Mike Shedlock

Greece bailout talks were postponed on Friday to Saturday, then Saturday to Sunday, then Sunday to Monday, then Monday to Tuesday. They have been postponed again, this time for a reason that makes perfect sense "Political Suicide".

The New Work Times reports Greece Puts Off Decision on Austerity Measures Amid a Strike Protesting Them

As thousands of Greeks walked off the job in a general strike on Tuesday to protest stringent new austerity measures, there was a growing sense that the country was reaching a critical point in its efforts to survive the debt crisis.

Greek political leaders postponed for yet another day a decision on an austerity package — including 20-percent cuts to base pay for workers in private companies and a loosening of public sector job protections — in exchange for the billions in loans Athens needs to prevent a default in March. With elections looming as soon as April, the parties fear that they are essentially being told to commit political suicide to save the country.

If that indeed is the case, analysts here say, it is not clear what will replace them, making Greece a potential laboratory for a volatile mix of austerity, populism and social unrest.

Not that the old order, widely derided as corrupt and inefficient, is likely to be deeply mourned.

For most Greek voters, the two larger parties participating in the fragile tripartite coalition of Prime Minister Lucas Papademos — the Socialist Party and the center-right New Democracy — were already drained of political capital before the debt crisis by decades of self-interest and corruption. That has now been capped by two years of unrelenting austerity that has hurt most Greeks but has ultimately failed to revive the system, or even change it in any significant way.

With unemployment at 19 percent, businesses closing, credit scarce and the proposed new wage cuts expected to further decimate the shrinking middle class, the hard left and extreme right are rising.

With Greek popular anger at the country’s foreign lenders rising — a German flag was burned in front of Parliament at a demonstration on Tuesday — the Socialists and New Democracy are treading a fine line: They want to push back against the troika enough to regain some political capital — and keep more Greeks from falling into poverty — but not push hard enough to precipitate a default.

If the Greek political leaders do not agree to accept the new austerity measures in the coming days, Greece will run out of time to complete a broader deal for the voluntary write-down of Greek debt before a bond comes due on March 20. If Greece cannot pay the bond, it will default, which could result in its leaving the euro zone, among other ill effects.

Most Greeks say they have lost what little faith they had in the political system. “None of the parties we’ve been voting for have anything to offer,” said Vassiliki Karanasou, 42, an employee in a biscuit factory north of Athens who was participating in a demonstration outside Parliament on Tuesday.
Eventually, Will Come a Time

I keep repeating Eventually, Will Come a Time When
Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the "bail out" debt foisted on their country to be null and void. That person will be elected.
Flag-Burning Trigger

For Greece, "eventually" may be at hand. The only thing missing is a party leader willing to stand up and tell Germany to go to hell.

That is not a comment on the desirability of  telling Germany to go to hell, rather a comment that is likely to happen. However, the austerity measures imposed by Germany and the Troika cannot possibly work, even though the worker reforms are badly needed.

What is causing the revolt? The sad irony of this mess is the flag-burning and latest strike is over the one thing that is needed: work rule reform.

The flag-burning incident could easily be a trigger.

All sides handled this very poorly straight from the get-go. Greece would have been better off defaulting 2 years ago and the EMU and ECB much better off to simply let it happen. Now Greece is totally and completely trashed, having agreed to austerity measures that cannot work and resisting work rule changes that can work, but only years down the road.

 Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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