The savings rate in Greece

[cjpraharaj]

Statistics available on the internet shows that the savings rate in Greece ( as a percentage of GDP ) has declined drastically and is far lower than most economies with comparable per capita GDPs. The investment ratio ( as a percentage of GDP or GNP ) has not declined as much, most probably due to foreign investment in Greece. Does anyone have any thoughts about whether the Greek government tried to take pro-active steps to prevent the savings ratio from declining to its present pathetic state ?

Monetary or fiscal schemes designed to make the level of savings in the economy increase will probably have limited effect on overall savings rate since monetary and fiscal policies have to achieve other objectives too. Moreover, Greece does not have an independent central bank, and even if it did, a central bank has only a few policy instruments and other concerns like inflation and unemployment. And the ability of governments to induce people to save more, say, by offering high interest-rate schemes ( for example, some kind of infrastructure bonds or similar financial instruments ), is limited by other fiscal policy concerns. How about drastic policy options like imposing some kind of tax at the source and putting the money in an investment fund of specific duration ( not necessarily a mandatory retirement account, but something along those lines, of shorter duration ) ? Does anyone have any thought about whether the low savings ratio in Greece is a response to the economic weakness it has been experiencing and the economic problems it has been having, or whether it is due to a drastic change in consumer preferences and the spending habits of the people or whether it is due to different allocations of profits by businesses ?

 

[Artevelde]

Actually, one of Greece's many problems is that Greek capital is fleeing the country. All Greeks who can have put their savings abroad, out of reach of their government and an eventuel default.

 

[waltky]

Granny says it all gonna come tumblin' down like a house o' cards...

Greek Economy Contracting at Rapid Rate
April 24, 2012 - Greece's central bank says the country's troubled economy is shrinking even faster than first thought.

The bank's governor, George Provopoulos, said Tuesday the Greek economy will contract as much as 5 percent this year - the country's fifth straight year of recession. Just a month ago, the bank had predicted the economy would shrink 4.5 percent. Provopoulos said that as soon as Greek voters pick a new government in the May 6 elections, the debt-ridden country needs to return quickly to imposing more austerity measures to keep its deficit spending in check.

"In this crucial environment, the Greek economy is called upon to make steady progress. Full readiness is required the very day after the election period ends, so that the war can be won on all fronts, beginning with building an effective and flexible state that serves the competitive functioning of markets and social cohesion," said Provopoulos. At the demands of its international creditors, Greece already has imposed widespread social spending cuts and eliminated thousands of government jobs in exchange for billions of dollars in debt relief and financial bailouts. But the measures have angered Greeks and prompted frequent strikes and street protests.

Provopoulos said Greeks have an obligation to adhere to the cost-cutting plan. "If, after the elections, the slightest doubt is cast on the will of the new government and society to carry out the [reform] program, today's positive prospects will be reversed and the country will rapidly find itself in a particularly harmful situation, with a negative effect on the psychology of the citizens," said Provopoulos.

Source

 

[waltky]

'Mass poverty' warning for Greeks...

Greek socialist leader Venizelos warns of 'mass poverty'
4 May 2012 - Polls indicate Mr Venizelos' Pasok will be punished at the polls by voters angry at austerity measures

The leader of Greece's Pasok party Evangelos Venizelos has said Greece faces a choice between austerity and "mass poverty" in elections on Sunday. "On Sunday, our people's fate is at stake," Mr Venizelos told the closing rally of his campaign in Athens. The leader of the centre-right New Democracy party, Antonis Samaras, said the Left was "playing games with the country's European future". Both parties are set to lose votes to those opposed to austerity measures. "Our place in Europe and the euro will be decided on Sunday," Mr Venizelos told supporters in Athens' central Syntagma Square.

Mr Venizelos served as finance minister until standing down in March to take over the leadership of the centre-left Pasok party. He said Greeks should opt to stay "on a course that is difficult but safe, after having covered most of the distance, to finally emerge from the crisis. "Or... we embark on an adventure, sliding back many decades and taking the country to default, to leave Greeks facing mass poverty," he went on. Speaking at his own closing rally in the city of Alexandroupolis, New Democracy leader Mr Samaras said "the Left "wants to destroy everything... The Left feeds off the crisis."

Fringe parties to gain

New Democracy is expected to emerge from the poll as Greece's largest party, but with only around 22% of the vote. Pasok, which has been governing in coalition with New Democracy since last November, has been in second place in opinion polls with around 18%. Parties opposed to the austerity measures that the Pasok-New Democracy coalition have been imposing are expected to gain votes.

The ability of the new government to carry on with the austerity programme will be crucial for Greece's continued access to bailout funds from the EU, the European Central Bank and the International Monetary Fund - the so-called Troika. Left-wing parties opposed to the terms of the bailout deal have collectively scored around 30% in opinion polls. There are fears that the far-right Golden Dawn party could gain more than 5% of the vote and enter parliament for the first time.

