficit spending mode, needs international support to pay monthly pensions and Public Sector salaries. Greece deserves better.