On wage cuts, cruise shipping, Athens mosque, PSI, Papoulias, history, referendum

Private sector wage cuts are no solution either

On January 1, in addition to ringing in the New Year, we were also celebrating the first 10 years of the Euro fiat currency. In hindsight, becoming a member of the 17-member Eurozone has not been all that it was supposed to be.

It began with our government borrowing excessive amounts of money (loans) from the EU, ostensibly to fund infrastructure projects and other such things that they said were necessary for Greece to become more ?competitive?. As a result, the Greek consumer confidence level rose considerably, as did employment, wages, and inflation. Food, petrol, clothing, and housing prices began to increase to startling levels. There were some complaints but the easy credit fueled a consumerism that swept across the country. The Olympic Games led to additional borrowing and the vicious cycle of deficit spending continued unabated.

As the billions in loans grew, our elected officials used every accounting trick possible to hide the ticking financial time bomb from the general public as well as the EU. In 2009, time ran out and the bubble burst, causing a global tsunami of panic. At the time, many thought this was strange because Greece only represents about 2% of the EU economy, yet financial markets reacted swiftly and rather harshly. In time, the news media began to report that the debt crisis involved all of South Europe and later many of our northern neighbors. In essence, this was and is a pan-European crisis that was allowed to get out of control.

But I digress.

Shortly after PASOK revealed the startling deficits, we all began to become acquainted with the troika and its technocrats, who to this day continue to espouse theoretical economic solutions (also known as guesswork) in an effort to contain the crisis. Not surprising to some of us, none of their ideas have worked. In fact, everything they have suggested or imposed upon us has contributed to our economic downfall.

The latest idea, wage cuts, or as the Editors of Kathemerini tried to sell us yesterday, ?internal devaluation?, is another feeble attempt by our government to delay the inevitable — reducing the size of the government and hence its ability to borrow and spend.

The logic behind lowering wages is simple really — labor productivity needs to rise in conjunction with a rise in wages or there comes a point in time when the organization becomes ?uncompetitive? as costs exceed revenues. This is all in a day?s work for our government since it is not run for profit. To cover their fiscal ineptitude they resort to deficit spending (borrowed money).

With the exception of banks and the businesses that trade and prosper on ?rousfeti,? both of whom also engage in deficit spending although it is called fractional reserve banking for the former and government subsidies for the latter, private companies must manage their costs in order to stay in business. Deficit spending is not an option because it leads to insolvency, also known as bankruptcy.

It is, therefore, contemptible not to mention naive to demand the private sector lower wages. These business owners have been struggling since their access to credit has been cut off. Many have already asked their employees to accept wage cuts in an effort to keep their businesses open. Furthermore, many could not afford to pay the additional salaries/bonuses and many employees are working more than 40 hours per week with no extra pay just to keep their jobs.

What is really surprising is that for all their education, the technocrats do not seem to comprehend that the private sector self-corrects when the economy changes. Economic expansion usually leads to hiring more staff and increasing wages to attract the best employees. During economic contractions, unproductive staff are let go first and wages are lowered only if it becomes necessary to keep the business open.

Unfortunately, none of this applies to the government. They continue to borrow and spend money recklessly with zero accountability. Worse still, we are left to foot the bill with higher taxes and a lower standard of living.

So the problem boils down to this — as long as there remains a complete lack of political will to impose the necessary reforms to the judicial system, the tax code, the labor laws, and rein in the public sector excesses, nothing will change. Not surprisingly, these reforms are the true drivers of labor costs. As to productivity, the private sector demands it. There are simply too many driven people looking for work to keep the lazy and ineffective. But the same cannot be said for our dysfunctional government. Therefore any further discussion about ‘competitiveness’ should begin and end with the subject of their proven incompetence.

For Greece to become more competitive, we simply need to change our system and structure of government. Specifically, the people who are elected to represent us. They have run this prosperous country into the ground and should pay for their actions.

And should Kathemerini or any its contributing journalists make further reference to wage cuts or internal devaluation, I refer you to a document by the Levy Economic Institute, Working Paper No. 651 entitled ?Unit Labor Costs in the Eurozone: The Competitiveness Debate Again? written by Jesus Felipe and Utsav Kumar. They state unequivocally that there is no relationship between a rise in labor costs and growth of output otherwise known as productivity. Furthermore, that fiscal policy in the Eurozone (not just Greece) must be addressed as well to improve trade imbalances between EU countries.