BBC News - Greek socialist leader Venizelos warns of 'mass poverty'

 

[waltky]

Greece out to scrap EU bailout...

Greek election: Syriza 'to tear up EU austerity deal'
8 May 2012 - Alexis Tsipras says his cabinet would reject "barbaric" austerity measures

The leader of Greece's left-wing Syriza bloc has said he will try to form a coalition based on tearing up the terms of the EU/IMF bailout deal. Alexis Tsipras, whose bloc came second in Sunday's vote, said Greek voters had "clearly nullified the loan agreement". He has three days to reach a coalition deal and has told the two major parties to end their support for the austerity terms if they want to take part. The European Commission and Germany say countries must stick to budget cuts. European Commission President Jose Manuel Barroso said on Tuesday: "What member states have to do is be consistent, implementing the policies that they have agreed."

But, after French voters chose a new president on Sunday in Francois Hollande who has advocated greater focus on growth, EU leaders are to gather on 23 May for an informal meeting at which his proposals will be discussed. German Chancellor Angela Merkel has written to Mr Hollande, saying that it is "up to us... to prepare our societies for the future and protect and advance prosperity in a sustainable way". The financial chaos has sparked huge social unrest in Greece and led to a deep mistrust of the parties considered to be the architects of austerity.

On Monday the leader of the centre-right New Democracy (ND) party, Antonis Samaras, abandoned attempts to form a coalition. ND came first in the polls but, in common with the centre-left Pasok - the other traditional party of power - saw its share of the vote dramatically reduced. In March, both parties backed the terms of the second EU/IMF deal agreed by technocrat Prime Minister Lucas Papademos. In return for its two bailouts - worth a total of 240bn euros (£190bn; $310) - Greece agreed to make deep cuts to pensions and pay, raise taxes and slash thousands of public sector jobs.

Their votes drained away in Sunday's elections in favour of smaller parties on the left and right, with Syriza picking up almost 17% of the vote. But because ND came first, it was awarded a 50-seat bonus in parliament according to Greek rules, and was initially asked to form a government. Twenty-four hours later it was Mr Tsipras who was given a mandate to form a coalition during a meeting with President Karolos Papoulias and immediately he began talks with prospective partners.

More BBC News - Greek election: Syriza 'to tear up EU austerity deal'

 

[Artevelde]

It's over and out for Greece. Sad really, but inevitable. Bankruptcy and exit from the Euro (and possibly also from the EU) are virtually inevitable. Fortunately most European banks have been able to write off their Greek loans in the meantime so that a default will only affect the ECB (which is strong enough to cope); the Greek banks (who will all have to be nationalized anyway); and some hedge funds.

 

[waltky]

Greece still a problem...

Greek Tensions to Persist in Coming Week
5/19/12 --- Market anxiety is expected to stay at elevated levels in the coming week as the political turmoil in Greece goes unresolved.

The week is a very light on the economic and earnings fronts, and it comes right before the Memorial Day long weekend. That means major domestic drivers will be few, and investors likely will continue to focus on the overriding issues in Europe. "The big question is 'what if'-type bad news like what if Greece leaves the eurozone soon?," said Ryan Detrick, senior technical strategist at Schaeffer's. "But what is important to remember is that no one has ever left the eurozone."

That bifurcated view of Greece's ultimate fate should continue to fuel volatility in global markets, Detrick said. At the same time, the heavy selling witnessed in the past two weeks means the odds of U.S. stocks catching a bounce are increasing, he added. "We are nearing some extremely oversold levels," Detrick said. "Should we see any positive news out of Europe next week, there is plenty of room to bounce."

With the market eager for some good news and a reason to rally, such a bounce could come from European Union officials saying they would prefer to see Greece stay in the single-currency bloc or from Greece voicing a preference to remain there. "But the big question is once we have that bounce, will it have any staying power?," Detrick said.

Michael Gayed, chief investment strategist at Pension Partners, had been very bullish about the prospects of the stock market, but he says he started shifting into bonds in early April. "If you look at market action, it's been a nearly constant decline," said Gayed, who noted that the selling has picked up since the European elections on May 6.

That's when Greek voters made a clear statement against austerity and put the country on track for another round of elections in June, while the French elected socialist Francois Hollande as president, a leader unlikely to continue predecessor Nicolas Sarkozy's pro-austerity collaboration with German Chancellor Angela Merkel.

Source

 

[Two Thumbs]

Greeks should learn to say "danke" instead of σας ευχαριστώ

And get used to taking it Greek from the Germans.

 

[editec]

Greece will go down that seems obvious.

I wonder how much that will cost taxpayers in the nations (other than Greece of course) where their national banks lent Greece money?

Because you know we cannot expect the BANSTERS to take losses on the loans they made to Greece, can we?

I mean there's no such thing as AUSTERITY for stupid lenders, only for stupid borrowers.