The claims of Grecovery turned into a continuing economic depression for Greece

Today has started with something that has become all to familiar over the past 7 or so years. From Kathimerini.

Greek farmers protesting against bailout-related income cuts are clashing with riot police outside the agriculture ministry in central Athens.

Police fired tear gas to prevent farmers from forcing their way into the ministry building, while protesters responded by throwing stones.

This is of course the human side of the austerity regime which has been applied to Greece again and again and again.

Protesters are angry at increases in their tax and social security contributions, part of the income and spending cuts Greece’s left-led government has implemented to meet bailout creditor-demanded budget targets.

Yet sadly there is also a theme where some as in those at the higher echelons of society are more equal than others. From Keep Talking Greece.

Greece’s ministers, lawmakers, mayors and other high-ranking public officials are able to enjoy generous tax reductions reaching up to 2,000 euros per year.

Even worse this was tucked away in a 2016 bill which did this.

The provision was included in the law to decrease or even cut the poverty allowance to thousands of low-pensioners.

Many of the problems could have been avoided if Greece had found a way to tax the wealthy. Yet they seem to continue on their not very merry way.

It appears that the former head of gas grid operator DESFA, Sotiris Nikas, granted himself a promotion that boosted his retirement lump sum by 100,000 euros to 258,000 euros, ( Kathimerini)

What about economic growth?

There was a familiar pattern to those who have followed the Greek economic depression as  From Keep Talking Greece.

Greece’s Prime Minister Alexis Tsipras was confident that the times of recession were over and that “Greece has returned back to growth” as he told his cabinet ministers……..After seven years of recession, Greece has returned to positive growth rates he underlined.

Reality was not a friend to Mr. Tsipras as soon after the Greek statistics office released this.

The available seasonally adjusted data1 indicate that in the 4th quarter of 2016 the Gross Domestic Product (GDP) in volume terms decreased by 1.2% in comparison with the 3rd quarter of 2016, against the decrease of 0.4% that was announced for the flash estimate

Which meant this.

In comparison with the 4th quarter of 2015, it decreased by 1.1% against the increase of 0.3% that was announced for the flash estimate of the 4th quarter.

If we look at the pattern then it has turned out to be what economists call an “L” shaped recovery or in fact no recovery at all. What I mean by this is that the Greek economy as measured by GDP (2010 prices) peaked at 63.3 billion Euros as the output for the second quarter of 2007 and then fell to  46 billion Euros per quarter as 2013 started and is still there. Remember all those who proclaimed that so-called “Grecovery” was just around the corner? Well it was a straight road and in fact had a gentle decline as the latest quarter had a GDP of 45.8 billion Euros. Thus the Greek economic depression over the last decade has involved a contraction of economic output of 28%.

If you prefer that in chart form here it is.

Yet the Institutions as the Troika are now called stick their collective heads in the sand.From Amna on the 7th of February.

The recent IMF report saying that Greece’s debt load is unsustainable was “unnecessarily pessimistic,” Eurogroup President Jeroen Dijsselbloem said on Tuesday.

The banks

Where an economy is really in trouble then we can find a banking system which has had a type of heart attack and the Greek banking system did as Kathimerini points out.

the huge pool of NPLs ( Non Performing Loans) in Greece that now add up to 107 billion euros after their increase by 1.5 billion in the first couple of months of 2017.

As to the deposits in the banks they have yet to regain the losses of 2015. Care is needed about the many claims that bank deposits have plunged again as the numbers has seen some ch-ch-changes with the order of 6 billion Euros removed. Any way the recent peak at 179.1 billion Euros for domestic residents the the summer of 2014 compares with 130..9 billion Euros in January.

The main growth industry for Greek banks seems to be this.

Eurobank Financial Planning Services (FPS), is the second bad-loan management firm to obtain a license from the Greek authorities to operate in the local market. It follows the permit issued to Cepal, a joint venture by Alpha Bank and Aktua.

On my way to looking at past house prices I found the Bank of Greece 2008 Interim Report which told us this.

the Greek banking system remains fundamentally sound, safe and stable.

Oh and this.

