A Short Story About The Greek Credit Crisis: A European Morality Tale

Let's imagine a situation. Let's imagine that times have been good for you and you decided to buy a house, a house that you always dreamed of, a place that you can call home. The only problem is that this place is a bit pricey, certainly a stretch financially but what the hell, times are good, your credit rating is just fine and the guys at the bank just love you.

Alas, the economy takes a downturn, your job isn't as secure as it used to be and the boss is muttering darkly about downsizing and wage cuts. Now those mortgage payment instead of being steep become vertical so you go to the bank and decide to ask them if some kind of deal can be made. They look at you aghast, they had no idea that you are unable to meet your financial commitments, otherwise why would they have sent you all those credit card applications or phoned so insistently wondering if you want a loan for a new car/holiday/kid's dental work/shopping/home extension. They are shocked, shocked to hear that you have been so profligate with their hard earned cash, how on earth could you have deceived them in such an underhand manner?

But rather than lose a long standing customer (and a house they'd never sale for money you paid for it) they decide to offer you a loan to cover your debts. The problem is that this loan comes with some pretty severe conditions, no more outings, eating in restaurants is a thing of the past, also the kids really should leave home, they're a drain on your resources and frankly, granny's presence puts the family budget over the edge.

Grudgingly, you accept the terms, what else can you do? The problem is that the job market is still not getting better, the boss is demanding ever greater "flexibility" when it comes to salaries and that loan you just took out to cover the mortgage is still just beyond your pay grade. No matter how low the interest payments are, they are piling up and up.. So you go back to the bank and explain the situation, maybe rather than foreclose they could be persuaded to cut the total loan and allow you to pay, at least some of it whilst keeping a roof over your head. The mere suggestion is enough to make them choke on their mid-morning lattes and you get the impression that all is lost.

Yet, these are finance professionals and they know that a foreclosure would not only look bad for the bank, it would also not do their careers any good at all so they come up with a compromise solution. this time they'll issue you a credit card to draw upon when you need to pay the next installment of the loan you took out to cover your initial mortgage. Your kid's college fund will have to go, and that pension plan you took out is way too extravagant for a family of YOUR means. While you look dumb struck, they add a final condition,"you have to sell the family car". But how will you get to work or find a better job without a car? "No", they say, "a car is simply a luxury you can no longer afford, the price of petrol alone means it's not a viable option. Have you considered cycling to work?"

Without a car you cannot earn enough to pay off the credit card installment which you needed to pay off the loan you took out from the bank to pay back the mortgage you had with them. You refuse, saying the conditions are unacceptable. 

Welcome to Greece.

Is a Golden Dawn role in government on the cards in Greece?

Last week the leading commentator at one of Greece's largest private TV stations raised the possibility of a political alliance between the ruling conservative New Democracy party and the Neonazis in Golden Dawn.

"Why shouldn't New Democracy co-operate with a serious Golden Dawn?" asked Babis Papadimitriou, the head of the staunchly pro-government Skai TV. The statement was prompted by the latest opinion polls that show the continued rise of Golden Dawn, now at 13-15% and the poor showing of the other partner in the Greek ruling coalition, PASOK, whose fall from electoral Grace has seen support plummet from 42% to 7- 8% within the space of four years.

Papadimitriou's remarks immediately provoked a storm of angry response from Greek Twittersphere and political commentators, many of whom believe that this is the first step in the process of "rehabilitating" Golden Dawn. Such was the reaction that Skai dedicated an entire hour the following day to giving Papadimitriou a chance to clarify his stance. His argument was that Golden Dawn, Greece's third most popular party now represent a large proportion of  the electorate and that a similar alliance between centre right and far right parties had already taken place in Norway.

At first glance such an alliance would contradict prime minister, Antonis Samaras's  policy of presenting himself and his party as a bulwark against the threat of rising extremism. The Policy of The Two Extremes as it has been termed involves the government and its supporters in the pro-government mass media painting both its opponents on the Left and Right as a dangerous challenge to political stability, harking back to the often chaotic politics that Greece lived through during the 20th century. With junior partner, the nominally left-wing PASOK party hemorrhaging votes, it's leader Evangelos venizelos has been more than willing to go along with this strategy in the hope of scaring back voters from SYRIZA.

