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Lazy?
• OECD: average Greek worked 2,120 hours in
the crisis year of 2008. That is 690 hours more
than the average German, 467 hours more
than the average Brit, and 356 more than the
OECD average.
Debt Prone?
• A European Central Bank study shows that in
2007-2009 forty-four per cent of eurozone
households had debt. In Greece only 37 per
cent did. Incidentally, Germans, who have
often taken to lecturing Greeks on the virtues
of thrift, were found to be ten percentage
points more prone to getting indebted than
the Greeks. p. 5, (European Central Bank,
2013)
Corrupt?
• In the Eurozone decade before the crisis, Greece
scored somewhere between 4.2 and 4.6 points,
continuously improving, on a Transparency
Corruption Perception scale where ten is
perceived to be the least corrupt. This put
Greece in positions 42nd to 56th, on par with
countries such as South Korea, the Czech
Republic or Slovakia. Some other countries that
have been hyped as success cases in the initial
crisis years, such as Poland: position 70.
Average retirement age (Eurostat)
Social spending as % of GDP - Eurostat
25.0
20.0
15.0
Euro area
Greece
10.0
5.0
0.0
2001
2002
2003
2004
2005
2006
2007
Spending on public sector employees
as % of GDP - Eurostat
12
11.5
11
Euro area
10.5
Greece
10
9.5
9
2001
2002
2003
2004
2005
2006
2007
Total government expenditure as % of
GDP - Eurostat
49.00
48.00
47.00
46.00
Euro area
45.00
Germany
Greece
44.00
43.00
42.00
41.00
2001
2002
2003
2004
2005
2006
2007
Total government revenues as % of
GDP - Eurostat
46.00
44.00
42.00
Euro area
40.00
Germany
Greece
38.00
36.00
34.00
2001
2002
2003
2004
2005
2006
2007
GDP Growth Greece
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
1961-65
1966-70
1971-75
1976-80
Greece
1981-85
EU
1986-90
1991-95
1996-2000
Greek debt dynamics
180
160
140
120
100
80
60
40
20
0
Papandreou: welfare state, no taxes
55
50
45
40
EU14 general government expenditure
Greece general government expenditure
Eu14 general government revenues
35
Greece general government revenues
30
25
20
1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989
Wage share of GDP
68
66
64
62
60
58
56
54
52
50
1970
1975
1980
1985
1990
Greece
EU15
1995
2000
2005
Greece in debt trap by 1990s!
20
15
10
5
0
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
-5
-10
Primary deficit
Debt service
1988
1989
1990
1991
1992
1993
1994
1995
Nominal yield on reference gov bonds
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
Germany
Greece
2010
2005
2000
1995
Belgium
Italy
Debt stable during Eurozone!
110.0
105.0
100.0
95.0
90.0
2000
2001
2002
2003
2004
2005
2006
2007
Eurozone not optimal currency area!
(Kaltenbrunner, Lapavitsas et al.)
8.0
6.0
4.0
Germany
2.0
Ireland
Greece
0.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
Spain
Italy
-2.0
-4.0
-6.0
-8.0
Portugal
Not a productivity issue!
(Kaltenbrunner, Lapavitsas et al.)
But a wage issue!
(Kaltenbrunner, Lapavitsas et al.)
Eurozone current account imbalances
(Kaltenbrunner, Lapavitsas et al.)
10.0
5.0
0.0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Germany
Ireland
-5.0
Greece
Spain
Italy
Portugal
-10.0
-15.0
-20.0
2010: Whom they really saved: bank
exposure to euro periphery (BIS)
500
450
400
350
300
ESP
PRT
250
IRL
ITA
200
GRE
150
100
50
0
FRA
GBR
USA
NED
ESP
BEL
JPN
PRT
ITA
Austerity is bad: debt growth
Forced bailouts
• 3-5% of GDP in offshore annually (Cyprus, UK)
• military expenditure 3.5% each year:
France, Germany sold €1bn worth of military to
Greece in 2010
• bailed out 4 biggest banks twice
• 87% of Troika loans sent to Greece spent on interest
payments
• would need 6-8% growth to get out of sovereign debt
trap
• Germany borrows at 0%, lends at 5%, saves banks,
parades as saviour
Syriza victory January 2015
• Syriza is falsely portrayed as “extreme left”
• Thessaloniki Programme: Keynesian / Nordic
model programme
• Accused of secret plan to take Greece out of
euro: turned out not to have “plan B”
• Campaigned and won two mandates: 1.) keep
Greece in Eurozone 2.) End austerity
European Union asphyxiates
democratically elected government
• ECB introduces QE in Jan 2015, but does not extend it to GR: with
2.2% refinancing rate this could be a solution
• Even though GR commercial banks pass stress tests at end of 2014,
they are not allowed to accept GR government bonds as collateral
• Eurogroup (ad hoc body w not rules) denies democratically elected
GR gov its own policies
• Threat of Grexit leads to deposit flight
• As a consequence Greek commercial banks go into Emergency
Liquidity Assistance (ELA)
• ELA is then capped, forceing GR gov to close down banks and
introduce capital controls
• Tsipras capitulates in spite of 62% OXI. (85% of young people voted
OXI)
ECB used for political pressure
Paul de Grauwe, Charles Wyplosz, Barry
Eichengreen (leading neutral Eurzone experts):
- ECB moves against the statutes
- ECB used to apply political pressure
2015: Third Memorandum
•
•
•
•
•
New taxes will suppress GR economy
Automatic (de)”stabiliser” austerity
Unparralelled deregulation (pharmacies, milk)
Privatisation against European trend (utilities)
No measures against offshore, reversal of transfer
pricing law, no cutting of captured state by
oligarchs
• Reversal of humanitarian measures
• Reversal of collective wage setting (in place in 12
EU member states)
THANK YOU!