New Greek Government, Same Greek Woes

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Now that Mr. Samaras’s party has bought in, the political pain will be shared across the board. Where before the previous bailout package and accompanying austerity measures became easy targets for the opposition to criticize Papandreou and PASOK, now his political opponents will actually be charged with helping to run the government, and will be forced to act more responsibly.

Samaras acknowledged as much, saying, “I can sense the agony of the Greek people,” adding, “Everybody has to act responsibly now and send a message of stability abroad to the people of Europe and the people of our country too.”

To describe the set of austerity measures that Greece is to implement as “draconian” is not an exaggeration. A few examples:

  • Monthly pensions above 1,000 euros to be cut by 20 percent; monthly pensions at the same level for existing retirees under 55 to be cut by 40 percent.
  • Health spending to be cut by 310 million euros ($432.2 million Cdn) in 2011 and a further 1.8 billion euros between 2012 and 2015.
  • Education spending to be trimmed through merging or closing of 1,976 schools.
  • The tax-free income threshold to be lowered from 12,000 to 5,000 euros.
  • In an effort to raise money for the growing number of unemployed, the country is to introduce a “solidarity levy” of between one and five percent per household, which will be raised twice in 2012.
  • Taxes on gas, cigarettes and alcohol to increase by one third; luxury taxes to be levied on items like pools and yachts.

Also, the government is to sell off and privatize several state concerns including telecommunications giant Hellenic Telecom and sell stakes in various banks, utilities, ports, airports and land holdings in 2011/2012.

One prominent European think tank, the Organization for Economic Co-operation and Development (OECD) says the bailout and austerity measures will work as long as they are fully implemented. But initially, there is little doubt that there will be real pain and more contraction in the Greek economy, which has shrunk by an astonishing 15% since 2008. The budget cuts and layoffs will only lead to a more severe recession in the short run, which will add to Greece’s budget deficit. The question facing European leaders is: will the bailout be enough to cauterize the wounded euro and get Greece back on its feet before the money runs out?

In the end, it will be up to the new prime minister and his coalition partners to try and make the plan work. Just who might take Papandreou’s place is the subject of intense speculation. One name prominently mentioned in Greek media is Lucas Papademos, a former deputy president of the European Central Bank. A world-renowned economist, Papademos is a non-partisan technocrat who would head what is being described as a government of technical experts to act as a caretaker for the next few months until elections are held. The Wall Street Journal reports that Mr. Samaras would have no objection to Papdemos as caretaker, which could mean he might be named to the position as early as Monday.

The EU has made it clear that it wants to hear positive developments at a meeting of finance ministers on Monday, including a guarantee of Greek political stability for the near future. Greek Finance Minister Evangelos Venizelos is set to address the group and try to reassure them about the negotiations for a new government. But the political wrangling for advantage is far from over and Venizelos will have a difficult job convincing the ministers, unless the president and parties, set to meet on Monday, can hash out an agreement.

Papandreou, son and grandson of former prime ministers and scion to one of the most beloved political families in Greece, was simply used up at the end. His tumultuous term in office began with a landslide socialist victory in 2009. Early on, during the initial stages of the economic crisis, he was shocked to discover that previous governments had been cooking the books on the budget deficit. He also took a beating during a series of austerity measures that only seemed to increase the pain. Yet the prime minister remained surprisingly resilient. In the process, however, he alienated friend and foe alike, leading to his current predicament where he has few allies in government, and no confidence in his leadership by the Greek people.

His exit settles nothing, nor solves anything. The Greek tragedy will continue and European nations will continue to scramble in order to avoid the the prospect that the tiny nation’s economic woes will lead to the break-up of the EU and the death of the euro.

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  • Steve Chavez

    The Greek Communist Party (GCP) is leading the protests and our Communist Party USA declared official "Solidarity" with the GCP a few months ago. Our CPUSA also declared "Solidarity with the Iraq Communist Party" a few years ago even as the ICP was aiding in the insurgency and the killing of our soldiers.

    • PhillipGaley

      Whadya know, . . . an' here I thought the Communist Party was, . . . well, . . . maybe it's the beast of Revelation, whose deadly wound was healed, . . .

  • Steve Chavez

    Part Two: When the CPUSA led and directed "Audacity of Hope" Hamas flotilla was stopped in Greek ports, Medea Benjamin of Code Pink, and other flotilla members went to join in the Greek protests. (USTOGAZA.ORG).

    Code Pink also advertised the Sept. 17 Days of Rage which began the Occupy Wall Street but once the movement declared to be leaderless, Code Pink quickly took the advertisement off their website and the CPUSA was also silent but you can guarantee that their members, and front members, conceived and are directing the OWS with hopes of causing anarchy and even leading to class warfare or a civil war between races especially if Obama loses by a close margin.

    • mlcblog

      From what I saw in organizing meetings back in the late 1960's, this rings totally true!! thank you, Mr. Chavez, for sharing your observations.

  • Fergie

    If anyone knows how the IMF works, they will realize when they read from this article, “Also, the government is to sell off and privatize several state concerns including telecommunications giant Hellenic Telecom and sell stakes in various banks, utilities, ports, airports and land holdings in 2011/2012.” This is another natural and infrastructure grab by the IMF.