The violence used and glorified by Golden Dawn is therefore equated with supposedly similar trends in SYRIZA and the Greek Communist Party (KKE). In such an equation, brutal attacks on immigrants, Nazi salutes and 1930's style Brown Shirt street fighting is considered the same as strike action or sit down protests. In such a world, New Democracy and PASOK can present themselves as a sane alternative to such political madness, a stabilising influence in difficult times.


The problem with this theory is that just does not reflect reality on the ground, no matter how much political and media spin is used. The rise in political influence and extremism on right has not be mirrored by 1930's style street tactics on the left. It is Golden Dawn MP's who have been charged (though not sent to convicted of) with a raft of offences ranging from assault to possession of illegal weapons. It is their supporters who have repeatedly been accused of endless list of attacks against immigrants and increasingly domestic political opponents.

As if to underline this just a day after Babis Papadimitriou talked of the possibility of  bringing Golden Dawn in to government, 50 of their supporters took part in a bloody attack on Greek communists who has putting up posters in the city of Perama which left nine of them in hospital.

On other hand the differences between Golden Dawn and New Democracy are fewer than they'd either would like to admit publically. The lurch to the right that PM, Antonis Samaras brought to his party has seen the rise to power of far right supporters, many refugees from the ultra-nationalist LAOS party which was all but wiped out in the last elections. In terms of immigration, for example, New Democracy's policies are little more than a more polished version of unvarnished racism of Golden Dawn.

Despite the political risks that both parties face forming an alliance, New Democracy, at least may not have any other choice. The party cannot rule on its own, having seen its share of the vote drop from 40+ % to 26-29% and it's current coalition partner PASOK is fading away, suffering a wane in political fortunes on par with that which struck the UK Liberal party in the 1920's.

Although die-hard supporters still maintain that PASOK leader, Evangelos Venizelos has a master plan to turn the situation around, the reality is that its decline is irrevocable and that any recovery that may take place is years in the future and almost certainly without the presence of Venizelos who has become personally identified with the decline in Greece's fortunes. The fact that a recent poll found that in one of Greece's largest electoral districts in Athens support for PASOK among younger voters was 0% just underlines the the scale of the problem.

Some commentators have argued that the government's demonisation of Golden Dawn rules out a coalition however, in true Orwellian fashion  New Democracy has changed policy stances on a number of occasions. Samaras positioned himself when in opposition as Greece's best hope to fight austerity and then once elected to promote himself as its most loyal defender. Yet one more u-turn in a long history of such moves would surprise few observers and given Samaras's own history as a semi-reconstructed ultra-nationalist an alliance with Golden Dawn would far more sense than one with his arch political rival, PASOK and its leadership.

What is in this for Golden Dawn is less clear since its entire existence is predicated upon its staunch opposition to the political establishment which it has painted as a hotbed of corruption and worse. They have made much of their anger with austerity, promoting themselves as agents of national resistance against a anti-Greek, internationally orientated elite who are betraying the homeland in order to hang onto power. To suddenly join up with New Democracy would risk them being consigned to the dustbin of history, suffering the same fate as far right LAOS party who made the same transition and paid the price for it at the polls.

On the other hand the siren call of access to the State and all the power and privileges that go with it has turned many a head in Greece's turbulent political past. With government position comes the ability to reward followers with public contracts and civil service jobs, a potent recruiting tool in difficult times. More importantly, a role in government brings legitimacy especially in the eyes of Greece's oligarch owned mainstream media who would quickly forget any qualms they once harboured about hosting violent Nazi style idealogues.

None of this is likely to happen soon unless the tensions that underlay the government coalition become untenable and since neither side is looking to go to the polls before it is absolutely necessary that seems unlikely. However, the fact that pro-New Democracy media is mooting the idea of a future alliance between Golden Dawn and New Democracy means that the prospect is being discussed and the waters tested.

Faced with the possibility of a future government lead by SYRIZA Greece's economic and political establishment would be more than willing to hold its nose and embrace a Neonazi party rather than see Greece clash with creditors over the terms of the bailout deal and the attendant risk of exit from the Eurozone.
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*Note. This post was written just days before a man identified as a Golden Dawn member was accused of stabbing to death singer and left-wing activist Pavlos Fyssas.

International Citizen Audit Network (ICAN) Meeting - Thessaloniki, Greece 2013

Iolanda Fresnillo - International Citizen Audit Network (ICAN) Meeting, a photo by Teacher Dude's BBQ on Flickr.

"European activists meet in Greece to discuss the debt problem, coordinate resistance strategies and
propose alternatives.

