Monday, March 10, 2014

Christine Lagarde thinks the troika got it wrong on Greece? If only she knew

 Alex Andreou

Alex Andreou, Tuesday 25 February 2014

The IMF chief's admission that the wrong solutions were applied to the crisis seems crass, given what Greeks are suffering

Christine Lagarde at George Washington University

Christine Lagarde claimed that the IMF, the EC and the ECB had ‘made sure there was enough of a safety net so that people who were most exposed would not suffer too much'. Photograph: Handout/Getty

Christine Lagarde made some comments in an interview for Australia's ABC which have passed largely unreported, Greece no longer being the crisis en vogue. She admitted that the troika – the entity consisting of the European commission, the European Central Bank and the International Monetary Fund, of which Lagarde is the head – was mistaken in its calculations initially and that this led to the wrong economic solutions being applied to the Greek crisis. She claimed, nevertheless, that they had "made sure there was enough of a safety net so that people who were most exposed would not suffer too much".

I don't know what Lagarde sees when she visits Greece. Perhaps it is a different country to the one I experience whenever I travel back. After all, for someone on a cool, tax-free $500,000 salary, who no doubt flies first class and is transferred by limousine between five-star hotels and clean, white marble conference buildings, reality may be easy to miss.

Or perhaps there is another, first-class reality, a five-star version of events. Such a visitor is unlikely to see the old women clad in black dresses and scarves, who appear like an ancient Greek chorus as soon as supermarkets have rolled down their shutters, in order to search through the bins for scraps in the evening gloom. Or the thousands queueing up every day for care packages from Médecins du Monde, or the addicts shooting up in the streets, or the body bags of families being wheeled out of flats, suffocated as they burned rubbish in their stove to keep warm. In my own small town of Mykonos – largely insulated by virtue of its popularity as a holiday destination – two people tried to kill themselves last week, due to financial ruin.

On Friday the respected medical journal the Lancet published a report which told quite a different story to that offered by the head of the IMF. It set out the devastating effect austerity has had on the health of the nation. It explained how the drastic reduction in healthcare and social spending combined with the pressure of a higher tax burden, unemployment of nearly 25% and an economy which has shrunk more than 20% in the last few years to create a pincer movement which has caught millions of innocent people in its grip.

It has resulted in 800,000 people with no health coverage, escalations in HIV infection, suicide rates, infant mortality, child abandonment, deaths related to violence and ill health from poor nutrition. All the data were corroborated, and have even deteriorated since being collated for the report.

"In view of this detailed body of evidence for the harmful effects of austerity on health, the failure of public recognition of the issue by successive Greek governments and international agencies is remarkable. Indeed, the predominant response has been denial that any serious difficulties exist", the Lancet report concludes. "This dismissal meets the criteria for denialism, which refuses to acknowledge, and indeed attempts to discredit, scientific research."

It is the essence of such denialism which Lagarde exhibits when she says Greece is out of the woods and praises the country for reportedly achieving a primary surplus of more than €1.5bn – a giant amount for such a small economy. This surplus is in itself the subject of very lively debate, with many suggesting it is the result of the same creative accounting techniques that got the country's economy into trouble to begin with.

This denial is accompanied by a monumental crassness; a lack of even the most rudimentary understanding of Greece's collective psyche, its people and its history. How else can one explain Lagarde saying that "we can only celebrate now the fact Greece is finally coming out with a primary surplus, as we call it, which hasn't happened since 1943"?

In 1943 Greece was in the middle of a four-year occupation by Nazi Germany, a period during which the country mourned nearly 10% of its population; the victims of violence, execution, disease and hunger. The Great Famine of Athens alone resulted in an estimated 300,000 deaths in the winter of 1942. It's good to know, however, that the country's books were balanced.

Are such comments the result of gargantuan thoughtlessness – or do they hide a deeper, uglier message, that Greece does best under foreign rule? One thing is certain: that tragically they play directly into the hands of fascist organisations like Golden Dawn, with its not-really-a-swastika logo, not-really-nazi salute and not-really-criminal parliamentarians. Their central message is one of suffering Hellenism under an economic occupation. Their central promise, to rid Greece of foreign interference. Recent opinion polls have them comfortably in third position. Every time Christine Lagarde decides to comment on Greece, they must cheer.

