Thread: Greek death spiral accelerates

Greek death spiral accelerates

By Ambrose Evans-Pritchard Economics Last updated: February 9th, 2012
590 Comments

Another normal day at the Hellenic Statistical Authority.

We learn that:

Greece's manufacturing output contracted by 15.5pc in December from a year earlier.

Industrial output fell 11.3pc, compared to minus 7.8pc in November.
Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.

I have little further to add. This is what a death spiral looks like.

It is what can happen if you join a fixed exchange system, then take out very large debts in what amounts to a foreign currency, and then have simultaneous monetary and fiscal contraction imposed upon you.

Germany discovered this on the Gold Standard when it racked up external debt from 1925 to 1929 (owed to American bankers) in much the same way as Greece has done.

When the music stopped – ie, when the Fed raised rates from 1928 onwards – Germany blew apart in much the same way as Greece is blowing apart.

This is not a cultural or anthropological issue. It is the mechanical consequence of capital flows into a country that cannot handle it, as Germany could not handle it in the late 1920s.

By the way, Greeks work an average 42 hours a week, one of the highest in Europe. Just want to put the record straight on that.

Greek death spiral accelerates – Telegraph Blogs

Summary Of Greek Reform "Pledges"



Submitted by Tyler Durden on 02/08/2012 14:49 -0500

At this point everyone is so habituated to worthless updates from Greece that we are shocked Bloomberg even noticed. Either way, here is latest Greek headline tape bomb, via BBG, which looks at a leaked Troika draft report obtained by Bloomberg.

• TROIKA DRAFT GREEK ACCORD SAYS 2012 GDP TO SHRINK AS MUCH AS 5% - so make that 15%-25% realistically
• GREECE TO CUT MEDICINE SPENDING TO 1.5% OF GDP FROM 1.9% OF GDP - why not just "cull" 15-20% of the population?
• GREECE PLEDGES TO MERGE ALL AUXILIARY PENSION FUNDS - one problem - following the default, there will be no pension funds left.
• GREECE TO PLEDGE 20% CUT IN MINIMUM WAGE IN TROIKA DRAFT - and Greek citizens pledge to never work again.
• TROIKA DRAFT GREEK ACCORD RENEWS PLEDGE TO CUT 150,000 EMPLOYEE - or the US equivalent of nearly 5 million workers...
• TROIKA DRAFT GREEK ACCORD PLEDGES 15,000 STATE JOB CUTS IN 2012
• GREECE TO PLEDGE ACCELERATED LABOR, PRODUCT MARKETS REFORMS
• GREECE PLEDGES PERMANENT SPENDING CUTS IN TROIKA DRAFT REPORT
• GREECE PLEDGES NOT TO INCREASE SALES-TAX IN DRAFT REPORT
• GREECE RENEWS PLEDGE FOR 1 NEW HIRE FOR EACH 5 DEPARTURES
• GREECE AIMS TO SELL DEPA, DESFA, OPAP, EYDAP, EYATH IN 1H 2012
• GREECE ALSO TARGETS HELLENIC PETROLEUM SALE IN FIRST HALF 2012

But the winner is:

• TROIKA DRAFT GREEK ACCORD SEES RETURN TO GROWTH IN 2013 - OMFG.... no, did they just... HILARIOUS

This from the country that was "just short" of a 9% forecast revenue growth in January with a 7% miss???

Sheer lunacy, and Germany will throw up all over the "pledges" as they have had enough. What is needed are guarantees. And even these are pending since the government meeting is still going on, meaning that Greek "leaders" can't come to an agreement over a set of hollow promises?

Summary Of Greek Reform "Pledges" | ZeroHedge