The Greek economic depression continues to the sound of silence

Today it is time again to look at what has been in my time as a blogger a regular and indeed consistent contender for the saddest story of all. This is of course the issue proclaimed as “shock and awe” by Euro area ministers such as Christine Lagarde back in May 2010 as they sent Greece spiralling into an economic depression from which it shows little sign of returning. This was accompanied by a media operation where those who argued for a different course of action were smeared with claims that they would damage the Greek economy. How shameful that was!

Instead we got austerity and claims of an internal devaluation instead of the old IMF strategy where the austerity was ameliorated by a currency devaluation. Oh and promises of reform which remain in the main just that promises. Eventually there was a default but by then it was not enough partly because the official creditors refused to take part. Drip by drip we have had confessions of failure as the IMF first decided its sums were wrong and more recently has become a fan of fiscal stimulus rather than austerity. Just as a reminder Greece was supposed to return to growth in 2012 (1.1%) and then 2.1% for two years before growing at 2.7% until the end of time.

An economic depression

How do we measure this? Well the first signal is that Greek GDP was 19.5% lower in the second quarter of this year than it was in the second quarter of 2010 when “shock and awe” was proclaimed. So that is a severe depression or Great Depression. There is no other way of putting that.

If we move to the present position then we see this.

Available seasonally adjusted data indicate that in the 2nd quarter of 2016 the Gross Domestic Product (GDP) in volume terms increased by 0.2% compared with the 1st quarter of 2016 against the increase of 0.3% that was announced for the flash estimate.

Sadly even this brief flicker of candle light gets sucked up by the gloom when we look at the annual comparison.

In comparison with the 2nd quarter of 2015, it decreased by 0.9% against the decrease of 0.7% that was announced for the flash estimate of the 2nd quarter on August 12, 2016.

We have other signs of a depression here. Firstly the fact that so far there is no rebound. Ordinarily however bad things are economies eventually rebound in what is called a V-shaped response but here we have a much grimmer L shape as in a collapse and then no recovery. Also numbers in such a situation are mostly revised upwards but as you can see it has in fact been downwards.


An important signal of these times has been the behaviour of wages and especially real wages well we have seen nothing like this. There is an index for Greek wages for different sectors so let us start with manufacturing which at the start of 2010 was at 95.9 and at the start of 2016 was at 45.5 and had fallen by over 9% in the preceding year. It is not the worst example as the wages of the professional and scientific sector fell from 100.8 to 45.9 over the same time period.

Just so you see both sides of the coin the best number was for the information sector which only and by only I mean comparatively fell from 89.8 to 80.9.

Retail Trade

This sadly is one of the worst examples of the economic depression. You may wish to make sure you are sitting comfortably before you read that on a scale where 2010=100 then Greek retail trade was 69.8 in June. Grimmest of all is that food is at 78.1.

Is it getting any better or Grecovery as some were proclaiming in 2013? Take a look for yourself.

The overall volume index in retail trade (i.e. turnover in retail trade at constant prices) in June 2016, recorded a decrease of 3.6% compared with the corresponding index of June 2015, while compared with the corresponding index of May 2016, recorded an increase of 3.7%.

May must have been dreadful mustn’t it?

The Monetary System

We see regular proclamations of recovery but regular readers will recall the situation last year when Greece saw capital flight on a large-scale. Capital Greece sums it up like this.

Greece΄s banking sector saw a 42 billion euro deposit outflow from December to July last year.

They try to put a positive spin on the data but it tells a rather different story.

Greek bank deposits dropped slightly in July after a rise in the previous two months………Business and household deposits fell by 160 million euros, or 0.13 percent month-on-month to 122.58 billion euros ($138.3 billion), their lowest level since November 2003.

That means the credit crunch is ongoing.

Export Led Growth

One of the ways that the “internal devaluation” was supposed to benefit Greece was via foreign trade. This should impact in two ways. Firstly exports would be more price competitive and rise and secondly imports would fall in sectors where Greek producers can replace them. How is that going? From Kathimerini.

exports of Greek products dropped to their lowest point in the last four years in the first half of 2016, posting an annual decline of 8.1 percent to 11.8 billion euros, against 12.8 billion in January-June 2015. Excluding exports of oil products, the annual decline came to 1.4 percent.

