Things have gone from worse to worse in Greece. On Friday, talks between the Greek government and private lenders fell apart, over discussions about how to reduce the country’s debt of nearly $444 billion (€340 billion) by $130 billion. The installment of a new prime minister, Lucas Papademos, a former Vice President of the European Central Bank and an economist, had raised hopes that Greece could stabilize its massive debt and get its battered economy back on course. The country has been in a recession for three years now and its debt is 142.8% of its GDP. But while Papademos’ government has passed a 2012 national budget, it has still failed to put into practice most of the changes the previous government had agreed to in 2010, at the start of the financial crisis when Greece admitted that it had underreported its debt and was, in essence, broke.
Greece is awaiting the next installment of a bailout package from the European Union. But the EU, the European Central Bank and the International Monetary Fund — the “troika” of foreign lenders to Greece — are preparing to withhold that next installment, as they have “come to believe that the country has neither the ability nor the will to carry out the broad economic reforms it has promised in exchange for aid.” While a voluntary default by Greece now seems likely, an involuntary one also is also highly possible if negotiators cannot agree about how to push hedge funds and other private lenders to take large losses to lighten Greece’s debt load.
Greece defaulting on its debt has been mentioned numerous times over the past year, but now seems more likely than ever. France and eight other European countries had their credit ratings downgraded last week and there is a growing sense that Greece only says that it will make structural changes (such as truly getting people to pay their taxes) but then fails actually to execute them.
The austerity measures that the government has passed in order to receive the EU bailouts have already wreaked havoc on people’s daily circumstances. For the past two years, Greeks have endured tax increases and wage cuts, with civil servants’ salaries slashed by 40 percent since 2010. The New York Times reports that approximately 68,000 businesses closed in 2010, and, out of the remaining 300,000 another 53,000 are hovering near bankruptcy. People have invested $75 billion aboard, fearful of the instability of the Greek economy and its banks. Unemployment is now around 18.3 % and nearing 50 percent for those aged 20 – 30. There are reports of families giving up children who they cannot care for — an Orthodox priest has found four children, including an infant, on his doorstep in just the past two months — and 6 out of 10 Greek households are unable to pay their utility bills.
Amid all this, Greeks — the “Indignants,” the Αγανακτισμενοι (Aganaktismeni) – are again taking to the streets. Joining the protests in Athens’ central Syntagma Square is protest dog Loukanikos. It’s not uncommon to see dogs roaming the streets in Greece; Loukanikos attracted global attention for his joining the protests in the fall and has been called the “most famous riot dog worldwide” — and it looks like he’s going to have a very busy season.
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Photo by Kokotron