Greece currently has big problems. But I think their new government is doing a great job to improve their situation. As you can see in the video Varoufakis is a brilliant guy.
Really? The economy has plunged further into decline after showing some signs of recovery in the second half of 2014. Tax avoidance (cheating) has soared given Syriza's populist promises to roll back measures designed to improve tax collection (and the Greeks are the worst tax cheats in the EU). They have both told their EU creditors f*ck you - you'll never get back the money you just lent us - while simultaneously demanding EU countries lend them more money. Unsurprisingly this pissed off their only friends/supporters in the world. Within the EU, support/goodwill for Greece has collapsed since Syriza took charge.
Other EU countries have taken on huge debts to support Greece only to be berated by Syriza; Spain for example has given Greece 27 billion euro (equal to an entire year of government social spending) while Spain itself suffers 25% unemployment and a collapsed economy. Syriza has/is rolling back many reforms (like paying civil servants 13 months pay every year) while other EU country are continuing to cut back (e.g. on retirement ages). Many EU countries (e.g. the Baltic states) have lower average salaries and work longer before retiring than the Greeks and yet have paid into the rescue fund for Greece. After all this Syriza still blames the EU for their troubles? Or threatens to unleash Jihadists on Berlin?
The trouble with Greece is that the government hasn't balanced its books in 35 years and the economy produces little of value (olive growing and cheap tourist sector jobs) while expecting to live a live-style like the average German, British or even French or Italian who produce high value-add goods which are exported to the world. They continue to demand that the government spend more while avoiding taxes.
Syriza feeds this national self-pity by looking for outsiders (particularly the Germans) to blame for this. At some stage reality has to be faced.
14, not 13 salaries a year. There are the normal monthly salaries, then there are an "Easter" and a "Christmas" salary.
I learned of this via something almost out of a ancient Greek comedy, the lines of the Goddess of irony:
A Greek manager sent to manage an branch created here in Bulgaria to take advantage our cheaper labor was outraged when she found out we only get 12 salaries a year. How is she expected to live on only 12 salaries, she asked incredulously, what about the extra spending around vacations??
I think that it is not very relevant whether civil servants get 12, 13 or 14 monthly salaries per year. The schedule of pay packages is just an artifact of history.
What matters is the annual salary (or total cost of employment). This can then be split into e.g. 12, 13 or 14 - I don't care - payment lots. But if the total salary package of civil servants is something that the government cannot afford, then that is the problem.
Is that anecdote about a Greek manager in Bulgaria real? If there indeed are such managers, they are definitely very silly not to understand how different the terms of employment may be in different countries. The practices in your home country may be not at all relevant somewhere else, and this is not just the pay packages, but also days off, terms of laying off people, what things like health care is included, and so on and so on.
We have a stereotype that Americans are particularly ignorant of the rest of the world in this respect, but I don't know if that stereotype is really justified.
(FWIW, our annual gross pay in Finland is typically 12.5 monthly salaries; the .5 monthly salary is paid out at holiday seasons, typically in the summer. The creation of these bonuses are related to the economic situation in 1960's and 1970's: during their summer holiday, many people took a temp job in Sweden, and pay in Sweden was so much better that once there, many decided to stay. A "return bonus" was commissioned in Finland after negotiations between employers and employee unions, to motivate people come back to their normal jobs at end of annual leave. This has since those times transformed into a part of the regular compensation package for everyone. In shorter employments, you earn both holiday days and the holiday bonuses, which are then paid out typically at end of employment if you're not in a regular job.)
That's not too uncommon in Europe. In Denmark we also get something like 13.5 monthly salary payments. In order to ensure that all workers have extra cash flow around the time of the summer vacation [1], the Danish Holiday Act (Ferieloven) requires an extra salary payment about 6 weeks before the normal summer holiday period, equal to 12.5% of the annual "regular" salary (i.e. 1.5 normal monthly salaries). Well, modulo some complexity: in some arrangements a part of that money may go to a communal holiday fund run by your union instead, which uses it to operate vacation property that workers can use free or cheaply, and only half or so might be paid out to the worker in cash. But in any case, everyone gets 13 salary payments of some kind.
[1] It's an important part of Danish culture that everyone, of all social classes, should take a contiguous 3-week vacation in the summertime.
It's comments like this that make me sick in the stomach. I won't argue with @derriz because his lack of basic understanding of the situation both in Greece and the EU is extremely low.
To get a perspective of how inadequate German and EU (generally speaking) technocrats are at basic macro-economics take a look at Ben Bernanke's blog, on Germany's trade surplus[1].
NOTE: Noting @derriz posts I'd say there's a strange patterns emerging. He probably jumps into conversations just to make a point: Greeks are bad and they get what they deserve while Germans are good and we should follow their example. I will just say that this view is naive and stupid :-)
In a way yes I do think countries get what they deserve if they repeatedly vote for politicians which promise the impossible and enact self-destructive policies. For example not collecting taxes and borrowing 10% of GDP every year to over-pay under-worked state employees and fund grandiose vanity projects like the Olympics. It's all great until arithmetic catches up with you.
I'm from one of the other PIIGS, lost my job and had to emigrate. I lived through bank and property implosion and unemployment increasing more than 3-fold. I saw friends lose effectively ruined.
However, the other PIIGS have all faced the unfortunate reality of their position, recognized their OWN mistakes and tried to correct things by cutting back on public and private wages and government spending. After a few years of pain, they are all seeing improvement - particularly falling unemployment.
