In Greece, Economic Crisis Brings Rage and Paralysis

By LANDON THOMAS Jr. Published: November 6, 2011

Petros Giannakouris/Associated Press

Pedestrians chatting on a street in Athens on Friday. A crisis atmosphere has brought the economy to a virtual standstill.

ATHENS — The tiny jewellery shop in the working-class Athens neighbourhood was open for business — barely.

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The shop’s proprietor, Tasos, who preferred not to disclose his last name, said he had not had a sale in more than three months. Because he cannot afford to pay his electricity bills, there was no light to illuminate his storefront display of jewels.

Like most Greeks here, he has, over the past few months, spent more time watching television than conducting commerce, as Greek politicians veered from one political crisis to another. His imagination has been battered with all possibilities of a disaster, not least the prospect that Greece might leave the euro.

The effect on his small business — which he says may have to close — has been devastating. His regular customers, most of whom he rarely sees these days, owe him 14,000 euros, about $19,300. Those that he does see are looking to pawn their family heirlooms to get by.

“The politicians are playing games with the people,” he said, his eyes red with exhaustion and stress. “This city is boiling. I am not a protester, but soon the top on the kettle will pop.”

That the Greek economy is in a downward spiral from a relentless program of austerity is well known. In October, Greek manufacturing had one of its sharpest declines ever, and this year overall production is expected to contract by more than 6 percent. What has not yet shown up in the official figures, though, is the extent to which the crisis atmosphere has brought the economy to a virtual standstill.

Auto sales have essentially stopped and are at their lowest level since 1993. People who do have cars have trouble with the expenses of operating them. In the last three months, the number of uninsured drivers increased by 500,000, bringing the total to 1.5 million.

Small shops, in many ways the lifeblood of the Greek economy, which relies on domestic demand, are closing by the day. And the heightened speculation that Greece might have to return to the drachma has sped up the flood of money leaving Greek banks: money to be deposited abroad, stashed at home or in one’s car, and most certainly not spent.

Since January 2010, Greek banks have lost $63.5 billion in deposits — or about 20 percent of annual economic output. But bankers here say that in September and October the numbers rose substantially, with estimates ranging from $13.8 billion to $20.7 billion for just these two months.

Dimitris, a retired truck driver who also did not want to have his full name revealed, recently sent his life savings, about $69,000, to Sweden because, as he put it, “Greece is going bankrupt.”

He has no doubt where the blame lies. “I am impressed that the people have not yet stormed into Parliament and burned the politicians alive — like a souvlaki,” he said.

The vitriol toward politicians is in many ways more intense than the outrage expressed toward the European Union and the International Monetary Fund. Politicians here rarely venture out in public, and when they do, even the most obscure member of Parliament is accompanied by at least one bodyguard.

All of it is giving rise to talk that, instead of putting forward another coalition of failed parties and leaders, new people with new ideas outside the political establishment should be brought in.

Among the people mentioned are Lucas D. Papademos, a former vice president of the European Central Bank, and Stefanos Manos, a former economy minister for the New Democracy Party who has long argued that any chance of true reform is hopeless until Greece lays off a large chunk of its inefficient public work force.

Mr. Manos’s latest program is even more controversial. He proposes that as much as $415 billion worth of Greek assets be put into a vast “goody bag,” including plots of land, sites of historical significance and even prized islands, as collateral to secure an immediate loan of about $105 billion from Europe that would be used to buy discounted Greek bonds and pay off debtors. In return, Greece would agree to sell most of the assets in the goody bag within the next 10 years or so and pay back the loan — with a bit left over, he hopes.

“Call me a taboo killer if you will,” he said. “Fire Greek workers, sell Greek islands — politicians here have to overcome their taboos.” And, he added, they have little time to do so. “Everything has stopped here,” he continued. “People are taking their money out of the country. The bomb is ticking.”

For many in Athens, it has already gone off. In the upscale neighborhood of Kolonaki, where much of the Athenian elite live and shop, stores selling luxury goods are shutting down left and right, the result of a Greek consumer strike that includes not just the lower and middle tiers of the economy but its highest as well.

In part, this has been driven by the intense pressure the government has been under to meet targets to secure its next round of loans. With tax collection still a challenge, Greece has imposed heavy value-added taxes on consumers and, most controversially, a special real estate tax has been attached to Greeks’ electricity bills.

But making matters worse, shop owners say, has been the political uncertainty and the constant strikes and riots that can shut down their stores for days at a time.

“Our business is in a free fall — down 70 percent since the crisis,” said Giovanni Urciuolo, the owner of Maurizio’s, a high-end women’s clothing boutique. At the end of the day on a Friday, while the street outside bustles with activity, his store was empty of customers — as it has mostly been during the past two months.

He is closing his flagship Kolonaki store in January and he, too, knows who is to blame. “We hate all politicians,” he said. “We think they are responsible for all this.”

Eleni Varvitsioti contributed reporting.

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