Greek Economy Looks to Perform Worse Than Expected Amid Record Eurozone Unemployment Numbers

It looks like Greece is going to have a worse year than initially thought. Lenders had predicted back in March that the Greek economy would shrink by 4.8 percent. That estimate has been revised to 6.5 percent.

The Greek government predicts that the economy will shrink only 3.8 percent, while the Greek central bank predicts a 5 percent contraction. None of these figures are good news for eurozone recovery.

Greece is weeks away from defaulting on its debtand possibly leaving the eurozone. The bailout that the Greek government is seeking is dependent on austerity measures that have proven very unpopular.  

Inspectors from the “troika” are sitting down with Greek officials today. From the Wall Street Journal:

Inspectors from the European Commission, IMF and ECB, also known as the troika, return to Athens Monday after a 10-day break where they will meet with Finance Minister Yannis Stournaras at 1100 GMT to weigh up the austerity package finalised by Greece's three coalition party leaders last week.

The latest package includes 10.5 billion euros in spending cuts and 3 billion euros in higher taxes, according to government officials. Of the spending cuts, 6.7 billion euros will come from pensions and public-sector salaries and bonuses, while an additional 3.8 billion euros will come from government operating expenses.

The spending cuts in the package envision raising Greece's retirement age to 67 from 65 currently; cutting two extra-month bonuses now paid to public servants and retirees; cutting wages to uniformed personnel by 12% on average; cutting pensions above 1,000 euros a month by up to 10%; and reducing other supplemental pensions.

As bad as things are in Greece, the economy of Spain is shifting attention West. It is looking increasingly likely that Spain will request a bailout, despite what at least one German politician thinks:

German finance minister Wolfgang Schaeuble has said Spain is taking all the right steps to overcome its fiscal problems and does not need a bailout, arguing that investors will recognise and reward Spanish reforms in due course.

Unemployment in the eurozone is at a record highFrance is looking at a depression, and Greece is looking worse than already expected. But the politicians have this continental crisis under control, right?

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  • rts||

    Greece is weeks away from defaulting on its debtand possibly leaving the eurozone.

    These must be Biblical weeks, or something, as they've been weeks away from leaving the common currency now for a few years, eh?

  • PapayaSF||

    I am still boggled by all the sneers at "austerity" that we hear from Europe. You are out of money, folks. You really don't have any other options. I suppose you could kill your rich people and take all their stuff, but then what would you do next year?

  • Hugh Akston||

    You really don't get it, do you PapayaSF? There will always be a top 1% to send to the guillotine.

    Well, until you're left with fewer than 100 people. But then you can start taking off body parts until perfect social justice is achieved.

  • ant1sthenes||

    Oh, we can colonize Europe well before they get there. Although we'll be competing with Russia, the Middle East, and Africa.

  • PapayaSF||

    It's Africa and the Middle East who are already colonizing Europe. It's a slow-motion version of The Camp of the Saints.

  • ant1sthenes||

    But we have more experience with that sort of thing. Also, we still probably have stockpiles of smallpox, so...

  • ||

    then what would you do next year

    More like next week.

    Most of the wealth rich people have is stuff (land, stocks, etc) not actual cash.

    If you took it all and sold it the value would plummet.

    And of course with all the rich being dead who would even buy it?

  • ||

    Indeed. The market value of those things is based on the expectations of future use-potential.

  • InlineSkate||

    I find it funny that many people sneer at "austerity" not working when they haven't even tried it yet.

    Meanwhile Democrats in the US still seem to want to look at Europe as a utopia.

  • ||

    An extremely common line I've heard from Europeans on this is that "austerity was tried and failed". So, yeah.

  • Scarecrow Repair||

    The problem with confiscating rich peoples' stuff is that most of it is not cash. It's stuff that has to be liquidated along with the people. Who would buy it, and what would they use to buy it with -- would they trade one of their villas for one of the confiscated ones? One yacht for another?

  • ||

    France is looking at a depression

    Sooo...

    The Laffer curve is crazy yet France raises taxes on the rich and goes into a depression...

  • The Hammer||

    According to HuffPo, that's because they didn't raise taxes enough, or soon enough, or something.

  • ||

    It's because the plutocrats can still get the hell out. What they really need are some nice old Soviet-style emigration controls.

  • Generic Stranger||

    Because that worked out great for the Soviets.

  • ||

    It'll be different this time, because the right people are in charge.

  • ||

    We could have predicted this by the fact that Obama doesn't want them to release their report until after the US election.

    Time to start placing bets on the probability that Greece leaves the Eurozone sometime after the US election.

  • ||

    It is looking increasingly likely that Spain will request a bailout, despite what at least one German politician thinks:

    German finance minister Wolfgang Schaeuble has said Spain is taking all the right steps to overcome its fiscal problems and does not need a bailout, arguing that investors will recognise and reward Spanish reforms in due course.

    Spain did actually cut spending by like 9%. Unprecedented if you ask me.

    Feeney neglected to mention that last time he talked about Spain.

    It may not be enough and it may be empty promises and gimmicks...of course that is a different argument and left entirely unexplained.

    Why does reason even publish Feeney's articles? Everything it is either half truths or just plain wrong. Anything in here of substance has to be looked up elsewhere in order to get any context or meaning out it....hell you have to do that anyway to double check if what he is talking about is even real.

  • Paul.||

    Spain did actually cut spending by like 9%. Unprecedented if you ask me.

