Thousands of Greek civil jobs to be axed as parliament vote looms

[dipsydoodle]

Source: RT

Greece is bracing itself as MPs are set for Sunday’s vote on a law dismissing 15,000 civil servants by 2014, including 4,000 in 2013, as part of austerity measures imposed by the Troika in return for $11.4 billion bailout loan.

The bill also includes staff being fired for corruption or incompetence, while others being pensioned off, and some being dismissed as state entities they are working for are being eliminated.

The new law will also make it easier to fire people in the civil service, extend working hours for teachers, open up more internal positions for competition opportunities and reduce a controversial property tax by 15 percent.

“This is not a human sacrifice," Prime Minister Antonis Samaras told reporters. “It’s an upgrading of the public sector and its one demand of Greek society.” Samaras also promised that new positions will be created and new employees will be hired based on merit.

Read more: http://en.rt.com/news/greece-fires-civil-servants-525/

[jakeXT]

1. Emergency Property Tax?

The unify tax will combine all property taxes and could lead some property owners to pay 10-15% less in emergency property tax.

However its basis will be extended and it will include not only properties that receive elecricity but also farmland.

Yesterday I was listening to the conversation of two old men:

- They will tax our farmland, anything whether cultivated or not.

-Yes, I will delete all the land I own from my tax declaration.

-Me too. I have waste land on the mountain, in fact I never visit it. It’s from the grandfathers. Now I will have to pay for it? I don’t think so…

-Me too, me too. I will not declare all the land plots anymore. Leave it free to anyone who wants to claim it.

-Pay taxes for the bushes? Hahaha…

http://www.keeptalkinggreece.com/2013/04/04/greek-govt-trick-give-a-new-name-to-emergency-property-tax/

[midnight]

2. Sucking the last bit of economic security out of the country...

[Laelth]

3. Cutting govt. jobs in the middle of a recession is stupid!

Of course, most sane people know this, but that won't stop the austerity-goons who insist on protecting the rich from their own recklessness by shifting the burden onto the poor and the middle-class.

As RFK noted, they want socialism for the rich and capitalism for everyone else.

-Laelth

[quadrature]

4. there is no other choice.

Greece has maxed out the credit card.
something has to change.

[magellan]

5. Putting even more people out of work isn't the change needed

Sure they won't have to pay those salaries anymore, but they're also applying further downward pressure on the economy. People without jobs tend to stop paying bills and buying stuff.

Austerity will end badly, and not just for Greece and Spain and the rest of the EU.

[quadrature]

6. thats life, in a bubble economy...

when you, or a whole country,

produce little or nothing,
your job could be blown away
by external events.

as for 'austerity ending badly',
I'd change that to,

affluence budget (of years past) ending badly.

[magellan]

9. "Affluence budget"?

Explain.

[quadrature]

10. what term should I use for the opposite of 'austerity' budget? nt

nt

[magellan]

11. Wasn't sure how you meant it.

Anyway, i understand trimming fat, and it appears that's *part* of what Greece is doing with this action. But a bigger part of the cuts is to jobs that will be replaced by fewer workers at lower pay. More austerity isn't going to help. Greece's problem isn't going to fixed by Greece.

[Katashi_itto]

25. It's obvious you don't know what your talking about.

This entire situation has been rigged.

[Laelth]

14. There are always alternatives.

Perhaps those alternatives are less palatable?

-Laelth

[Yo_Mama]

15. But Greece has to borrow money from foreign countries to keep paying its civil servants

This isn't "austerity" - it's bankruptcy.

If Greece didn't cut some of its civil servants, the creditors wouldn't keep lending them money (now giving them money) and they'd have to cut even more of them!!!

This isn't stupidity, it's necessity, unless Greece were to repudiate its debt:
http://www.bloomberg.com/news/2013-04-10/greece-s-first-quarter-budget-deficit-narrows-81-beats-target.html

Of course you are right that there is no exit on the path they are on. As the budget deficit shrinks, so does their economy, so their debt-to-GDP ratio goes ever higher. But I gather that the long-term plan now is for the debt essentially to be nullified, so maybe there is hope for Greece. It will never have any hope for the future until it can consistently run a primary budget surplus while paying its essential bills, at which time it will get some bargaining leverage.

[Laelth]

16. The US has to borrow from other countries too. Big deal.

Cutting government jobs will only worsen a lingering recession and reduce tax revenues. Everyone knows this to be true.

There must be a better solution.

