Greece Implodes

7th September 2015 / EU

Greece became the epicenter of Europe’s debt crisis after Wall Street imploded in 2008. With global financial markets still reeling, Greece announced in October 2009 that it had been understating its deficit figures for years, raising alarms about the soundness of Greek finances.

Unforgettably and accurately described by Matt Taibbi in Rolling Stone magazine that Goldman Sachs was the “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” This was no more true than Goldman leading Greece into this pitiful situation in the first place. GS now faces the prospect of potential legal action over the complex financial deals in 2001 that many blame for its subsequent debt crisis.

By the spring of 2010, Greece was shut out from borrowing in the financial markets. it was veering toward bankruptcy, which threatened to set off a new financial crisis.

To avert calamity, the so-called troika — the International Monetary Fund, the European Central Bank and the European Commission — issued the first of two international bailouts for Greece, which would eventually total more than 240 billion euros, or about $264 billion at today’s exchange rates.

The bailouts came with conditions. Lenders imposed harsh austerity terms, requiring deep budget cuts and steep tax increases.

One of the many victim’s of government spending cuts has been healthcare.

In the four years to 2014 there was a 22 percent cut in allocated funding to hospitals alone, there is already a shortfall of 5,000 doctors and 15,000 nurses. By 2015 the cut to hospitals is now 50 percent. Greece’s healthcare system has all but collapsed via financial starvation as the annual spend has been decimated and now accounts for just 4 percent of GDP.

They suffer from severe shortages in everything, from sheets and gauzes to syringes. Supplies are critically low, says Athena, a former nurse in a haematology unit. “We do not even have the most basic of materials such as surgical spirit.”

Of all 231 nations listed in the World Bank Global Health Database, Greece ranks highly, but the information is now very out of date as far as Greece is concerned. In reality it ranks 211 out of 231 and that includes nations that have a full private healthcare system supported by a private health insurance system. War-torn countries such as Syria, Eritrea, South Sudan and Dem. Rep of Congo spend less, but not much less.

Researchers say the harmful effects of austerity are linked to the increasing inability of patients to access the health system, large rises in the incidence of infectious disease, and a deterioration in the overall mental health of Greek people.

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The Greek government – along with its European partners – are in denial about austerity’s severe impact on health. The cost of austerity being borne by ordinary Greek citizens, not bankers or politicians.

A 2014 paper published by the medical journal The Lancet highlighted the nation’s deterioration in health, including:

HIV incidence has risen in injecting drug users more than 10-fold from 2009 to 2012
Tuberculosis incidence among injecting drug users more than doubled in 2013
State funding for mental health decreased by 55% between 2011 and 2012
Major depression increased 2.5-fold between 2008 and 2011
Infant mortality jumped by 43% between 2008 and 2010
The proportion of children at risk of poverty increased to 30% in 2011.

Notice none of these figures post date 2013. For instance Child poverty in Greece has increased since 2011. By 2014 it reached a staggering 40.5%. In addition, 18% of households are now unable to afford protein such as chicken or fish as a meal. No-where in Europe has such deprivation and decline taken place.

Cancer care has all but gone as a functioning service. With patients being told to bring their own blankets with them. If afflicted with cancer, patients are often told “to give up“. Can you imagine being told to ‘give up’ to save bankers some losses on a bet that went wrong.

Greece’s economic descent has been deeper than the United States’s during the Great Depression, with the main difference being that, as it has lost more than a quarter of its economy and there is little prospect of a recovery as it plunges yet further into the abyss.

The current brain drain of young and capable university graduates, at more than 200,000 has left the promise of the European Union utterly hollow to the younger generation. Who would blame them for moving on – nearly 60 percent have no job or a prospect of one.

If you want evidence of how dire the situation is in Greece, just look at its long-term unemployment figures.

Eurostat figures show 73.5pc of people who were unemployed in Greece in 2014 had been out of work for more than a year. Attiki, which includes Athens and Piraeus, has the highest long-term unemployment share of any European region – at 77.3pc. The western Greek region of Dytiki Ellada isn’t far behind, with a long-term unemployment share of 76.7pc.

A 2014 paper claimed that austerity in Greece had caused male suicide rates to rise significantly since the banking corporations imposed austerity. According to another study the same year, researchers at the University of Portsmouth in the UK, stated that over 550 men kill themselves each year (since 2010) “solely because of fiscal austerity”.

In 2008, 3.3 percent of the population showed symptoms of clinical depression, which is a state that needs to be treated with medication. By 2013 that figure rose by nearly 400% to 12.3 percent of the entire Greek population who are now showing symptoms of clinical depression over their enforced economic trauma. With more than 2.5 million Greeks lacking health insurance, one can only speculate as to how the situation could develop over the next few years.

If only to exaserbate this issue; among the many cutbacks was a 55 percent drop in mental health funding between 2011 and 2012, more came and there is more to come.

Huge economic damage was done to the country amid the closing of its banks in July/August, again enforced by the Troika. The four Greek banks (Alpha Bank, Bank of Piraeus, Eurobank, and the National Bank of Greece) saw their share prices fall by half in just two days trading.

At the same time, July saw the most severe industry contraction during the whole of Greece’s crisis period, and employers shed jobs at the fastest rate in at least 16 years – as if that was possible. This latest figure is not yet recorded on official unemployment numbers. And this is set to get worse as the inevitable spiral worsens.

Greece’s economy is expected to contract by up to 2.3% this year, according to a draft of the country’s bailout agreement, a Greek government official said Monday. It’ll probably be more – it always is.

Greece’s economy has already shrunk 25 percent, and it is having trouble honoring its obligations mainly because it has had so much austerity inflicted upon it. As it’s historic descent continues, it’s prospects weaken further, one can only hypothesise the sense of direction the Troika has taken.

Then there’s the corruption. Notably, the pervasive influence of vested interests in the country’s business and political elites. Profits as a share of business income in Greece are a whopping 46%, according to the latest available data. Italy came in second at 42%, with France third, at 41%. (Germany’s share is 39%; the United States’, 35%; and the United Kingdom’s, 32%.)

European politicians have made the same mistakes as American politicians before the financial and banking crisis of 2008-09, that is to say encourage excessive indebtedness of some economically weak countries with loan guarantees that they simply can’t pay back.

For now, the latest Greek drama isn’t over, but what is worrying is that it is not its last act either. There’s more to come.

Regime change is next as the elite financial forces in Europe are using financial muscle to provoke political outcomes in Athens.