So please. In these troubled times, the last thing we need is more dis- or misinformation about the basics of economics. Our troubles began and will end one way or another based on the decisions that 300 MPs and one appointed PM will make in the coming weeks. If they are seeking advice, they should look no further than their constituents, many of whom want to help and more importantly, have the ideas, experience, and will to help. Just ask already.

Jonathan Reynik

Technocrats

Responding to calls for Greece to set down limits to demands by the European Commission, European Central Bank and International Monetary Fund — known as the troika — Papademos noted, ?For me, the red line for the country is guaranteeing a secure future for citizens.? I think he means if they have not starved to death having been bled dry by him and his technocrat cronies from the banking establishment across the world. These technocrats fight for their ideals at the cost of humanity to the people, they are only interested in their own ideals regardless of the cost to the working man. Greece should have defaulted 18 months ago and give the lenders what they could afford when they could afford it; after all, they have made enough out of Greece in the past. Greece could have devalued and been coming out of the problem instead of getting even deeper into the clutches of the loan sharks. How is Iceland doing?

Roly Baker

Corfu

Cruise giants eye local port infrastructure

Let’s hope these plans become reality. Cruise ships are looking for new more convenient and let us face it, less expensive ports to stop at.

Cruisers are mostly a mature lot with disposable income and are ready to see and spend.

Greece has so many interesting places and almost everyone wants to visit our country.

Hopefully those in charge will see the benefit of such a project and welcome it with open arms.

Between the tourist guides, bus owners and operators, tourist shops and restaurants a lot of people will find gainful employment and much needed influx of tourist cash will come along.

Monica Lane

Florida USA

Deficit woes

Why do Mr. Venizelos and his team at the Finance Ministry continue to ignore one of the biggest expenses our government has — 300 MPs and their collective benefits package. Several contributors have commented on this subject previously, but as our country continues its descent into outright bankruptcy, doesn’t it seem rather outlandish that with a population of 11.4 million people, we require 300 people to govern and manage our country? The U.S., with over 300 million citizens, only has 535 MPs (Congressmen and women). Portugal, with a population of 10.6 million, only has 230. And the Netherlands, with a population of 16.4 million, has a total of 225 MPs!

Considering the recent discussions about wages, productivity, and competitiveness, isn’t it about time the MPs were held to some standard of performance? Since the crisis began, actually well before 2009, what have they done to earn their keep? In addition to the ongoing deficit shortfalls, they have overseen record unemployment; imposed ever higher, unsustainable, and soon to be argued illegal taxes; a sinking standard of living; a crumbling infrastructure; a bankrupt healthcare and pension system; and rising civic angst that has led to a wave of crime and now suicides. It is obvious they have done and are continue to do nothing right. Worse still, they are ignoring the obivious discussion about cutting the size of government including their number.

At this critical juncture in our history, we need leadership, vision, and accountability. Time is running out. If our MPs will not or cannot do their duty, then they should be sacked and replaced by appointed citizen legislators who want to save our country. Not profit from its demise.

Jonathan Reynik

Greek consensus on FYROM

Letter-writer John Coburn (Jan 6th) condemns Greeks for «squabbling» over the name issue of the Former Yugoslav Republic of Macedonia. Not only is there no «squabbling,» but the name issue is the only policy, domestic or foreign, in which there has been broad and consistent consensus between successive governments and oppositions. Greece is the victim of outrageous and aggressive claims against its territory and culture. Greece has made concessions and overtures to the neighboring Republic. Both NATO and the European Union support Greece and have decreed that the neighbouring country cannot join either organization until this interference in Greek affairs stops and the issue is resolved. The ball has long remained idle in FYROM’s court. Greece has turned its attention and energies elsewhere. 