Christine Lagarde thinks the troika got it wrong on Greece? If only she knew | Alex Andreou | Comment is free |

Tuesday, March 4, 2014

Home ownership in Greece 'a sick joke' as property market collapses

Helena Smith in Athens The Guardian, Saturday 1 March 2014

Greece has suffered the second biggest property crash in the EU since the debt crisis began

Piraeus, Athens

Piraeus harbour in Athens: some estate agents say prices in the city have halved in four years. Photograph: Louisa Gouliamaki/EPA

There is constant motion on the second floor of 24 Kanari Street. At the Athens office of Remax, Greece's largest property company, clients come and go, agents slip in and out and brokers pace the corridors barking into mobile phones.

For Christos Vergos, it means a frenetic work schedule of 12-hour days and a client base that is ever growing.

"At all hours, people call in wanting to sell or wanting to rent or wanting to expand because places now are so much cheaper," says the estate agent in a conference room overlooking Kolonaki Square.

In a market that has hit rock bottom in the maelstrom of Greece's financial meltdown, basement flats are selling for as little as €5,000 (£4,150) in the less salubrious parts of Athens. On the isle of Mykonos, cash-strapped Greek celebrities have been selling luxury villas for a song.

But Vergos prefers to focus on another figure. "Last year, there were just 3,600 sales in all of Athens – I repeat, all of Athens."

Greece's social and economic crash is reflected in its property slump. Data released by Eurostat, the EU's statistics agency, earlier this month showed that the country had suffered the second steepest decline in house prices after Croatia, the bloc's newest member.

Since the outbreak of the Greek debt crisis four years ago, property values nationwide have dropped by around 32%, according to the Bank of Greece; estate agents contacted by the Guardian estimated the decline at nearer 50%.

"At their peak, in 2005, in the euphoria of the Olympic Games, there were 250,000 sales in Athens," said the property analyst Christos Bletas. "The lack of interest displayed last year, partly because of the incredible rise in property taxes, hasn't been experienced since the second world war."

Owners may be desperate to offload, but in a climate of pervasive uncertainty there are few who want to buy.

With over a third of households unable to meet tax obligations, four out of 10 Greeks recently told a Kapa Research poll they would willingly hand over properties to the state to fulfil future payments; one in three, unable to keep up mortgage repayments, feared their homes would be confiscated in 2014.

The situation, says Bletas, is so dire that home ownership – at nearly 87% the highest in the EU – has become cause for black humour. "The joke now doing the rounds is: if you want to punish your child, you threaten to pass on property to them," he said. "Greeks traditionally have always regarded property as a secure investment. But now it has become a huge millstone, given that the tax burden has increased sevenfold in the past two years alone."

At no time has there been such a glut of property on the market, according to the Hellenic Property Federation (Pomida), which reckons more than 500,000 property owners want to sell. Across Greece, about 300,000 residences are believed to be empty.

"For northern Europeans who want to buy a holiday home or a plot to develop for business, it's a golden opportunity," says Stratos Paravias, Pomida's president. "The tax burden is not so big when you have one property; it is when [like most Greeks] you have two or more."

With about 500 properties on his books, Manolis Akalestos, who runs the Scopas estate agency on the island of Paros, confirms that view. In the past year he has been deluged with requests for holiday homes from foreigners, many encouraged by the drop in prices and a new law granting non-EU citizens residence permits.

"In 2013, I had my best year yet, with 90% of all sales being made to people overseas," he said. "Before, property prices were incredibly inflated because every Greek was able to get a cheap loan after our entry into the eurozone," he explained. "And foreigners took a step back. Now that prices have calmed down and returned to natural levels, they are coming back with a vengeance."

With the market's stagnation also being blamed for the lack of liquidity in Greece, politicians across the board are quietly hoping that non-Greeks will help save the day.

"In Crete, where I am from, a lot of investment went into housing for foreigners, and it was the first to collapse," said Giorgos Stathakis, the shadow development minister for the radical left main opposition Syriza party. "Foreigners stopped buying, or started selling off their houses, when the crisis began in 2010.

"We are in a very peculiar situation where prices are falling but the market isn't moving. If the recession eases in Europe, and foreigners start to return, it would be part of the solution to one of Greece's biggest problems."

Home ownership in Greece 'a sick joke' as property market collapses | World news | The Guardian