Sunday, 13 February 2011


As anyone who's reading this blog knows I don't believe we can ever pay back our debt, regardless of how it is contorted to fit our ridiculously tight cashflow. From time to time, the IMF and EU also realise this, in the same way that people living their lives happily suddenly become aware of their own mortality and have a brief panic attack.

Usually people's reaction to this is a short-lived spurt of sexual activity, megalomania or escapism, and things then go back to normal. The Troika folks tend to react very similarly in economic terms. In this latest episode they've asked us to speed up our privatisation programme to deliver EUR50bn of proceeds by 2015, with EUR15bn of that delivered by 2013, up from EUR7bn as per our previous arrangement. Then one of their representatives went off-message for a second, to explain that a large number of scenaria have been examined by the Troika, including the selling of our electricity company, as well as beaches and whatever-have-you and that our ministry of finance have failed to offer any objection.

All of this prompted an amazingly intense response from the Greek Government, which has left me puzzled although it was a typically knee-jerk reaction. The Secretary General of our Socialist party, one Michael Kachrimakis, said:
'The representatives of the Troika have crossed the line. What they said yesterday are unacceptable and worthy of condemnation. We will not accept ultimatum-like suggestions or orders on how the assets of the Greek State, the wealth of the Greek People will be utilised. And we allow no one to wag their finger in the face of the Greek people in their own home. They should do this in their own houses.' 

Others went on the record as saying, in various closely scripted statements that the Greek government only answers to the Greek people, that we have debts but we also have pride, and all manner of other verbosities. One clever ex socialist Minister of Finance said the EUR50bn figure was very risky and our Minister for Infrastructure pronounced it impossible. I was particularly struck by this excellent statement by our Minister of the Interior:

"None of those who have an obligation to assist Greece in her efforts to exit this crisis should misunderstand what their role is. And the Greek people has given no spokesperson the authorisation to intervene in the political life of the land."
Then our finance minister finally conceded that our new target is indeed EUR50bn by 2015, EUR15bn by 2013. So that is that. This is of course a charade. The Troika does get to tell us what our policies are and that's plain fact. That is the deal. How being told to cut public sector wages or pensions differs from being told to privatise a good deal of public property is unclear to me, but presumably being told on air rather than behind closed doors is somehow demeaning.

Here's some news everyone: loss of sovereignty is demeaning. Being up to our neck in debt is demeaning. Everything else is trivia.

The IMF responded with this short almost-apology, presumably intended to save some our government some face. It didn't. But the spin operation behind all of this clearly worked. On Fbook, educated contacts of mine were rehashing the idiotic line: 'Troika demands the selling off of public property! Down with this sort of thing!"

Here is some context to all of this. Unemployment has exploded to 13.9% in the last recorded month, even reaching 36% for the under-24s - as one reader kindly brought to my attention. The theory is that disaffected youth tends to mean social unrest. In fact that's what the OECD seems to think caused the Greek riots in 2008. I think the moderating variable between unemployment and unrest is the education premium: the global evidence base suggests that economic concerns and even basic needs alone are not enough by themselves to cause social unrest.

So far, the differential is very substantial: male graduates have done much better than school leavers in the recession, which means that staying in education is still a good investment - therefore there is still some kind of hope. To me the brown stuff will really hit the fan when this curve reverses, which it still shows no sign of doing. However, as I've explained, it surely must. The returns to education are inflated by its use as a substitute for skills in the public sector, and with that out of the way, and layoffs possibly on the way, the returns should start falling.

In preparation for this perfect storm of unemployment and loss of hope, one of our army units stationed near Kilkis started drilling for riot control. The drill clearly anticipated included some very very unfortunate references to current politics, with 'rioters' linked in the drill script to the Coalition of the Radical Left, one of our smaller opposition parties. The Government initially denied knowledge of the drill but was then forced to admit it knew all along, but alleged that it was part of an international military drill against civil unrest, as though that was so much better.

Clearly this wasn't going to go away just like that, so our Government needs some kind of PR victory or damage control mechanism, double-quick. This latest bullshit stand-off was meant to provide this. It didn't. With the option default increasingly slipping out of reach, our ticket to Cairo is being processed.

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