In the euro area, the situation is less worrying than in the United States as far as financial stability is concerned; however, risks of a deterioration do exist.

House prices

It was only yesterday I was looking at the central role of house prices in the UK economy but in spite of a barrage of measures the ECB ( European Central Bank) has failed to influence them much at all.

According to data collected from credit institutions, nominal apartment prices are estimated to have declined marginally on average by 0.6% year-on-year in the fourth quarter of 2016, whilst in 2016 as a whole apartment prices fell on average by 2.2%, compared with an average drop of 5.1% in 2015. ( Bank of Greece )

Ironically that is the sort of medicine which would benefit the UK but for Greece there has been another feature of the economic depression where “apartment prices” have fallen by 40% since 2007.

The shadow economy

The shadow or unrecorded economy has seen a few name changes in recent times but I have been trying to find out more about it in Greece since the crisis began. Yesterday there was a flash of light from Bloomberg.

When Maria’s employer, a large communications company in Athens, gave her additional tasks at one of its new units, it told her she wouldn’t be paid for the work in euros.

“I was informed that this extra payment of 150 euros per month would be in coupons that I can use in supermarkets,” said the 45-year-old, declining to provide her last name for fear of losing her job.

So as the austerity grip tightens more slips through the net.

Payments in kind are among practices companies are using in Greece as they seek to cap payroll costs, undermining efforts to balance the books of the country’s cash-strapped social security system………By some estimates, the so-called black market already accounts for as much as a quarter of Greece’s economy.

What we would like to know is how much the size of the shadow economy has grown. The fact that it has grown seems beyond doubt but how much?


As the Greek economic depression heads towards the decade mark where even “lost decade” simply does not cut it there have been many themes. A sad one I found in the 2008 Bank of Greece report which told us about structural reform, yes the same structural reform that is still being promised now.

Some time ago I wrote about the “Roads To Nowhere” in Portugal which were empty because of the high tolls charged. Well here is a view on Greece.

It’s often cheaper to fly to Berlin than pay the road tolls for a small car from Thessaloniki (Greece’s 2nd city) to Athens…….The insanely priced and ever growing road toll network in Greece is a major drag on economic development.Roads too expensive for many to use (h/t @teacherdude )

International Women’s Day

Let me mark this with the exchange between Sarah Jane of Sky News and Lord Heseltine.

Lord Heseltine: ‘She’s got a man-sized job to do’ : ‘It’s a woman-size job now’ ( about Prime Minster Theresa May)

This led to some humour from Charlie Reynolds

If I was Michael Heseltine’s mother’s dog I’d watch my step today






21 thoughts on “The claims of Grecovery turned into a continuing economic depression for Greece

  1. Hello Shaun,

    1, when ever Greece recovers it will be the “stunning” success of the Troika – even if it takes another decade to start ……

    2, Can Greece dump the euro ? revalue and do an “Iceland”

    3, Politically can they allow fuller and full fiscal union to take place – basically hand over the reigns of power to the EU ( Germany ) and become effectively a local council ?

    tricky I know


    • Greece can default any time they want …. problem is finding hard cash to pay the govt bills (salaries and pensions)

  2. Greece always promises reform to get the money. I think the EU has slightly given up on the Greeks actually reforming and now talks about “milestones” on the way to the reform that was promised but will probably never be delivered.

    • Greece’s problems come from excessive borrowing, at some point the lenders want their money back.

      Germany and the ECB shouldn’t be involved but the French and German banks leaned on crooked politicians and did a deal where the banks offloaded bad loans onto European taxpayers. The same crooked politicians are now lying everything is on track. They deserve to be jailed.

      • Excessive borrowing requires excessive lending.
        Unless Greece was being deliberately tricked into debt slavery, whereby only the lenders should lose, then the lenders are as guilty as the borrowers, and should themselves pay a heavy price.