The International Citizen Audit Network (ICAN) holds its third meeting in Thessaloniki from February 15th to 18th 2013, with the participation of activists against debt and austerity measures from Spain, Italy, Portugal, France,Belgium, the UK and Greece. ICAN brings together, from April 2012 and under the slogan "We don't owe! We won't pay!", movements and networks in different European and North African countries fighting austerity measures and debt problems through Citizen Debt audits."

cadtm.org/IMG/article_PDF/article_a8811.pdf

Despite crisis good times still roll for Greek MPs

Antonis Samaras is currently doing the rounds in Europe, attempting to persuade fellow EU leaders that Greece needs two more years to fulfil the obligations required to receive the country's next installment of cash to avoid bankruptcy. Samaras has even personally guaranteed that Germany will be repaid in full, though how intends to do this is another matter, unless there is a secret coda in Steve Job's will that no one has been aware of till now.

On the other hand The PM's attempt to prove the Greece has changed and become a more fiscally responsible country have been undermined by even high ranking members of his own government, who upon being elected to parliament seemingly appointed to state jobs just about every member of their extended family not in jail or the grave. Case in point being New Democracy heavy weight, Vyron Polydoras, who secured a government job for his daughter after Greece's first national elections in May. Polydoras was also involved in a scandal during the Karamanlis administration after he used his position as minister for public order to have them transferred to his own offices.

However, this misuse of parliamentary privilege is not limited to New Democracy as such moves have been made PASOK, Independent Greeks and Golden Dawn MPs, with a total of 150 extra employees being added to the public payroll at a cost of nearly 3,000,000 euros annually.

At first sight such nepotism and pork barrel politics would seem to give fodder to Greece's foes in Europe who argue that Athens refuses top take reforms of its bloated state sector seriously. However, such accusations ignore the fact that these abuses are the preserve of the those at the top of Greece's deeply corrupt political system. For ordinary Greeks, the cuts in spending are very real indeed. A telling example is that while 187,000 people registered as jobless receive unemployment benefit (usually less than 400 euros a month), 734,000 do not. Hardly evidence of profligate welfare spending and for those who remain unemployed for more than 12 months there is little in the way of financial assistance form the State.


The irony of the situation is that during Greece's deeply divisive dual elections in summer much of the European political leadership and the financial establishment across the world exerted as much influence as it could muster to shore up support for New Democracy and Antonis Samaras, and in doing so helped maintain the corrupt political empires that helped Greece get so deeply into debt in the first place. 

Stand up and fight

Stand up and fight, a photo by Teacher Dude's BBQ on Flickr.

If you don't, who will?

Where they make a desert, they call it salvation

Where they make a desert, they call it salvation, a photo by Teacher Dude's BBQ on Flickr.

Tacitus updated for modern economic realities.

As Greece slides further into an economic downturn that matches the very worst period of the Great Depression, the country's creditors and and the domestic political elite talk of salvation, prosperity and growth.

Greece: Light blue touch paper and stand well back

Evangelos Venizelos, a photo by Teacher Dude's BBQ on Flickr.

Over the last two days it seems that the Greek government has been in tense negotiations with the IMF and EU partners over the conditions attached to the country's sixth bailout installment. The local media has been cutting into normal programming to report even the the slightest update over the state of play.

In an address to the nation on Sunday, deputy prime minister quoted Churchill to show quite how serious the situation Greece was facing. In Venizelos's opinion anything but a united front by Greek political parties, academics and the media would lead to disaster and  in a fierce attack on critics he stopped just short of accusing those opposed to the austerity measures of treason.



So considering the atmosphere of supposedly feverish negotiations it came as more than a surprise when the IMF's official spokeman said that Athens's creditors had in fact demanded no new cuts or taxes but rather that the ruling PASOK government applied measures that had already been agreed upon in summer.

And there you have so many of Greece's problems in a nutshell. The country's political elite, even as the situation deteriorates even further still continues playing the same old games.Like generals fighting the last war, the leadership of PASOK still thinks it can fob off foreigners with promises it cannot keep while fobbing off domestic critics with talk of victories won.

However, this particular web of half-truths, fudges and outright lies is about to crumble as it becomes more and more apparent that Athens hasn't the political power to stop massive cuts in public services and pay. On the other hand local trade unions, public sector workers and huge swathes of the population facing yet more tax hikes are at breaking point. After three years of recession pockets are empty, people are desperate and anger at the mendacity and ineptitude of the country's political class is at an all time high.