    Kind of. It's hard to say how badly the increases (since 2002) have hurt them. For instance (and this is a very rough 'for instance') if I increased my spending to 20x my income, ran into predictable troubles, and then cut my spending by 9%, would that "fix" my budget hole?

    I know, I know, a government budget isn't like a household budget. Governments can print money, I can't.

  • Hugh Akston||

    I know, I know, a government budget isn't like a household budget. Governments can print money, I can't.

    Which always seems to solve the problem.

  • Pro Libertate||

    Maybe we should allow households to print their way out of debt, too.

  • ||

    Well no. My argument is that Feeney didn't even mention it. Is it enough is it a gimick is it real? Who knows?

    Instead we get this:

    It is looking increasingly likely that Spain will request a bailout

    You really could not be more oblique.
    How is it increasing? why is it increasing? What has changed? Did they make an effort? why is that effort going to fail? Who the fuck knows? Certainly not anyone reading this Feeney article.

    Also even if they had a lot of spending prior and then they cut 9% that still is unprecedented even if it is not enough.

    Everyone else in Europe and the US are not cutting....hell only a very very small group even acknowledge cuts are needed.

    Even if only 1 Euro was cut i would call that a miracle.

  • ||

    You really could not be more oblique.

    Meant opaque not oblique.

  • Drake||

    That's the big problem with the Eurozone - they can't print money.

  • Paul.||

    At this point, the only thing could allow people to believe that more spending and more debt will fix this is a shooting revolution. A real violent revolution would create enough disruption to obscure the solution that would actually work: Cut spending and reform your spending model.

    After a revolution like that, a totally new government and currency could be created. Entire debts could literally be wiped away. This would allow the anti-austerity people to continue to claim that had they just spent and borrowed enough, none of the violence would have need happened.

  • Hugh Akston||

    I think you're underestimating peoples' willingness to ignore reality when their livelihoods depend on doing so.

  • Paul.||

    I pride myself on my bottomless ability to underestimate people.

  • pmains||

    the solution that would actually work: Cut spending and reform your spending model.

    I'm guessing they're too far gone, and defaulting is probably the best option. At some point, trying to work 3 jobs to pay off the credit cards you've maxed out just isn't worth it.

  • ||

    We were in Greece for vacation in September (Athens and Andros) and it was extremely normal except that there were a lot less tourists than when I was there three years ago. I suppose we could've gotten caught by the strikes in Athens that happened a few weeks later but actually the closest call was my parents just missing the Lufthansa strikes in Germany.

    BTW, what's up with the videos getting stretched to the bottom of the page on iPad (both Safari and Chrome), making it impossible to read comments.

  • Paul.||

    It's interesting. I would be nervous about traveling in a country like Greece right now. I don't have any feel one way or the other, but I'd be concerned that somehow the average Greek would blame me (Ie, Bush) for all of their troubles.

  • Fist of Etiquette||

    But you're Canadian. Wink wink.

  • Paul.||

    I live close to Canada!

  • Pro Libertate||

    Really, Canada should bolster its economy by selling Canadian passports to U.S. citizens.

  • ||

    America-hating seems to be on the wane in Europe. There was plenty of America bashing when I came here in '95, and it got much worse under Bush, of course. But now that America elected the Black Messiah and it's economy is circling the toilet (along with Europe's), there seems to be a lot less of it.

    Of course I don't go out that much these days so perhaps I'm just exposed to a lot less Eurotrash snobs (mostly Western European liberals).

  • Pro Libertate||

    My suggestion wasn't so much about Europe as about other places in the world. Everyone loves Canadians.

  • ||

    Pfft, speak for yourself. I hate them more than anyone (other than the Belgians). I make an exception for hot, easy French-Canadian chicks with a sexy accent.

  • ||

    (other than the Belgians)

    I meant the Dutch! Now I have to go watch that movie again...

  • ||

    I didn't get any sort of anti-American vibe at all from the Greeks, they are basically pretty laid back. The island of Andros doesn't get any American tourists that I've ever heard, so Americans are rather unusual.

    There is apparently some anti-German (ironically) sentiment, but I would guess that would be more likely in Athens.

  • NotSure||

    The Greeks hate their own politicians much more than others. I now somebody that just came from there, the cities are run down, but you will like the rural parts, the people are friendly there it is beautiful.

  • FD||

    Re the screwed-up video frmae rendering, yeah! I dropped a note to the webmaster but haven't gotten a reply. I figured I was the only one and it was a stupid user error...
    Very annoying.

  • ||

    It seems to have started about a week ago, so whatever they changed, just change it back.

  • NotSure||

    Another thing not often talked about regarding Greece and its economy, is its demographics, it has one of the lowest birth rates in the world. No matter how much Germany throws at them, the rising pension costs to support Greece will hammer the country until its population has hit more economically healthy levels again.

  • Bill||

    And they all would have succeeded too - if it wasn't for those pesky libertarians fouling up all of their wonderful plans. Just ask David Brookes.

  • Tulpa Doom||

    Be wary of Greeks bearing economic performance data.

  • Sevo||

    Tony Judt in "Postwar" made the point that E. Germany was very good at manufacturing only one good: False data.

  • ||

    "Greek Economy Looks to Perform Worse Than Expected ...."

    hahaha It is hahaha unexpected? hahahahaha....That hahaha depends hahahahahahahaha...on who hahahaha you ask.

  • Drake||

    I must have different expectations than the "experts".

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