So the oil price fall has had an impact except care is needed here if it was counted when we were being told this was getting better. Especially troubling considering the efforts of the ECB to reduce the value of the Euro came from this.

There was a notable decrease in exports, including oil products, to non-EU countries, where they fell by 14.6 percent compared to June last year.

An area which had shown signs of hope was tourism where I recall better numbers and hope for the future but sadly the Bank of Greece has another tale.

In January-June 2016, the balance of travel services showed a surplus of €2,991 million, down 6.7% from a surplus of €3,205 million in the same period of 2015…….The decrease in travel receipts resulted from a 1.6% decline in arrivals and a 4.9% fall in average expenditure per trip.

Just in case someone wants to deploy the scapegoat of 2016 which is of course Brexit that has so kindly given the poor much abused weather a rest. well see for yourself…

Receipts from the United Kingdom increased by 24.8% to €388 million.

Actually it is people from outside the European Union who have stopped going to Greece for a holiday it would appear.

while receipts from outside the EU28 dropped by 21.9% (June 2016: €469 million, June 2015: €601 million).

Any thoughts as to why?


As we review the scene there is a familiar austerity drumbeat.From Kathimerini.

Tens of thousands of pensioners will see their auxiliary pensions slashed by between 10 and 12 percent on Friday morning, while in some cases the cuts will even exceed 40 percent…..This second wave of cuts will affect 144,000 pensioners, after a first one hit just under 67,000 retirees in August.

Odd that because we have been told so many times that reform has been completed. Oh and we have been told so many times that the banks are fixed as well.

Greece’s four systemic banks increased their provisions for nonperforming loans by a total of 1 billion euros during the second quarter of the year

By systemic they mean toxic under the Britney definition.

I’m addicted to you
Don’t you know that you’re toxic
And I love what you do
Don’t you know that you’re toxic

Meanwhile the Greek depression continues to the Sound of Silence.

Hello darkness, my old friend
I’ve come to talk with you again
Because a vision softly creeping
Left its seeds while I was sleeping
And the vision that was planted in my brain
Still remains within the sound of silence



35 thoughts on “The Greek economic depression continues to the sound of silence

  1. Just to add a personal note. I went to Crete this summer and:
    1. Apparently, Heraklion airport has overtaken Athens as the busiest in Greece, which perhaps underlines the importance of tourism and the lack of “real” business;
    2. Almost ironically (if it were not so sad), Germans have all but disappeared as tourists (and I have been to the same hotel before, when it was largely occupied by Germans);
    3. The two people running the local bike hire shop had previously owned an engineering business and had a highly paid job with Coca Cola. The business went bust within weeks of the crisis, Coca-Cola shut the relevant office. Three of their friends committed suicide after their businesses went bust.
    4. Construction appeared to have stopped altogether.
    I know that you don’t do politics (a relief), but I am sorry to say that the cause of this IS political. The reaction of the European elite is simply and completely based on its obsession with uniting the continent and keeping the Euro. This has resulted in:
    1. Disaster for Greece and not much better for the other southern European economies;
    2. An extraordinary desire to punish the UK for its temerity in going for Brexit. We are not at Kindergarten now, but it feels like being told to sit on the naughty step;
    3. A complete impasse over the Italian banking system.

    I am afraid that the idea that the Greek economy can:
    1. Compete with Germany with a fixed exchange rate;
    2. Ever pay its debt off
    Are IMHO ludicrous.
    I did write on your blog two or more years ago that the Greeks should leave the Euro and devalue and I think we are seeing the tragic consequences for real people of not doing so.

    • Germans avoiding Greece, for the simple reason that thuggish and violent Greek protesters threatened individual Germans safefy and blamed them for the actions of Merkel, Juncker, Sarkozy, Strauss-Kahn & Lagarde. If you were German, would you risk this or go elsewhere ?

      Likewise, protesters blocking the border at Kulata is a strong signal for Eastern European residents that we’re off choosing Croatia, Montenegro, Bulgaria or Turkey.

    • Hi James

      Here are the Bank of Greece travel services figures for June.

      “receipts from Germany fell by 13.4% to €295 million and those from France dropped by 28.0% to €103 million.”

      The French fall is more surprising…

    • Hi Forbin

      Have you got a job as one of Jack Wilshere’s minders? More seriously we both know that we would struggle to get the two countries on the same chart. If you are still there next week we are due some nice weather again I think.