Even before the present debt crisis public confience in the political system was low following the seemingly endless series of corruption scandals that dogged the conservative New Democracy's five years in power. Even by the abysmally low standards of Greek politics the Karamanlis administration had reached new depths of veniality, helped in part by laws drafted by present deputy PM Venizelos protecting ministers from prosecution.

Both major parties are polling historically low and are struggling to get more than 20% of the vote. Nor have the smaller parties both of the left and right been able to capitalise on this trend. Instead there has been a widespread sense of disgust which is signalling a seachange in Greek political life.The current politicial set up is in crisis and despite frantic claims to the contrary no one is clear about how to get Greece out of the hole it finds itself.

Outside the hermetically sealed world of party politics however, protests movements are being created that promise to challenge prime minister Giorgos Papandeou's plans. Even the traditionally pro-PASOK public sector trade unions are promsing a long drawn out fight over cuts in pay, conditions and numbers. A battle that will intensify once details of lay-offs involving 100,000 civil servents are announced this week.



Less predictably, and perhaps more explosively, the country's Indignant movement is likely to see a resurgence following it's violent surpression in June. In addition the "I Won't Pay" civil disobedience movement created to fight road toll hikes is likely to pick up support amongst the 5 million housholds facing an emergency property tax in October as part of their electricity bill. Failure to pay in full will, according to the government result in people having their power cut off

This measure is deeply dispised as it is seen as little more than a legislative smash and grab that will includes the unemployed and disabled but not the nation's second largest property owner, the Greek Orthodox Church.

Just today there are at least three major demonstrations being planned in central Athens, a number that is likely to rise as the full extent of Athens's new austerity measures beome clear.

Venizelos may have compared himself with Winston Churchill on Sunday however, Marshal Petain, leader of the puppet Vichy French regime during World War Two seems a much closer historical fit, given how much national sovereignty has been surrendered propping up an economy on the brink of collapse.

How did it come to this? The roots of the current Greek economic crisis

Looking into the abyss - Giorgos Papandreou, prime minister of Greece, originally uploaded by Teacher Dude's BBQ.

This article was originally written last February but I thought that I would post it again since most of the points remain valid and especially in light of the fact that Eurostat has warned that Greek debt numbers are to be revised upwards for the years 2006-2009.

Much of the current media coverage over Greece's debt crisis is focused on how the country is going to raise the funds necessary to cover the $400 plus billion it owes creditors. Scenarios concerning the role of Germany and/or France in bailing out Athens are discussed constantly on national TV and in the newspapers and what will need to be done in order to convince Greece's European partners to cover cost of lending the billions needed just to keep the country afloat.

However, whatever happens in the coming months the question of what Greece does next in a world in which its financial choices are closely scrutinised by whatever monetary institution steps into the breach to save the country from bankcruptcy has not been addressed.

The prospect that an elected socialist government will be obliged to implement a conservative fiscal policy controlled by unelected officials raises all kinds of political dilemmas which Giorgos Papandreou's PASOK administration will have to deal with in the immediate future.


Papandreaou will be forced to challenge directly exactly those public sector trade unions which have put him and PASOK in power. In addition he will be forced to cut areas of spending which have been used by successive government to ensure political support.


The prospect of a place in the Greek civil service has long been the source of political power for parties on the right and left of the political spectrum. This combined by the promise of public sector contracts to economic elites in the private sector form the basis of the country's feudal political structure and in no small measure contributed to its present woeful economic situation.


Instead of land and power being swopped for military service the present Greek version of feudalism sees votes and political support flowing up the system in return for public funds and the influence it garners flowing downwards. It is a structure of patron-client relations which links the heads of the major parties to the humblest villager and is the lifeblood of modern Greek politics.


The ebb and flow of such influence and the complicated web of personal, familial and political relations that it engenders helps explain much of the apparent confusion and chaos of modern life in Athens and other major cities. Much of the country's infrastructure is divided into a patchwork of competing fiefdoms that have formed as a result of the present political setup. Each participant owes their position and continued economic well being to maintaining the right connections with those above and below them in the hierarchy. In such a system qualifications, skill, effectiveness and ability play second fiddle to being able to stay in with those who are in a position to advance your career.


Another by - product is chronic inefficiency and confusion as its duty of every fiefdom to ensure that it gets the maximum amount of resources in order to guarantee its survival. Co-operation and cost cutting mean giving up exactly those resources one needs to make sure that money and influence continues to flow to those whose support you need.