Peter Kyriakeas-Kirk

Stoupa, Messinias

Tax evasion and the ?receipt? card

Some weeks ago we were pleasantly surprised to read in these pages about the introduction of the «receipt» card. What a wonderful method, we thought, to ensure that the VAT we pay as consumers in Greece actually reaches its destination. So within a couple of days we were able to collect the card from our local bank and register it via SMS with the Ministry of Finance. Wonderful, we thought, something is actually functioning in this country. And it all seemed so easy. Just present the card to the cashier at the supermarket, who then swipes it through the machine for credit cards and enters the amount spent. Easy, we thought. We were wrong. We forgot that this is not Germany, nor France, nor the UK, nor any other functioning European state. This is Greece. The local supermarkets had all sorts of excuses for not using the card: they knew nothing about it, no-one had given them explanations, the machines had to be changed/adapted.

Now we are back in Greece and we find, to our dismay, that nothing has changed. Same excuses as ever. So, are we surprised? The supermarkets just don’t want transparency over their transactions? Of course not. But what about the Greek consumer? In every other European country we could imagine lines of angry consumers insisting on the use of the card, to make sure their 23% VAT goes where it’s supposed to go. Not so here. Are the Greek consumers also afraid of transparency?

Surely there must be some honest people in this country who are prepared to do their little bit to help fight tax evasion. This makes us, as German taxpayers, particularly angry, as it will be us, the German taxpayers, who willl finally foot the bill, if Greece is not able to solve its own problems.

German taxpayer

Penny Mueller

Dublin II and Athens mosque

The problem is not Dublin II, the problem is the lack of a working asylum system in Greece.

If the Greek state would register and provide sufficient asylum, like they are entitled to according to European laws, the problems of illegal immigrants would be much smaller.

These people came here for several reasons, may it be war, political prosecution or just the search for a better economic life. Whatever reason, one thing is sure, the majority of these people didn??t come here because they wanted to be illegals and criminals.

They are stuck in Greece due to the disfunctional Greek state and European laws that became a trap for them. As a result the only chance for them to survive is to survive in illegality.

Take a look at the asylum figures of other European countries and you will understand that the main reason is not Dublin II but again Greece that has failed badly.

Instead of sitting down to analyse and correct the mistakes that have been made, people are again accusing the EU of unfair contracts and regulations whose only aim is to abuse Greece and to exploit the pockets of Greek people etc.

And the bad thing is that Greece is getting through with it.

Just some weeks ago the ECHR ruled out the inhuman treatment of asylum seekers in Greece, as a result other EU countries do not send back asylum seekers to Greece anymore.

In my opinion this is again a wrong signal to Greece. 

Obviously you just need to fail so badly and to ignore every possible law and regulation that in the end other countries will have to do the job for you (again).

The kid that screams the loudest gets the biggest piece of chocolate.

If there are 200,000 Moslems in Athens, where is the problem of providing them with some empty buildings to establish their mosque?

I don??t see also why Greece or the EU should pay 12 million Euro for the construction of a new mosque. 

If you look to Germany, we have by today in almost every small city a mosque, but they are mostly established in old factories, supermarkets or whatever kind of unused buildings. These buildings are run and financed by the Moslem community and not by the German state.

Only in bigger cities like Cologne, Berlin or Bremen are there new mosques that have been built from scratch, but are also financed completely by the specific Moslem community.

Sebastian Schroeder

Patra

Mr Papachelas’s objection to the referendum

Dear Mr. Papachelas

I have enjoyed reading many of your articles from abroad, even though I have not always agreed.

Unfortunately, you have completely lost me with your assessment of the Referendum proposal by Mr. Papandreou:

Does anybody in Greece understand that the current government and, however tenuous, stability is only possible because of that proposal that forced ND to change their position on the EU deal?

Didn’t anybody see that at Cannes the opposition ND got a colder shower than the government? (Sarkozy called the Ref. «legitimate», «no renegotiation of the deal», «the problem with Greece as opposed to Portugal and Ireland is that the Opposition is against the EU deal» etc). Mr. Samaras understood that quite well, that’s why he promptly changed positions the next day.

What were the options for the country the week following Papandreou return with the 50% EU deal? Not many considering that most opposition parties (incl. the leading ND) were against the deal.

Papandreou’s Ref. proposal was brilliant, a «win-win» for him, and the country really, which is what matters.

Some day in the future he will be given the right honors for his navigation of the country at this extremely difficult phase.

Sincerely

George Saxopoulos

NY, NY

Orphanides and PSI

Ophanides is 100% correct (as was Trichet when he warned the politicians against it).

