Greece |

Glad They’re Not Greece

The graphic below from Morgan Stanley via this story at Business Insider appears to be today’s Chart of the Day on the internet, this coming after reports that the jobless rate in Greece rose from 27.0 percent in April to a record high of 27.6 percent in May.

Glad they're not Greece

It seems the “debt-laden PIGS (i.e. Portugal, Italy, Greece, and Spain)” are falling short in restoring economic growth, but nowhere is the pain as severe as in Greece. Youth unemployment stands at 64.9 percent as the nation recently entered its fourth year of receiving bailout money from their European overlords in return for belt-tightening.

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Higher Education in Greece

This Bloomberg story about campus life in the new, more austere Greece makes you wonder about the future of the Occupy Wall Street protests in the U.S. and about higher education in places like California where budget cuts will continue to be felt for years to come.

In the universities of Athens, the city where Plato taught and Cicero studied, campuses are covered in anarchist graffiti, stray dogs run through buildings and students take lessons in Swedish with the aim of emigrating.

Higher education in Greece, as in much of Europe, has been battered by the recession and austerity measures. Budget cuts of 23 percent since 2009 mean buildings aren’t heated in the winter, schools have slashed faculty salaries and newly hired professors can wait more than a year to be appointed.

Students say it’s hard to be hopeful with youth unemployment surpassing 50 percent and protesters seizing university buildings.

“People are pessimistic and sad,” said Konstantinos Markou, a 19-year-old law student, speaking in a lobby at the University of Athens, where dogs fought nearby and students say drug dealers and users congregate. “The sadness is all around the air.”

As universities in Greece reduce salaries and slow hiring, young academics are rethinking their careers there, said Leonidas Karakatsanis, 39, who received his Ph.D. in political science last year from the University of Essex in England and has a research fellowship at Panteion University in Athens.

“My initial plan was to spend some years abroad and return back to Greece,” Karakatsanis said. “Now it seems like it’s impossible to return to Greece. I’m starting to imagine myself living abroad for the next 15 to 20 years.”

While no one is expecting any U.S. states to follow the path of Greece, there are already some important parallels, namely, how policy makers continue to pass on a disproportionate share of the pain to the younger generation who have little political power and how people are adjusting to recent changes by relocating within the U.S.

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How Goldman Sachs Masked Greece’s Debt

Lest we forget that everyone’s favorite investment bank played a key role in the Greek tragedy that has been playing out for over two years now, this BBC video reminds us how some complex financial engineering by Goldman Sachs helped mask Greece’s debt for years, that is, right up until a new government was elected.

The term “loan shark” comes to mind when listening to this depiction of what Goldman did and, paraphrasing former Fed Chairman Paul Volcker, financial innovation that, over the long-run, benefits the economy stopped with the ATM machine.

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Greek Economy Now Poised for … Something

In this commentary at the Telegraph today, Ambrose Evans Pritchard seems none too optimistic about the chances of an austerity-fueled economic revival in Greece, citing the rather shocking comparison to the U.S. below about recent job losses.

In November alone 126,000 Greeks lost their jobs in a country of 11 million, equivalent to three and a half million Americans in a single month. The unemployment rate jumped from 18.2pc to 20.9pc.

This has not yet fed through into social breakdown. Greeks receive unemployment support for an average of thirty weeks, with a ceiling of €454 a month, according to Professor Manos Matsaganis of Athens University. Those with civil service tenure are placed on labour reserve for two years at half their basic pay, or a third their actual pay.

Once these cushions are exhausted, Greeks are on their own. The monthly ratchet effect will then become painfully evident. It is why the Orthodox primate Hieronymos II warned in a letter to the prime minister that ever further doses of the same “deadly medicine” is becoming dangerous.

“The voices of the desperate, the voices of Greeks are being provocatively ignored. Fear is giving way to rage and the risk of a social explosion can no longer be ignored by those who give orders and those who execute their lethal recipes,” he said.

Anyone looking for alternative solutions to what ails Greece should consider a recent comment by Jeremy Grantham about central bank policy: “Well, I wouldn’t start from here”.

When the government accounts for 40 percent or more of a nation’s GDP, you’ve basically purchased yourself a one-way ticket to a much lower standard of living and, if you haven’t already done so, have a look at last week’s New York Times story – The Way Greeks Live Now. I finally got around to reading it the other day and it’s well worth a look.

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