The effects of this system also affect the private sectors as the companies competing for contracts with the public sector, a huge player in the Greek economy, do so on the basis of political, personal and family connections. In some cases this takes the form of outright bribery but many others there is the mutual understanding that favours given must at some point be returned. It is no coincidence that many of the country's richest men have media wings attached to their business conglomerations which can be used to promote or attack parties and politicians .


The upshoot of this unholy alliance is that crony capitalism and "licence Raj's" dominate the economy stifling innovation and competition. There is little incentive to cut the cost of your product or improve the quality of your service in such a system. As a result Greek companies will dominant nationally rarely have the expertise to break into developed markets where transparency means that methods used at home cannot be employed.


Whilst foreign observers often point the finger of blame at Greece's powerful public sector unions for lack of competiveness and low productivity the reality is that pay in the private sector has remained stagnant for years and that much critised worker protection laws are rarely applied to non - public sector businesses. Despite a pool of cheap, educated labour which can be hired and fired at will the private sector has done little to prepare the demands of a modern globalised economy and instead reaped the benefits of European Union's lowest wage while raising prices far beyond the rate of inflation safe in the knowledge that an invisible web of cartels and unofficial "gentlemen's agreements" mean that they will not be faced with any real competition.


It is difficult to see how an economic and political system run on such principles can reform itself in the kind of time scale being proposed by Europe and controlled by exactly those people who helped run the country into the ground in the first place. The obvious answer is that Greece will not be able to implement the kinds of reforms being demanded and that in trying to square the circle the country will tear itself apart as different social and economic groups turn on each other to preserve a semblance of their priviledges and power.


Already there has been a growing wave of political violence with terrorist attacks now forming a staple of the daily news. That combined with a burgeoning crime rate form the background to a society that appears to be gradually coming apart at the seams.

http://www.nowpublic.com/world/greece-morning-after

Debt kills - International Monetary Fund Special Tactics Division

Debt kills - IMF, originally uploaded by Teacher Dude's BBQ.

IMF/EU/ECB - Resistance is anything but futile

IMF - Work will set you free, originally uploaded by Teacher Dude's BBQ.

One of the worst aspects of the current economic crisis here in Greece is the way it has sucked the hope out of so many people's lives. The current austerity measures offer nothing in the way of hope for the millions of Greeks on lower incomes whose backs are already up against the wall. This sense of dispair limited to any one group or region but rather has spread like some infectious disease throughout the social spectrum.

Talking to friends the conversation always seems to find its way round to the financial mess the country finds itself in. Everyone I know is worried about the future since the massive economic dislocation we are all going through seems to offer nothing but years of poverty and deprivation, negating decades of hard won progress.

For the young the sense of a future deferred, cancelled, even is strongest. What do they have to look forward to? Unemployment, low wage dead end jobs, a life spent living with their parents? After so many years of study and struggle they are coming to the realisation that much of what they were working towards has disappeared and nothing is being offered to take its place.

Prime minister Giorgos Papandreou may talk about the light at the end of the tunnel but few believe his words as they are the same broken promises that the Greek political class have been manking for years. The same wooden language expressing ideas that no one listens to anymore (not helped by the fact that Papandreou is a monumentally awful public speaker).

The fact is that that the recently elected PASOK party has absolutely no popular mandate for the changes they are making to pension schemes and wages since none of the recent measures were in their pre-election manifesto. Papandreou insists that his party had no idea of the size of the deficit they were inheriting on taking power last year (a contention vehermently dened by the head of the Bank of Greece who says that the head of the opposition knew of the massive overshot in public spending figures). Yet it is a measure of the collapse in public trust in the present political system that few are willing to believe him.

Lacking a mandate the leadership of the PASOK party has resorted to fear and intimidation both within and outside parliament to push through legisaltion demanded by the IMF/EU/EB troika. Any MP refusing to follow the party line faces immediate dismissal form the party whilst outside parliament the presence of riot police has become a permanent fixture of demonstrations of any size.

However, this is just the beginning, the real battles lie ahead of us in September when Greek politics traditionally revive after the lethargy of a long, hot summer. Also the effects of the first wave of cuts in wages, rising unemployment and the fall in income from tourism are likely to combine to form a perfect poltical storm. In the face of such massive unrest it is hard to see how Papadreou is going to maintain party discipline amongst PASOK backbenchers already deeply upset about the route the party is taking. Likewise the party base is unhappy with being identified with such wildly unpopular policies.