        • I don’t recall the Greeks complaining about their state and personal debts in the naughties. I agree that the lenders were incautious and suffered from that cynical ‘we are too big to fail’ disease. But in the end, a small but powerful band of Greeks pushed through the purchase of all those tanks, submarines and so on (not to mention the expensive Olympics) and the people were either totally ignorant or happy to go along with it, not least for military reasons vs Turkey. No side comes out well from this, but Merkel is in a good position to keep smiling while she twists the knife. Greece will join the Euro South when the adjustable two speed Euro is adopted. It’s the least bad idea.

  3. When I think of the EU agricultural money given to French peasant farmers and British aristocrats in order to “preserve their way of life” and see what the EU does to Greek farmers, and indeed its people in general, I spit bile.
    Seems uncompetitive, inefficient practices are to be preserved under the pseudonym of “tradition” if you’re in a big country, hammered elsewhere.
    With supposedly centre-left politicians like Dijsselbloem on the go, it is no wonder the Dutch look like turning to Wilders.
    Every day I get more and more proud of the UK’s exit vote.
    The EU is evil.

    • I somehow doubt our large landowners will miss out on any of those payments after Brexit – after all it was the UK who pushed for the right to transfer this money away from our smaller farmers.

      • Indeed – thank you for spotting that great many smaller farmers lost out while many large landowners, often with no livestock/production, gained enormously.

    • Farm subsidies are bad, and the Common Agricultural Policy costs consumers.

      The world doesn’t end when you phase out agricultural subsidy, as proved by New Zealand.

      Time to end all farm subsidy and let those rich landowners suffer austerity too

        • Hi Eric

          Thanks for this which shows that old fashioned models of an agricultural economy work a lot better than many of the others we look at and consider.

          “For farmers, that’s meant huge swings in prices, with Fonterra paying a record $8.40 per kilogram of milk solids in the 2013/14 season but just $3.90/kgMS for the 2015/16 season, below the level required by most dairy farmers to break even.”

      • Unfortunately, Hammond and May have already promised the CAP payments will continue at least until 2020 – so much for Brexit allowing the English electorate to gain control!

        Meet the new boss, same as the old boss…..

    • Spot on. I would add that fifteen minutes spent in, say, a middle sized town in Germany and the same spent in a Greek town would have told even a moron in a hurry that the economies should never have been United by a single currency.
      You didn’t need specialists and Goldman Sachs, you just needed one ounce of common sense.

  4. Hi Shaun this tragedy is virtually ignored in the propaganda of the main stream media.
    I believe we will be Greece in the not too distant future.House prices here must fall significantly instead of help to buy which supports high prices,measures should be introduced to prohibit excessive borrowing thereby bringing about a reduction in price.
    The Government will never do it for fear it would expose our Ponzi economy.
    There cannot be a recovery without elimination of substantial portions of the debt it is the debt and policies to drive down wages that are the problem.
    A capitalist economy cannot function unless the people have money to spend on goods and services,.
    Italian Banks also have huge amounts of NPL’s the issues are not being addressed because nobody wants to admit the current capitalist system and Neo liberal policies have failed.

    • Hi Private Fraser

      The debt is piling up in so many places but so much of it ( student loans for example) will never be repaid. So the establishment model keeps knocking chunks off the total of which the largest is the £435 billion of Bank of England QE which Charlotte Hogg confirmed last week they have no plans to end.

    • the current system is bankrupt, running deficits (borrowing) to pay day to day bills. All permitted by the voters, who should know better.

      The neo-con system is worse – give the 1% huge tax cuts and borrow. A thinly disguised lie “all is well and wealth will trickle down”. Inevitably this huge deficit will cause a debt crisis, which the neo-cons will use as a justification to dismantle all public education, health and welfare spending.

  5. What you call the shadow economy is a serious problem throughout the southern EU. Some countries estimate that their total economy is in fact about a quarter larger than the declared ‘official’ figures. That probably means that it is more.
    This explains why there has been no major uprising in countries where they report total unemployment of 25% and youth of 50%. The people are working – albeit at a low level – ‘in the black’ while hoping for permanent (and very hard to fire) jobs when things get better.
    Another factor is the EU’s calculations. Should the UK be a net contributor when the true figures, including those shadowy activities, are such that there is a far smaller gap between our numbers and theirs. If any.

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