PSI (and PSI+) is an irresponsible polictically inspired project which has and will have devastating consequences for Greece and the Eurozone. The savings you think you are getting will be wiped out many times over when Europe is taken as a whole.

Firstly it has destroyed all investor confidence about the role of the private sector in financing Eurozone governments. It has raised concerns about the very existance of the Euro.

Secondly the suggestions in the media that Greece may seek to override existing sovereign debt contracts through imposing new legislation (i.e. imposing collective action clauses to force PSI participation) will not only ensure no international investor will easily trust Greek law-governed contracts but it will severely undermine other Eurozone countries who similarly issue bonds under domestic law.

This failure to properly consider and price for contagion will be the ruination of the Eurozone.

John Kir

London

History and soul-searching

Most of the comments in the letters section are both angry and pragmatic. And they are mostly concerned with immediate questions such as institutional collapse, the political kleptocracy, and immediate financial matters such as how to run the country. While these are understandable matters of immediate concern, they don’t really address longer-term issues. In fact most of any information coming out of Greece is totally wrapped up with immediate concerns and hardly ever seems to address long-term issues. But these have to be addressed at some point otherwise Greece will simply enter into a permanent spiral of temporary fixes without long-term solution.

The first thing to look at long-term is when and why. After 500 years of Ottoman rule, all the Ottoman subject peoples including Greeks were largely Ottomanised. Greeks shared this fate with Romanians in the north, Mesopotamians in the east, and Egyptians to the south of the Ottoman Empire. There are two books that may be enlightening this respect. One is called ‘Ottoman Greeks in the age of Nationalism’, and the other is called ‘Imperial Legacy: The Ottoman influence in the Balkans and the Middle East’. Reading these two books may help to understand why Greece is where she is today.

In 1821 the Greeks supposedly removed themselves from the immediate purview of Constantinople (subsequently Ankara). From 1821 until 1912 they fought a series of wars to liberate Greek-speaking peoples from the Turkish yoke, and in doing so got their nation into a cycle of financial debt and default (someone had to pay for these wars and the Greeks couldn’t…) from which they have never emerged.

Yes, the financial problems that we see today began all the way back in 1821, when the Great Powers persuaded the Greeks that they could be a (largely foreign-financed) sovereign state in return for keeping an eye on the Ottoman ‘Sick Man of Europe’. The irony of the situation and its reversal 200 years later are painfully obvious… It can be argued that the Greeks and other religious communities within the Ottoman Empire enjoyed greater peace and stability under the Ottomans than during the subsequent years of supposed independence. This is not a notion that most of them want to contemplate. It has been argued by David Brewer in his ‘Greece, The Hidden Centuries’, that the Ottoman occupation was not an entirely negative phenomenon.

I would go further and say that its influence is very much with its former subject peoples today, and most of their problems, especially economic ones and institutional ones, stem from that.

How to address this? The first thing that Greeks and other Balkan peoples need to do is to ask themselves if they want to remain emotionally and psychologically and institutionally tied to their former Ottoman masters, even though they are supposedly politically independent? Or do they want to break that inward yoke and are they prepared to work diligently together to catch up with 500 years of Western European development? It says first that Greece as part of the Ottomanised Balkans is not naturally a Western European nation, ruins and ancient writings notwithstanding. And secondly that recognition of this reality will be a first step to a new socio-economic reality.

The question of where does Greece belong, other than on permanent European life-support, is the first long-term question that Greeks have to ask themselves in their innermost spaces, before any other issues can be realistically addressed. Greeks should perhaps avoid confusing emotional and psychological questions with financial ones. The opinion poll that revealed that 77% of Greeks want to stay with the euro would seem to reflect that 77% of Greeks would prefer to remain dependent upon euro life-support than to take their chances in any other direction. Given that half the working population works for the government directly or indirectly, and, of the other half, about half of the private sector is more less dependent upon handouts from Europe, the figure of 77% can arguably be easily accounted for.

Without that question being asked and answered, Greece will continue to exist on permanent life-support and quick fixes. Are Greeks mature enough as a nation to make this choice, collectively?