      Oh and thanks for taking a staycation and supporting the UK economy 🙂

  2. and why is the ECB allowing the IMF to interfere?

    where’s the help Greece needs?

    a middle finger from Brussels ?

    Greeks for heaven sake take note – you’re not wanted , you can’t be , look at the “help” you’re getting – a bucket of cold water does not save a drowning man!


  3. It breaks your heart really to see such neglect and willful financial destruction. The EU elite could hardly cause more damage if they allowed Germany to invade Greece.
    To think this is allowed to happen in a 21st century EU country and have the temerity to suggest this is progress. Absolutely shameful.

    • Hi Phil and welcome to my corner of the world wide web.

      You are correct and there was the statement by US Treasury Secretary Geithner that it was declared to be the intention at the meeting he attended. That is very embarrassing for the media who were cheerleaders for it, I remember Stephanie Flanders at the BBC writing a post telling us how the Greek bailout had worked.

      The correct answer as I have argued many times on here was for Greece to default and devalue which would mean leaving the Euro.

    • it will certainly die before the massive reform thats needed to make it work as intended.

      although I voted for freedom and not the golden cage I am not in principle against a United States of Europe , free and fair and for liberty of its peoples

      what we have is frankly a dictatorship of techo stalinistas


      PS: economic wise the US of E needed to be fiscal , not political

    • Really? Wait till you see the likely trade deals between the UK and EU. Shaun has kindly demonstrated the attitude of Euro politicians to any one who defies them. The UK is now in that boat with Greece and in 10 years time Shaun will merely have to cut and paste this post substituting the word “UK” for “Greece”. It must feel really good to be “right” and poverty stricken.

      • What utter rubbish! The UK is the 5th largest economy in the world. It is second only to Germany as being the most powerful economy in Europe. Due to English being the first language around the entire globe Brexit means we can establish trade with commonwealth countries (who have all made it clear they want to do business with us). Greece was always poor and renowned for corruption. It went on an insane spending spree thanks to Goldman Sachs fiddling its debt books so it could join the Euro currency and gain access to big bank loans.

        You obviously know zero either about global economies or their histories. I recommend you educate yourself rather than make imbecilic comments which simply show you to be an idiot.

        • It is you who are the complete fool, you are clearly completely unaware of the global slow down which is affecting the old Common Wealth countries too. In terms of the old Common Wealth – talks cheap it’s action that counts although it is of course early days yet.

          “5th largest economy in world” Would that be in currency or Purchasing Power Parity? Do you even understand the the concept?

          If you have any rism of intelligence I expect you to educate yourself re the concept and look up where the UK stands on that real measure – clue – it ain’t the 5th largest economy in the World!

          You will see how the UK fares even in the next 5 years and I am sure it will all come as a shock and surprise to you but not to me.

        • Hallo buzzin.. Whilst Banksterville above has proved him/herself a complete cretin, I can relate to your final comment as it transcends economics and politics appealing to ultimate ideals of freedom.

          It’s how I feel actually as I said to Bob J in an acrimonious exchange following the Brexit vote I’m arranging my own Brexit, as the Brexit vote was clearly a racist vote shouting “foreigners out”.

          As a foreigner I have to heed that message before I find further down the road that I have my assets confiscated as “really belonging to us English” as the UK falls further into decline and us “dodgy foreigners” are blamed for everything from the economy to how much rain has fallen.. I also have to expect eventual restrictions on my movements (Nazi Germany?), ltd access to the NHS services into which I have pumped £200000.00 down the years. I have no intention of accepting any of that treatment so when it comes to my personal position and expectation of future treatment in a Brexited UK I find myself in full agreement with you when you say freedom or death.

          Not too sure how you guys are going to get on as us immigrants leave taking our skills, expertise and money with us……

        • Noo2,
          feelings run high on both sides of the debate, but I can assure you of this; not one legal immigrant who has been here since prior to the referendum will find himself in any way disadvantaged, in fact, I would expect, and hope, that they are offered citizenship.
          Everyone knows that our economy needs skilled immigrants for our economic well-being, and EU migrants’ cultural contribution is, in my view, beneficial.
          You have to learn to accept, however, that not every “Leavist” is a rabid racist; one of my most important reasons for voting to leave was solidarity with the people of Greece. having had their country deliberately trashed, IN SIMILAR FASHION TO NAZI REPRISALS DURING WWII.
          You draw on similarities between the UK and Greece, and I ask this, “Would you want to be a member of the EU in such circumstances?”
          I wouldn’t.

