Another Sunday Evening Stick Save

Greek politicians are meeting as I write, trying to craft some kind of political agreement that will make it seem as if all is well in Athens, and the Greeks will buckle down and accept the EU’s austerity measures in return for the next tranche of loans. We’ve seen this Sunday night brinksmanship so often that it, at least to me, seems farcical. Yet traders continue to react in Pavlovian fashion (I’m flat stocks, for the record – well except for NLY) and pump up share prices every time. Will this time be different? I doubt it. But all is not well in Athens, and the privileged state employees have not accepted the swingeing cuts that have been demanded. The basic problem in Greece is that the Socialist government has created a class of public employees who are ludicrously well compensated, and often enjoy sinecures, like the 26 gardeners employed by the hospital with no garden. Now not only are there privileges being (somewhat) reduced, the rest of the Greek population is being asked to accept drastic cuts in its standard of living in order to pay for the debts run up paying the privileged.

There is no easy answer. There is no way out that doesn’t involve considerable pain. The credit that has sustained a standard of living well above the earning power of Greece has essentially been cut off, except for a trickle. That means Greeks are either going to have to suddenly start producing twice as much, or see their standard of living cut in half. As an impressively articulate Greek lady, Ilia Iatrou, says in this BBC interview, “Bulgarian salary and London prices.” Watch the clip. In spite of the ham-handed interviewer, she is compelling.

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