The situation on the ground in Athens [sovereignman]

My friend Illias took a drag of his cigarette as he contemplated my question.

“Our government tells us that this will be a better year. No one really believes them. But all we can do is be optimistic. Too many people are committing suicide.”

His statement probably best sums up the situation in Greece right now. It’s as if the hopelessness has gone stale, and the only thing they have to replace it with is desperate, misguided, faux-optimism. And anger.

There are roughly 11 million people in this country. 3.4 million of them are employed, of which roughly one third work for the government.

1.34 million people are ‘officially’ unemployed. To put this in context, it would be as if there were 36 million officially unemployed in the US.

More startling, if you add the number of ‘inactive’ workers (i.e. those who gave up looking), the total number of unemployed is roughly 57% of the entire Greek work force.

And as you probably know, the situation for young people is even worse. Only 1 in 3 people aged 25 and under has a job.

This phenomenon, sustained for several years now, has cut deeply into the psyche of an entire generation that is growing up without productive work experience or the prospect of improving their lives.

The middle class here has been completely gutted. Aside from a few pockets of wealth, the country is either unemployed or working poor, hamstrung by debilitating debt.

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The Euro Legacy: In Greece, Children Pick Through Trash Cans For Food [Zerohedge]

“We have reached a point where children are coming to school hungry,” as with an estimated 10% of Greek elementary and middle school students suffering from ‘food insecurity’, the troubled nation has fallen to the level of some African countries. As the NY Times reports, unlike the US, Greek schools do not offer subsidized cafeteria lunches. Exacerbated by the austerity measures including cuts in subsidies for larger families, the cost has become insurmountable for many. With 26% of Greek households on an ‘economically weak diet’, children are starting to steal for food and picking through trash cans as they proclaim, “our dreams are crushed.” What is frightening is the speed at which it is happening, “a year ago it wasn’t like this,” as one family talks of the ‘cabbage-based diet’ which it supplements by foraging for snails in nearby fields. Programs are being started to help from wealthier Greeks, but as one parent said, “unless the EU acts, we’re done for.”

 

Via NY Times,

As an elementary school principal, Leonidas Nikas is used to seeing children play, laugh and dream about the future. But recently he has seen something altogether different, something he thought was impossible in Greece: children picking through school trash cans for food; needy youngsters asking playmates for leftovers; and an 11-year-old boy, Pantelis Petrakis, bent over with hunger pains.

 

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Greek Unemployment Soars To New Record, 56.6% Of 15-24 Year Olds Without Job [Zerohedge]

Judging by ongoing momentum moves in various European stock and bond market indicators, one could be left with the impression that something in the continent is actually improving. And whilehope of improvement is certainly be high, the reality is vastly different as confirmed by the just released Greek unemployment data, which saw the broad unemployment rate soar to a fresh record high of 26.8% in October (24.1% males, 30.4% females – that’s nearly one in three), up from a pre-revision 26.0% in September, and up from 19.7% a year ago, the youth (15-24 age group) unemployment rising again to a new all time high of 56.6% (up from 56.4%), and the ratio of those employed (3.68MM) to unemployed (1.34MM) plunging to a record low 2.75x. At this rate it may well hit 1.00x quite soon. But even sooner, perhaps in a few months, the total number of inactive workers (3.34MM) will surpass all those who are working. In short, the Greek collapse is just getting worse and worse.

 

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Happy New Year Germany: Greece Needs A New Bailout [Zerohedge]

When it comes to the main sovereign story of 2011 and 2012, namely the endless bailout of Greece, now in its third iteration, the conventional wisdom is that courtesy of the near elimination of the country’s private sovereign debt and the fact that its official foreign debt held by benevolent taxpayer funded globalist powers (IMF, ECB, EFSF) has been mostly converted into a zero-coupon, perpetual piece of paper, the country is fine. After all it has no debt interest expense to finance, and the only shortfall it has to plug is that created by its primary budget deficit (which as we showed earlier is “improving” on a year over year basis not because the economy is improving, but because the Greek government is simply refusing to pay its bills). So there is nothing more to do but sit back and wait while the economy slowly recovers, the unprecedented internal imbalance with Germany is gradually aligned, are the unemployment rate drops, (while hoping that the population does not die out first) right? Wrong.

 

 

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The Humiliation of Greece [GolemXIV]

It’s not often we get to witness the moment when a leader sells his nation for money. Such a moment occurred in Athens last week.