In addition there is every likelyhood that the Greece will fail to find enough revenue to fulfill Troika (IMF/EU/ECB) targets and will be forced to borrow even more to pay the bills. Already a second rise in VAT has been imposed on an economy struggling to become competitive, a clear indication that government measures to increase revenue are not proving as effective as Papandreou promised.

With a spiralling debt, massive drop in economic activity and steadily rising unemployment how long is it before Athens is forced to renegotiates its debt load?

Greek riot police about to use pepper spray against protesters outside town hall - Thessaloniki, Greece

Greek riot police about to use pepper spray against protesters outside town hall - Thessaloniki, Greece, originally uploaded by Teacher Dude's BBQ.

The riot police were used to break up a protest outside the town hall in Thessaloniki last week. Despite a pledge by the Minister for Protection of the Citizen (obviously, 1984 is not required reading for those who renamed the ministry) that the police would not be allowed to use chemical weapons such as tear gas and pepper spray they employed both liberally on the peaceful demonstration..

That, like some many other promise made by the recently elected PASOK administration seems to have gone out of the window. With the economic crisis set to worsen and austerity measures unprecedented in modern Greek history on the table this is just the beginning. As a speaker at a rally I attended today pointed out the war reparations which played a pivotal role in the economic collapse that brought down the Weimar republic amounted to 2.5% of GNP (the Wiki article on WWI reparations quotes a figure of 4-7%). Greece is being asked to devote 12.5% of its GNP to servicing its debt payments. There is no way any government can last with such a noose around its neck.

Greece set to explode over austerity package

Greece set to explode over austerity package, originally uploaded by Teacher Dude's BBQ.

On Wednesday the Greek government announced its long awaited package of economic measures to deal with the financial crisis the country has been facing since the discovery that the previous conservative government under prime minister Kostas Karamanlis had systematically lied about the country's debt load,. At the beginning of 2009 the Greek minister for finance, Yiannis Papathanasiou confidently predicted that Athens public lending requirements would not go above 3% of GNP, a figure that gradually creeped up over the following months.

However, no one, including Greece's EU partners nor the international money markets were quite ready for the real figure of 12.3% which only came to light following the crushing defeat of New Democracy in the October general elections.

On taking power Giorgos Papandreou, like president Barack Obama immediately found himself in the middle of an economic maelstrom unprecedented in recent history. Unlike America, Greece's chronically weak economy combined with a history of fiscal deception and misinformation meant that newly elected socialist PASOK party had very little room for manouevre with state coffers empty and debt repayments looming. A situation not aided by the role of speculators who saw in Greece a way of exploiting fears about the Euro and so bet on the currency losing value.

The upshot of the crisis is that a socialist government elected on a platform of social reform and aid to the poorest is currently attempting to implement a conservative fiscal reforms which are straight out the Thatcher - Friedman play book and so achieve in five weeks that which the previous right wing administration failed to do in five years in power.

Already swingeing price hikes in the cost of petrol, VAT and and the promise of wage cuts across the board have produced a wave of strike actions and protests. And this is just the beginning. Last weeks marches were marked by violent confrontations between marchers and the riots police who, despite orders by the Minister of the Protection of the Citizen, Mihalis Chrysohoidis used tear gas to disperse those present.

In scene reminiscent of December 2008 the heart of Athens once more resembled a war zone. In addition trade unionists and left wing protesters attempted to storm the ex-ministry of Macedonia and Thrace in Thessaloniki, Greece's second largest city. Like the 2008's outbreak of violence the confrontation are being fueled by a deep sense of outrage and injustice and are drawing support from a wider cross section of society. Enraged pensioners are just as likely to take part in these protests as disenfrancised youths.

As the austerity package starts to bite and the knock on effect of such a drastic change in the economy is reflected in skyrocketing unemployment then these clashes are set to increase in both size and intensity as more and more people take to the streets to voice their disagreement.Next week the country's trade unions have declared another general strike and with the work stoppages are planning public demonstrations which are likely to see a repeat of last Friday's violence.

At the heart of the protests lies the belief that while the country is indeed corrupt and that the public service is bloated and inefficient billions of euros has been siphoned off illegally and that the man in the street is being asked to pay for the folly of the local economic and political elites who have used their power to get rich at the cost of the rest of the country.

