Greek minister says pension reform part of a package of austerity measures to clinch a three-year, multi- billion-euro aid deal, a Greek minister told the FT on Thursday. Andreas Loverdos (left), social affairs minister told the Financial Times the measures included dropping the seasonal bonus for pensioners in a bid to slash Greece's bloated budget deficit. "The timetable for the pension measures is still being debated, but there isn't much room for manoeuvre – this is about saving the country from collapse," Loverdos told the FT. Union officials told Reuters on Thursday the International Monetary Fund had asked Athens to raise sales taxes, scrap bonuses amounting to two extra months of pay in the public sector, and accept a three-year pay freeze. Other measures in the 24 billion euro package include raising the retirement age from an average of 53 to 67, the FT said in its Friday edition. – Financial Times
Dominant Social Theme: Finally the Greeks get what they deserve.
Free-Market Analysis: We promised ourselves not to write about the Greek/Euro crisis again for a couple of days, but we can't help but return to it when we see articles like the one excerpted above. In our view, the Greek crisis seems designed to provide real-life examples of what we've been writing about these past few years.
All kidding aside (and it is truly a sad situation), we think the way that the European and Greek elites are handling the crisis proves our points not only about power-elite manipulations generally but also about how the free-market simply cannot be ignored. It will always have its way sooner or later – and people will suffer as a result, financially from the thwarting of its will, usually innocent people.
In this case, it is average Greeks that are going to suffer. But we sure do wonder how the elite organizing the Greek fiscal retrenchment believes that those who are going to pay for it are going to submit without a murmur. The Greeks are not in any case a quiet people, culturally speaking. We've pointed out on numerous occasions that the Greeks are not necessarily profligate; that they have not "had their fun" (and now must pay for it) as an anonymous German recently put it in an article reporting on the mess.
No … what happened was something else entirely. Investors, especially, who are trying to figure out what the heck is going on in Greece, and in the larger European Union, will need to be aware of what is taking place in the important subterranean cultural conversation that is not being reported in the mainstream media. They will need to understand what is being written on the Internet's blogosphere and what is being muttered over ouzo on the porches of people's houses where they gather to discuss the reality of what is being demanded.
The perceptive readers of the Bell (and other alternative publications) know that the entrance of the Greeks into the EU, and the largess that flowed as a result, did not reach the pockets of the average Greek. In fact, the EU exercise was likely one of legalized bribery. Money that was given to the EU to supposedly close budget gaps went to furnish numerous unnecessary private projects. The money was wasted, in a sense, as the projects weren't completed and wouldn't have helped generate a profit if they had been. The EU leaders providing the money knew this. But they didn't care so long as Greece joined the union.
Thus it was that the money cynically provided by EU's socialist leaders went into the pockets of the Greek elite that was in charge of the EU transition. And now this same elite, doubtless, is negotiating the Greek posture as regards the financial streamlining that must take place. If we can figure out what actually occurred, we don't think that it is hard for the average Greek to do so. When one reads about what is being negotiated, and puts it into the context of what went before, we think the average Greek may start to become fairly upset, if he or she is not already so.
We've read the Marxist rhetoric that the trade unions are using for instance. They claim that the "rich" have profited from the EU exercise at the expense of the larger mass of the people and that the cost of Greece's financial retrenchment should be borne by the rich as well. While we are not partial as a rule to communist analysis, we believe in this instance, that Greece's powerful union-rhetoricians have a point. This is exactly what happened – and what is about to happen as well.
It is actually kind of mind-boggling what Greek citizens are apparently being asked to do. It is not just that public pensions are being renegotiated, but that the age at which one can retire is going up by FIFTEEN YEARS. Is this really acceptable? People in Europe (and Greece) have accepted all sorts of regulatory nonsense (and even the erection of a quasi-authoritarian state) in return for financial security. But now they are to be left with the dregs of the deal and the sweetener is turning sour indeed.
The famous European social compact is being ripped to shreds. What makes the European elites confident that people will just go along? Again, in Greece, the average "Zorba" is likely well aware of what actually occurred, and who benefited the most. Now the social pact between citizens and the state is being drastically rewritten. And the Greeks generally are going to be paying for their entrance into the EU for years, maybe generations, to come.
Maybe we're missing something here. But we have a hard time thinking that Greeks are going to sit still for what is about to come down on their collective head. If one lumps all Greeks together (and we don't, as we indicated in yesterday's article on this subject), then it seems to make a little more sense. The Greeks collectively are getting what they deserved. They played and now they pay. Not so. The same elite that enriched itself initially when the Greeks joined the EU, is now negotiating the terms of Greece's pay back.
As a free-market thinking publication, we are not so sympathetic to unionism, welfarism or any other sort of collective- "ism." But given what we understand actually happened, what is about to "go down" may well be taken as an injustice by the average Greek struggling to stay afloat in the new and less forgiving EU economic environment. For this reason, we wouldn't be surprised if the idea of debt-repudiation becomes more, not less, attractive over time. The Greek political class can make the deal, but whether it can deliver is another question. It may be a long, hot summer in Athens and elsewhere in Greece.