At the behest and on the authority of Prime Minister Samaras and President Papoulias, an amendment to Greek law was drawn up last week. There was no debate in parliament, the vote is still to be purchased. But unless this amendment is challenged or changed, the change it will bring in will alter the future of Greece and its people every bit as much as the day Greece joined the Euro, perhaps even as much as the day Democracy was re-instated after the long rule of the Generals. Only this change will be a giant step away from Democracy and towards subservience to an unelected elite.

You can read the law in its original here. Here is a translation of the key part.

«The Beneficiary Member State, the Bank of Greece and the Hellenic Financial Stability Fund each hereby irrevocably and unconditionally waives all immunity to which it is or may become entitled, in respect of itself or its assets, from legal proceedings in relation to this Amendment Agreement, including, without limitation, immunity from suit, judgment or other order, from attachment, arrest or injunction prior to judgment, and from execution and enforcement against its assets to the extent not prohibited by mandatory law».

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Greece Shows What Happens When The Welfare Ponzi Ends [Zerohedge]

When no more money flows in, to fund outflows, then the jig is up for the pension fund ponzi. This, as evidenced by the ‘punching, kicking, and tearing at clothes’ that a Greek pension fund manager endured recently, is exactly what has begun in Greece. As Reuters reports, the fund manager “enraged” here audience when she asked the Greek journalists to ‘double their contributions’ to their social security fund, and spent the night in hospital for her efforts to keep the ponzi alive. It was a brutal sign of the fury many Greeks feel at the way the country’s debt crisis has dashed hopes of a comfortable old age. As New Democracy’s leader noted: “From July 2010 it was obvious that a debt restructuring would be inevitable. While foreign banks were unloading their Greek government bonds, no one moved to tell Greek pension funds to do something, that a haircut was coming.” Under a law passed in 1997 and refined in 2007, pension funds have to place 77% of any surplus cash in a pool of ‘common capital’ which must be invested only in Greek government bonds or Treasury bills (T-bills). So the PSI saved German and French banks but crushed Greek pensioners…

 

Via Reuters:

For hours the leader of the Greek journalists’ social security fund had been chairing ameeting about disastrous losses on retirement savings caused by the country’s economic collapse. “She tried to present herself as the fund’s savior and asked (members) to double contributions to 6 percent of salaries,” said one of those present that night at the Titania hotel. Spanopoulou, 58, did not succeed.

Greek Debt Buyback Update [acting-man]

It’s All ‘Voluntary’, Honest Injun!

We recently discussed that the mooted Greek debt buyback was getting more expensive as hedge funds flock into the debt to make hay from this latest desperate ploy. This has resulted in the truly bizarre spectacle of eurocrats trying to talk the value of the bonds of a peripheral country in trouble down. Pity there’s no ratings agency around willing to deliver a downgrade right now.

Now come reports that the Greek government has magnanimously decided to keep participation in the buyback ‘voluntary’ for now.

We hadn’t been aware hitherto that a plan to steal money from the bond holders outright was actually even considered, but apparently that is actually the case – why would they otherwise stress that it’s all ‘voluntary’? As soon as the buyback is no longer ‘voluntary’, there is absolutely no way anymore for bondholders to ever get their money back at par of course.

 

 

 

 

Reuters reports:

 

“Greece has hired Deutsche Bank and Morgan Stanley to conduct a voluntary buy back of its debt, a senior finance ministry official told Reuters on Wednesday.

Eurogroup finance ministers and the International Monetary Fund (IMF) agreed earlier this week to conduct the buy back by mid-December, as part of measures to make Greece’s debt sustainable.

Private sector analysts have since raised questions over whether it would attract enough interest from bondholders to deliver the promised savings and how it would be funded. “We hope that early next week, if possible on Monday, the Public Debt Management Agency (PDMA) will publish the invitation for the buy back,” the official said on condition of anonymity.

Deutsche Bank will be the lead manager. Deutsche and Morgan Stanley will act together as deal managers, the official added.

One proposal is to lend Greece around 10 billion euros from the euro zone’s rescue fund EFSF, which would allow it to buy around 30 billion euros worth of debt, cutting its outstanding obligations by around 20 billion euros.

Officials have said that the repurchase has a target cost of around 35 cents on the euro. The Greek official, however, said that Athens has not determined yet at what price it will offer to buy back the debt from private bondholders.

A repurchase at 35 cents on the euro is seen as a golden investment opportunity for hedge funds which have bought Greek bonds at rock-bottom prices.

But this is less certain for Greek banks and pension funds, which hold combined nearly 30 billion euros of Greek debt, about half of the outstanding Greek bonds in the hands of private investors.

Concerns that the buyback would be imposed on Greek banks at a price that would be unfavorable to them led their shares to plunge since Tuesday. “At this moment, we intend the buy back to be voluntary,” the official said.”

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