-Laelth

[Yo_Mama]

17. There isn't, not for Greece

It cannot repudiate its debt and/or start its own currency right now because it desperately needs imports to keep its economy going. Leaving the EMU right now would mean that it literally couldn't keep the power on, couldn't buy medicines, etc.

It cannot pay down its debt itself. As a result of the debt crisis, Greece's external debt has ballooned and it is still dependent on monetary contributions from those who have that debt to run day-to-day.

The most future freedom they can get is to get to a point where their current revenue/current expenses sort of balance, so that if credit were cut off they could keep the country running day-to-day. Then they can bargain it down.

The US is in a very different situation from Greece just because our debt/GDP is so much lower. We can still borrow very freely on the open market, even though we too have a hefty current account imbalance.
Here is Greece:
?s=grcdebt2gdp

Here is the US (note that actual public debt is still only about 76% of GDP):
?s=usadebt2gdp

If we continue on our current path, although we have some years left, eventually we will find ourselves in the same situation.

A country like Japan, which has been running a current account surplus, can run a much higher debt-to-GDP ratio:
?s=jpndebt2gdp

These are the current account balances:
Greece:
?s=gkcaeur
US:
?s=uscabal
Japan:
?s=jnbpab

[Laelth]

18. Thank you for a detailed and reasonable response.

Indeed, the US is in a better position for several reasons. I still think that the EU and the IMF are worsening the problem by insisting upon austerity. Perhaps those in charge of the purse-strings will learn something from the chaos and misery that they are creating in Greece. That is, perhaps, the most that one can hope for.

-Laelth

[Katashi_itto]

27. It's much further than that.

A loan is given to Greece, actually forced on Greece is the better term. It's Govt is a puppet.

Example: 15 Billion was one of several loans given.

Of that loan Greece actually got less than 3 Billion of usuable cpaital, the rest was out of the country in less than 3 mins to service it's outstanding loans.

So in that loan it actually got 2-3 billion, not much it can do with to fix things and another 12-13 billion added to it's loan debt. So it's actually worse off. However at this point, since it's chosen to "honor" these, well when it comes down to it, "fake debts, that have been foisted on them.


There really isnt much choice, there is a fire sale now, Islands in the Agean are being sold at pennies, 1 island alone could have paid their entire debt off, instead it's a systemic pillaging of their resources.

[Yo_Mama]

28. I agree with your statement

I think that what has been done to Greece is unconscionable. I don't think the debt is fake, though.

It's gone quarter by quarter, but Greece is getting closer to running that primary surplus, and when it does, they are going to either bargain it down or default on the external debt.

[Katashi_itto]

29. Explanation: To get into the EU in the first place.

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This created a ticking time bomb. Remember, Greece's economy was failry basically primitive, unable to keep apace with the rest of Europe. Basically unable to pay any of this debt being sold to them by Goldman Sachs.

At some point the so-called cross currency swaps matured, and swelling the country's already bloated deficit.

Leaving them in the situation they are in now.

With derivatives as the root cause for it all. It's fake debt.

http://www.spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html

[UrbScotty]

7. Update: Greek parliament approves 15,000 civil service job cuts (BBC)

The Greek parliament has passed a bill which will see 15,000 state employees lose their jobs by the end of next year.

The bill passed by 168 votes to 123, and had the support of the three parties making up the ruling coalition.

It is part of continuing moves by the centre-right government to cut costs and ensure more bailout money from international creditors.

But it was vociferously opposed by protesters outside parliament.

Read more: http://www.bbc.co.uk/news/world-europe-22328710

[quadrature]

12. title is untrue. people will be cut and replaced ...

with younger people.

no money is saved.

[dipsydoodle]

13. I assume you refer to this para :

"State workers who have broken rules will be targeted for dismissal, but many are expected to be replaced by younger employees in key sectors such as health. " That appears to be a specific issue rather than a general one.

The other issue which isn't mentioned here , but if you've followed this before you will already be aware of , is that many jobs going are in fact redundancies where whole departments are being shut down making the job positions disappear. They are departments which were not necessarily doing anything in particular - same as some UK quangos.

[blkmusclmachine]

8. The Kings Of Austerity have spoken.

There's no more money for the worthless eaters/workers.

[sofa king]

26. That's -15K jobs thanks to falsified data.

Do the Greeks know they're trashing their government in the service of a bad research paper?

[Marrah_G]

19. Vice on HBO did a story on what's happening in Greece and Spain

Scary, scary shit. The people are very angry. It's worth a watch.

