The youth unemployment rate in Greece has hit 51 percent, the highest in Europe. Youth unemployment is an almost-as-high 49 percent in Spain. In contrast, it is between 8 and 9 percent in German, the Netherlands and Austria and about 18 percent in the US. With further wage cuts and layoffs on the horizon as the effects of the latest austerity package become a reality, and the country’s economy still shrinking and likely to shrink in more in the wake of the deals the Greek government has had to make with the International Monetary Fund, the European Union and the European Central Bank — the so-called “troika” — and its private creditors — banks and hedge funds — it seems only too likely that these unemployment figures will go up before they go down.
The Greek government under President Lucas Papademos seems assured of receiving a 130 billion euro bailout. But analysts reviewing the terms of the deal all but say that the country seems to have handed over its soul and certainly the livelihoods of future generations. Greece has been able, through what the New York Times calls some “strong arm tactics,” to convince private lenders to take a 75 percent loss or haircut on investors’ debt holdings, for a total of 100 billion euros plus in losses. The deal means that the IMG and Greece’s European partners now hold 77 percent of the country’s debt. That is, foreign taxpayers are now helping to pay off Greece’s debts; they are likely to be “much less forgiving” than private lenders in the future.
Greece’s fourth-quarter Gross Domestic Product shrank 7.5 percent; the country is already in its third year of a recession. The country’s ratio of debt to its G.D.P. was 151 percent in 2012 and is projected to be 149 percent in 2013; it is the highest certainly in Europe and second only to Japan among developed nations. Part of the bailout terms included a provision that a system be established in Greece whereby tax revenue must be used to pay off debt obligations before it can be used domestically. The taxes that Greeks themselves pay will not go towards providing for public services in their country for years.
On Friday, the Fitch ratings agency already further downgraded Greece, to a rating of restricted default. The debt restructuring deal and the massive bailouts are, of course, supposed to avert Greece defaulting and fend off economic chaos that would, it is predicted, have cataclysmic effects not only on Europe’s economy, but on that of global markets.
In the meantime, the pain of the austerity measures and the prospects of no future have meant an exodus of young Greeks from the cities back to the countryside and out of their country, to the rest of Europe, to Australia and elsewhere. In Greece’s capital, Athens, more and more stores have “going out of business” signs in the windows.
The one type of shop that you will see more of in Athens are those that will buy the gold and jewelry of residents needing a quick way to make ends meet.
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Photo of graffiti in Athens by the euskadi 11