The fact that the PASOK politicians asking Greeks to make sacrifices have been repeatedly embroiled in corruption and bribery scandals has done little to convince voters to accept such painful cuts. Over the last decades members of both main parties, New Democracy and PASOK have been accused of a seemingly endless list of scandals involving corruption and influence peddling yet not one MP has ever been convicted or gone to jail. In such a climate of lawlessness where those in power seem able to float the law with impunity few have the moral stature to ask ordinary Greeks to give up so much in such a short time frame.

Although untouched by scandal personally, Prime minister Giorgos Papandreou's party is currently facing allegations that the German Siemens electronics corporation paid bribes to high ranking PASOK officials in order to win contracts for the 2004 Olympic Games held in Athens.

The Games which cost three times the previous ones in Sydney provide an insight into how the present economic crisis came about. Massive cost over runs, lack of transparency over contracts and a legacy of expensive facilities which lie rotting and unused across Athens are testiment to Greece's system of crony capitalism where efficiency, cost, competion, and innovation count for very little in an economy where political favours, kick backs and bribery are the rule rather than the exception.

Poverty in Greece

Poverty in Greece, originally uploaded by Teacher Dude's BBQ.

To listen to some international accounts of the current debt crisis you might be forgiven for thinking that the 300 billion euros Greece owes has been used to fund some kind of Balkan version of a Scandanavian welfare state. That the money has been spent on funding an unsustainably generous social safety net.

However, even a brief visit to the country's decrepit hospitals and threadbare schools is enough to disabuse even the most casual observer that that the huge mountain of debt accumulated has been used to improve the lives of the poorest Greeks.

While in theory Greece has a welfare state that compares with other EU members the reality is that much of this provision is of low quality or non-existent. As a result of such systematic deficiencies people are forced to pay for services that other Europeans take for granted. Few, if any student entering the countries universities have got there without massive investment of time and money by parents in the form of expensive extra tuition.

Similarly, medical treatment in the country's supposedly free health care system costs billions in terms private charges and bribes.

Instead most of the money has simply evaporated in a miasma of corruption and incompetence which sees that any public service contract almost invariably goes over cost and requires double ot triple the time originally alloted.

Case in point is the underground system being built in the northern port city of Thessaloniki which started 45 months ago and already is 32 months behind schedule. That number is set to rise as the Itallian construction company which won the countract has announced that it will fire 80% of its employees in March if it does not receive extra funding.

On the other hand the country Greece's bloated public sector can still afford to pay some of its better connnected employees 16 salaries per year. Those luckily to be employed by parliament are paid for 16 months work annually. At the other end of the spectrum tens of thousands often wait months or years to be paid wages owed.

Giorgos Papandreou has been working hard over the last week at the Davos World Economic Forum to try and persuade fellow Europeans and international economic markets that the his newly elected socialist government can reign in spending and raise more revenue. However, how much influence a system that his party has been instrumental in setting up and maintaining over the last 30 years is open to doubt.

For the last four decades both left and right have used the public sector as a way of gaining and maintaining voter loyalty by handing out jobs and contracts in return for political support. As a result the country's infrastructure has been manned not by the brightest or the best but the most faithful.

Entry and progress depend not on competence but on maintaining the myriad of personal, family and political connections that form the basis on any succesful career in Greece.

With unemployment predicted to hit one million in 2010 conflict and clashes between social groups unwilling to make sacrifices and a government unable to pay seem unavoidable. Already farmers have blockaded much of the country's transport network in order to demand one billion euros in funding and sweeping changes in agricutural policy.

Demotix

Christmas cheer, anyone?

Christmas is almost here and at least in Thessaloniki the atmosphere has calmed down. However, in Athens the situation still remains tense. Yesterday a coach carrying member of the MAT (Greek riot police) was fired upon in the Gouda district. The vehicle was hit by two 7.62mm rounds, most probably fired by a AK47 according to Alpha Channel.

No one has been arrested but one thing is sure we should all take the official police reports with a grain of salt. The Greek police's account of events over the last two weeks has consistently proved to be inconsistent and inaccurate. As a source of reliable information they have proved to be disappointing.

The economy seemings to be teetering on the edge the cost of serving the country's debt (93% of GNP) rising steeply due to worries over the unrest. There is even talk of going to the IMF if other source of credit are unavailable. Not much to celebrate really and this is reflected in the shops where people are buying just the essentials for the holidays, numbed by the thought of what might happen next.

Still, if you are celebrating the hoildays I hope you have a great time.