Philip Andrews

Indeed that is a Greek national disgrace

As a Greek American and a member of diaspora in North America, I am stunned and very concerned for the public insult and slanderous attck of some members of the Greek public against the Honorable President of the Greek Republic Karolos Papoulias and the Honorable Archibishop of Greece Ieronymos during the traditional ceremonies of the «Theofania».

First, it is a matter of fact that our Greek Orthodox Church has set in the last two years all of their food resources in order to help the suffering Greek laymen, who struggle to put food on their family table. For this reason, the Church, in its entirety, stood by the side of the poor and hungry by opening social grocery stores, distributing clothes and medicine etc to these needy Greek citizens. Was this Church act a punishable crime that harmed anyone? Certainly not.

And additionally, as a charity organization, the Greek Orthodox Church refrained from interfering in the political arena of the Greek Republic, taking no side in favor of any established political party. In short, the Church preached love and practiced brotherhood in order to help the poor and unemployed brothers and sisters of ours, who were unfortunate to lose their job, salary or their pension. And in that respect, they spread hope to those Greeks, who felt the pain of their poverty deep in their bones.

On the other hand, it is also a well-known fact that President Papoulias is also acting as a constitutional president, who also preaches and urges all the Greek population to stand by and help the hungry and needy in this economic crisis. And in that respect, he has professionally applied his duties and responsibilities as it is mandated by the Greek Constitution. Was that a crime on his part to do that? Certainly not.

I do not know what these people had in mind as they slandered in public our Honorable President and our religious leader. And while I understand and share my sympathy for their present hunger and mysery, in all fairness, I believe that these protestors ought to examine their heads and behave in a civilized manner as the Greek Republic demands and deserves.

Finally as to those arrested by the Greek law enforcement officers for committing the aforesaid offense, they should be convicted without bond to six months of imprisonment by a competent court of the Greek Justice systems; so that they will correct in due course their behavioral status. Thank you.

John J. Ress

Re: Cyprus can be reunified before gas exports to EU

The Cypriot Minister will find us in agreement on the ?Cyprus can be unified before gas exports to the EU? if both Cyprus community leaders and Turkey the occupier of 1/3 of the Cyprus Republic agree to use only the UN justice based on the UN charter and the UNSC adopted Resolutions during their reunification talks. Also the UN facilitators facilitate accordingly the two sides during all the aspects of the talks.

Turkish justice based on Turkish logic that is based on present realities as the Turkish leaders stated again recently is:

a) Not based on the UN Charter or the UNSC adopted Resolutions as per. agreed points of the talks,

b) Not based on Human Rights and does not protect all legal citizens of Cyprus,

c) Do not help to achieve a just workable and lasting true reunification of Cyprus with no human rights violations of any legal Cypriot citizen,

d) The present Turkish realities are bases on Turkish military power and not on UN true facts based on UN adopted resolution and the UN Charter.

We remember the numerous UNSC adopted resolutions condemning all terrorist acts on the Republic of Cyprus, requesting the immediate withdrawal of all foreign troops, the respect of the sovereignty, Independence, territorial integrity and the return of all the refugees to their homes in safety, with none of these UNSC adopted resolutions implemented by Turkey.

Our comments for a true lasting Cyprus reunification are: First the Turkish-Cypriot and Greek-Cypriots must talk and act as European Cypriots. Second, Turkey must respect the UNSC adopted resolutions that call for all foreign troops out of Cyprus and the return of all refugees to their homes in safety. Third, the Turkish side must stop using Turkish justice and logic based on Turkish military power and expansionist policies. And finally, the UN as the facilitator of the talks, we expect: That the Secretary General and his Advisor remind all members of the Security Council especially the permanent members of the root of the Cyprus problem, and that the Turkish occupation of part of the Republic of Cyprus, a full member of the UN, is illegal and expect from them to help the Cypriots by enforcing the implementation of the UNSC resolutions asking for the removal of all foreign troops and the return of all refugees.

Implementations needed to:

a) Give the two leaders the true political will and the legal citizens the freedom to decide at the referendums that must finalize the solution.

b) Help all the Cypriots to understand that, they as European citizens in addition to their Greek-Turkish-Armenian and Latin Cyprian backgrounds must act accordingly.

Harry Theofanus

Human Rights Advocate and Past President of Cyprus Federation and PSEKA