    Sounds like a conspiracy theory, but sadly it isn’t. The IMF did this to Indonesia and now the people there work for pennies, no health care, no ability to leave the Nike plant, the GAP plant, and others run by South Koreans. Their natural resources leave their country at an alarming rate with none of the profits returning to the people there, but going into the pockets of those who bought up the different landholdings, like mining companies destroying the landscape. The people have become nothing more than slaves to the countries in the IMF and sadly to say, BIG AMERICAN BUSINESSES ARE THE MAJOR PLAYERS.

    Each of the failing EU states will find themselves enslaved by the IMF if they don’t do something soon to stop their implosion.

    • mlcblog

      sounds like a power elite of some sort, once again laying claim to things that belong to us

      How dare they?!!! and I am a proponent of free enterprise, but there have to be rules and respect. Otherwise, it's piracy, as seems to be so in this case.

      Raping and pillaging of the people, and ruthlessly so. We need to fight more than ever to preserve our Constitutional way of life. It was based on a strongly moral and upright people who will always win and be blessed if they will just persevere.

    • Matt

      The IMF also screwed Argentina.
      Contrary to popular belief, The IMF is not your friend.

  • mrbean

    My fellow Americans, there are only two ways to deal with a 15 trillion dollar and growing debt problem:

    1) Pay it off

    2) Default

    The US has no chance at all of ever paying off its debts, which means some form of fraudelent default and articificial restructuring is coming our way in the future. And when this hits, it will make the Greece and EU defaults look like a picnic.

    • PhillipGaley

      . . . . 2.1) make regular installments

      2.2) get someone else to pay it off

      2.3) get someone to make installment payments, . . .

    • Fred Dawes

      Its 78 trillion not 15 and the USA Will become some monkey third world state. But that maybe justice, after-all we asked for it.

  • Seamystic

    For all Democracies!

    Except for a Gender addition, this is a cry of the past and present, by the original Poet.

    This specifically fits the National Debt turmoil forthcoming, WORLD WIDE.
    Check chapter 2 & 3 at: http//


    God, give us men and women! A time like this demands
    Strong minds, great hearts, true faith and ready hands;

    Men and Women, whom the lust of power does not kill;
    Men and Women, whom the spoils of office cannot buy;
    Men and Women, who possess opinions and a will;
    Men and Women, who have honour, who will not lie;

    Men and Women, who can stand before a demagogue
    And damn his treacherous flatteries without winking!
    Men and Women, sun-crowned, who live above the fog
    In public duty, and in private thinking;

    For while the rabble, with their thumb-worn creeds,
    Their large professions and their little deeds,
    Mingle in selfish strife, lo! FREEDOM WEEPS,
    Wrong rules the land and waiting Justice sleeps.

    Josiah Gilbert Holland (1819-1881)

    • StephenD

      Very Apropos. Thank you for posting it.

  • UCSPanther

    Once this economic crisis starts spreading like the fire it is, I wager that once it plays out, the EU will be no more…

    • Matt

      The 2 largest economies being Germany & France, will never be able to support the failed & or failing economies. The soon to arrive collapse of the EU will also have a severe negative effect on the US.
      The level of debt is such that not only will we see a collapse of the EU & US, but in broader terms the potential collapse of the banking system worlwide.
      Bailing out failed institutions or countries due to poor fiscal management only serves to create a bigger problem at a later date.
      Cutting Greece loose from the EU & letting them default is a smarter option.
      Will the EU bail out Spain & Portugal too?

      • mlcblog

        The EU was doomed to fail since its inception. People just don't tick that way.

  • Fred Dawes

    Once more what about the system and its banks? 180 trillion someone or all of us must pay that bill for the system, the new greek government means nothing its all about the bank payment, and as people have said the bankers will walk on this crimes and the poor will pay. The funny thing is most have forgotten about 2008.

    By the way we are next, so be happen living in a third world America.

  • Oleg

    Pretty much the blind leading the blind with the Greek debt crisis. You have groups of French and German Socialists (don't care what brand name they use) proposing solutions to another group of socialists (Green politicians) how to solve a debt problem. So big spending and big government types telling another group of profligate spending big government types how to solve their problems, it's like a group of drunks telling another drunk how to quit drinking.
    By the measures they have already taken, largely through hiking taxes, the Greek government has pretty much gutted whatever private enterprise they had left. Every time they hike taxes they destroy business, destroy jobs, and tax revenues go down, a perfect demonstration proving that the Laffer curve works both ways. Without private enterprise they will never get the economy going, never reduce unemployment and never get out of debt.

  • Oleg

    What's more who is going to buy these state owned industries that they propose to privatize? You have an economy that is contracting by double digits into the forceable future so even if they manage to find buyers for the telephone and other companies there won't be any money to be made unless they buy them for pennies on the dollar. Unless these industries are all money loosers then it won't help with the debt situation, if so then the Greek government would simply be cutting their losses. In my opinion the only way to solve this on again off again soap opera with the European debt crisis is for Greece and the other countries to stop drinking from the EU coolaid punchbowl, scrap big government, slash taxes, and go with free market capitalism like they have in Asia.