  4. Greece has a failed system where the elite regularly evade tax. Corruption stifles attempts to tax the rich. The Greek politicians haven’t had the courage to default. Default means govt salaries and pensions slashed, followed by electoral disaster. Yet Iceland shows the way – a referendum on default or bank rescue. Let the voters decide and they accept the tough times default brings. Following default, Iceland has a recovery …..

    • meaning that they should have never been allowed in in the first place

      like Italy , Spain and the rest of the PIIGS

      Unified laws and unified fiscal policies first for economic union
      not some cotton wool PC ideal


      • An economic area is okay, but currency union without an effective central government is a disaster.

        I don’t think Europe is ready for unified laws and fiscal policies, there are too greater cultural gaps. Some countries follow rules, pay tax and provide decent health, education and welfare. Others believe in working around rules, ignoring them and avoiding tax. Greece (and some others) want Scandinavian style health, education and welfare systems without paying taxes for it.

        • Couldn’t agree more on this one. A return to a free trade Common Market with each country using their own currency would be far more successful than the current shambles.

  5. Hello Shaun from a very sunny Ireland! I know that things are bad in Greece but those numbers are truly awful. I will be in Greece in November and will hear more from my many contacts there, but I cannot imagine that anyone can have any hope at all. Ireland, I am pleased to say, is picking up and the growth is trickling through to the man in the street. The main reason appears to be a boom in tourism due to tourists avoiding any country that is perceived to be a terrorist risk. I have met and spoken to Brits, French and Belgians who used to go to north Africa, Turkey or holiday in Europe and they have all said that they see Ireland as a safe destination. Friends in Portugal say the same thing is happening there. The big story about Apple and its tax arrangements has just hit the headlines and has everyone talking. If the EU clamps down they say Ireland should follow Brexit!! Others want Apple to cough up the 19 billion that reportedly is owed. It would be a lot of money for Ireland. Going to be interesting one to watch!

    • Hi Pavlaki

      I think that weather is due here next week which Forbin will be pleased about if he is still in Bournemouth. The tourism effect for Ireland is interesting as ironically the debate over here has had people pointing out that a terrorist route into the UK would involve going to Eire and then getting into the UK via Northern Ireland.

      Who would think that a government would not want 13 billion Euros in tax revenue? As you say this will run and run…

    • Hi Vinnie and welcome to my corner of the world wide web

      I think it reflects two things. Firstly how little faith the Greeks have in their own politicians and secondly the media campaign of disinformation aganst the alternative.

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  7. Sean, those figures are truly shocking, but living here one can understand why. The laws are archaic and not fit for modern day business, or tourists expectations. Tourism is the only thing that appears to be showing growth ( thank you Turkey Egypt etc) but they are doing there damndest to destroy even this ray of hope.
    In a little island in the Ionian, completely dependent on tourism, a beach bars sits closed for the next ten days, taped off like a murder scene.The ten people dependant on wages, must sit it out, the government loses taxes, the resort loses one of its most popular spots.
    The crime was to go 3 to 6 decibels over the 80 db the law states as maximum.. Why did they do this, because they wanted to attract customers , make an atmosphere etc. But in Greece if your neighbors are jealous that you are doing better than them, or they don’t ” like” you, guess what, they have an entire police force to complain to, who must come out, regardless if the complaint is genuine.
    All summer police cars parading up and down with light flashing. Not going anywhere, just intimidating businesses, but also scaring tourists, who think crimes are going on.
    The only crime going on here is the one being carried out by the government on its people.
    Trust me, those figures about business closing are way way short of what will happen at the end of this season. The tax burden is way to high with no safety net for people to be able to feed themselves.
    I truly despair for my husbands country and its people. How do the ordinary people bring about change, when like you said, the sound of silence is the most deafening of all.

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  9. So this is the famous “Irish Miracle”? Another drunkard scam turning Ireland into tax haven to screw America? This is why Ulster must join Scotland! Yapple was founded by Arabs and run by fags. Fags is what you get when drunken Irish molest their kids. Arabs is where Irish banks make their money funding terrorists who used to work with the IRA.

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