Only Greece seems to think the party can keep and what's even more irritating is that they are angry and bitter towards the very people - the voters other EU countries - who have made huge sacrifices to provide them with almost a quarter of a trillion euro to ease them over the required adjustments. Put yourselves in the shoes of a politician in a poorer (than Greece) EU country sending money to Greece instead of spending it on hospital, schools, etc. in their own country.
It's time for a reality check, my sick-in-the-stomach friend. It's time for Greeks to consider the plausible possibility that they bear some of the responsibility for its own unfortunate state. But I guess it's easier to blame German trade imbalances, international capitalism, the IMF, the EU, the US, bankers, anyone besides Greeks themselves for the problems of Greece.
Funny, it's point-by-point exactly the line of the french eco channel BFM Business (which, I concede, is my main and only source in term of economics matters). I am curious, are you also a listener of this channel ? If not, what medias also hold this line ?
I am pretty certain that the economical point of view diverge a lot between countries. France, UK, Italy and Germany all have common cultural roots but very different opinions about how economy should serve society. Thus, I think that the media could only agree so much on the specifics.
If we really all agree on the problems of Greece, it could be the first time ever all members of UE agree on something spontaneously...
>> But I think their new government is doing a great job to improve their situation.
Syriza was voted in to end austerity at minimum. They are nowhere near achieving this promise. Furthermore, their brinkmanship within the EU has made this even more unlikely.
All that has changed since winning the election is a steep degradation for the prospects of the Greek economy on almost every metric. The economic recovery early this year was snuffed out. Tax revenues have declined. Cost of sovereign borrowing is up. Bank deposits are flowing out.
I feel sorry for Varoufakis. He seems like a very sensible economist. Unfortunately the extreme elements of Syriza are driving Greece out of the eurozone and into much bigger trouble.
In what way exactly would it help to alienate the only parties that can provide sustainable assistance to Greece now and and in the foreseeable future?
Greece is one of the Euro zone countries that economically suffers the most from the EU sanctions against Russia. Their "flirting" with Russia, as you said, is merely trying to find a way to continue to sell greek agricultural produce to Russia. Given the economical state of Greece I think that's a pretty sensible approach.
Russia's share of Greek exports is less than 2%. Total value of the goods covered by the Russian sanctions is approx mio 200 EUR / year. I sincerely doubt that it is worth jeopardising EUs long term economic support to the Greek economy in an attempt to circumvent Russian sanctions even if individual Greeks or even sectors are hit hard by them.
@peterfirefly (sorry, I can't reply directly to you because of the negative karma of my original post)
Yes, the EU are of bigger importance, but OTOH those trade partners are still there. Only the exports to Russia are lost. If the trade amount relative to GDP really is 1%, that would amount to more than 2 billion Euros in lost trade. Greece is small and in a precarious financial situation, I can understand why they risk to affront other EU members for those 2 billion.
The Greek loss due to the Russian undeclared war against Ukraine is tiny, even if it meant that all the trade with Russia disappeared (which it doesn't).
Compare with Finland and Sweden when the Soviet Union fell.
They were hit a lot harder but they cleaned up and enacted reforms. They certainly didn't complain that Greece was unreasonable for not lending (or giving) them money so that things could continue as before.
Greece should have flirted with Russia earlier? I don't get that.
Of course, regarding requirements for compensation from Germany, it would have made sense to ask those in 1980, i.e. before joining an economic community with Germany, a community whose purpose was to put back wars and their compensation requirements, and start up a free trade area and bind economies together to avoid further clashes and wars.
Greece couldn't have asked in 1980. There was a debt conference in the early 1950s -by the world war winning superpowers of the time- that postponed compensation questions until the reunification of Germany (then thought to be coming soon). In 1990, after the reunification, the same superpowers convened again, and decided _instead of all countries and without consulting_ to drop the debt.
A mandatory loan from the Greek government to finance the German war effort would be at around 11 billion euros now. It is a multiple of that for many other EU countries.
I'm not saying that this "repay the war debt" is a good idea, but there certainly are a lot of hard to contest historical arguments for the validity of a small part of their claim.
Just for the record: Greek governments did demand war compensation before 1980, but Germany argued that that question has to wait until unification. After 1989 it was "too late"
Could you elaborate on Varoufakis' confrontational manners? I think you may be misattributing to Varoufakis some moves by other actors in the Greek government.
As for high stakes... well, the stakes for someone coming into the finance ministry of Greece in this Europe are huge no matter how you look at it.
Other EU countries have taken on huge debts to support Greece only to be berated by Syriza; Spain for example has given Greece 27 billion euro (equal to an entire year of government social spending) while Spain itself suffers 25% unemployment and a collapsed economy. Syriza has/is rolling back many reforms (like paying civil servants 13 months pay every year) while other EU country are continuing to cut back (e.g. on retirement ages). Many EU countries (e.g. the Baltic states) have lower average salaries and work longer before retiring than the Greeks and yet have paid into the rescue fund for Greece. After all this Syriza still blames the EU for their troubles? Or threatens to unleash Jihadists on Berlin?
The trouble with Greece is that the government hasn't balanced its books in 35 years and the economy produces little of value (olive growing and cheap tourist sector jobs) while expecting to live a live-style like the average German, British or even French or Italian who produce high value-add goods which are exported to the world. They continue to demand that the government spend more while avoiding taxes.
Syriza feeds this national self-pity by looking for outsiders (particularly the Germans) to blame for this. At some stage reality has to be faced.