This Golden Dawn group in Greece reeks of the third Reich.

[dipsydoodle]

20. Different backgrounds and issues with those two

Spain's demise is largely a result of the collapse of their construction industry attibruted to mainly by the antics of US financial institutions whereas Greece is largely the collective failure of their population to recognise the concept known as taxation.

[Marrah_G]

21. It's definitely got me interested in what's happening in both

It's definitely spurred an interest in reading more.

[Yo_Mama]

22. The Spanish debacle had nothing to do with the US

In fact it started to implode before it did in the US, because it was a far bigger bubble relative to the economy.

This paper explains it. Look at Figure 2 - you'll see that by 2007, starts had fallen back to between 2002 and 2003 levels:
http://www.craig.csufresno.edu/International_Programs/JC/IJB/Volumes/Volume%2017/V174-2.pdf

Housing prices had increased by 50% between 2001 and 2006 (see Figure 3). The prices seemed to increase till mid 2008, but the market has already plummeted. In fact, the number of transactions drop and the value of the transaction felt down since 2006.

Then look at Figure 3. The market was already collapsing due to a lack of buyers. The Spanish housing bubble ended in the classic way bubbles do end - via buyer exhaustion.

The last sets of construction were often very poor - developers were getting money and building on the cheapest land available, where people didn't want to buy. It really is true that developments were built without access to public utilities.

[dipsydoodle]

23. I don't agree.

There are no major other contributory factors other than the 2007 collapse.

The link says "This situation is due to the fact that a large part of these new accommodations were built for tourism or for holiday homes buyers." 2007 led to the absence of available credit contributing to the reduction in demand as opposed to "buyer exhaustion".

It was the inability to sell those homes that led to delinquent debt in the construction industry resulting finally in the demise of 7 of their regional banks which were subsequently nationalised.

With regard to house price inflation - the UK during the period 2001 - 2006 showed a similar increase of c. 50%.

[Yo_Mama]

24. Yes, but Spanish sales fell hard before the US subprime crisis and before bad loans in Spain

I don't think you can postulate that something occurs as a result of something that occurs later. I really don't. If you believe that's valid, kindly explain WHY???

The massive overbuilding in Spain was somewhat unique, and the causes of the collapse in Spain was sheer overbuilding. UNLIKE IN THE US, CREDIT PROBLEMS IN LENDING DID NOT CAUSE BUYING TO SLOW.

The first increase in bad loans in Spain did not occur until 2008, two years after the peak in buying. Those increases were due to unemployment. In 2007, the rate of bad loans in the production and mortgage sectors was still half of what it was for other sectors.

But at its peak, the construction boom in Spain accounted for at least 16% of GDP, so growth in the economy could not continue as soon as building slacked off. What happened is that sales slowed, construction growth slowed and so employment slacked off.
?s=umrtes

Credit contraction didn't cause the Spanish economic problems - it was a result of the Spanish economic problems:
http://www.tradingeconomics.com/spain/loans-to-private-sector

If you go to internal page 18, external page 19 in this IMF report on Spain, you'll see a housing construction graph that shows how quickly it peaked and fell. Throughout 2007, the starts rate fell until by the beginning of 2008 it was close to where it had been in 2003. This created an economic shock that just kept rolling through the economy.
http://www.imf.org/external/pubs/ft/scr/2011/cr11216.pdf

Eventually, the economic shock created bad loans, but it was because of the economic shock, not because the loans were bad. In the US, we had a lot of bad loans remember early payment defaults) which tightened terms. Of course it snowballed from there.

In the US, bad mortgages started growing in 2006, and by the end of 2007, the residential mortgage delinquency rate was more than 5 times what it had been in 2005.
http://www.federalreserve.gov/releases/chargeoff/chgallsa.htm

Since Spanish mortgage funding was totally different than in the US, US bad debts had nothing to do with Spanish mortgage funding. The US crisis could not possibly have caused a Spanish crisis. Overbuilding, pure and simple, caused the Spanish housing collapse and from there a contraction of the economy.

Go and look at the trajectory for 2007 and 2008 in Spain for new car registrations:
http://www.tradingeconomics.com/spain/car-registrations

Also retail sales:
http://www.tradingeconomics.com/spain/retail-sales-annual

The economy in Spain just folded from the bottom up as construction backed off its hectic pace. It was such a large part of the economy that any significant decrease was doomed to take down the entire economy.