The Greek Crisis : What you need to know (Part 2)

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(This is Part 2 of the analysis on the Greek situation. If you haven’t done already, you should read Part 1 here)

First we met with Helena, a 40 something professional with a political science background, born and raised in Athens. She recently had to leave Athens for Crete to find a job as a receptionist in a hotel.

TheMoneyMine – Helena, why did you leave Athens? 

Helena, Receptionist – It was impossible to find a job in Athens. Or as a waitress maybe. If you don’t live in the place and you only look at what the news say, you cannot understand what is going on. There is this whole myth that in Greece everyone is under the sun and lazy. Sometimes it even gets insulting. If you see the salaries, they are so low people have to work at least 2 jobs. That’s why I moved from Athens to Crete. Here it’s like a different country, because there is tourism and people have land so they grow their own food. In Athens you see people eat from garbage. It became so difficult one day I had to leave.

TMM – What do you think brought the economy to where it is today?

H – The banks, I don’t know. Why should I save the banks? Who will save me? You know, there has recently been a comic in the newspaper of a homeless guy holding a sign saying “For God’s sake, please save the banks!” (laughs). But for the middle class and down, it’s a disaster. They haven’t yet touched the public sector. They cannot touch it because it’s their voters. So they have completely destroyed the private sector but they cannot touch the public sector.

TMM – What do you think the government should do to resolve this situation?

H – It’s hard to say. They have sent only 1 politician to jail, but half of them should be. I voted for the Syriza because I was hoping they had some ethics because many of them are not professional politicians, they are intellectuals. If I had to vote again, I wouldn’t vote for them. But there aren’t many options. You know, I took my passport with me in case of an emergency (laughs).

This looks totally under control. Samaria Gorges, Greece
This looks totally under control. Samaria Gorges, Greece

What we discovered is that the financial situation is very unequal in Greece. Athens seems to be the hit more while touristic destinations are holding up better. A lady in the Chania airport, Crete even told us that the talks of a crisis were exaggerated. “It’s different here, in Crete people grow everything : fruits, oil, wine, … and people aren’t afraid of losing their jobs like in Athens” told us a taxi driver.

To understand how salaries were reduced, we had a short discussion with a museum attendant in Delphi, coincidentally also named Helena.

TMM – Helena, how is the crisis affecting you?

Helena, Museum attendant – Before this job, I was working in a clothing store downtown. But then they cut my salary from 1000€ to 600€ [a month]. So I found this job at the museum which is owned by the government for 850€. It is nice, it’s not very difficult but I have to work on Sundays. It is very hard to find jobs now, the maximum you can find is 700€/800€ so I have to combine with another job in a nails salon in the mornings.

Delphi's theater, overlooking Apollon's temple
Delphi’s theater, overlooking Apollon’s temple

Can they find a deal?

At this end of this month, on the 30th of June, Greece is due to repay 1.5 billion Euros to the IMF, money that it doesn’t have. The Troika has had discussions with Greece for several months to agree on a new loan of 7.2 bn€ to bridge the gap but little convergence has been seen so far as the European Community is reluctant to lend more money to Greece if reforms aren’t pushed forward to get the debt and the deficit reductions back on track.

One of the points of contention today in the negotiations is around pensions. Greece spends more than even France on pensions (resp. 17% of GDP vs 15%). There is a huge distortion in the pension system: while 67 is the official retirement age, 75% of Greeks retire before 61.

What’s sure is that we’re going to end up paying for this!

A restaurant owner explained to us how this was presented in the news:

TMM – How does the crisis affect people’s pensions?

Restaurant owner – The government is collecting money everywhere. I don’t know if there is money left anywhere at all. The government has no money to give to the European community. Like our Minister said, he has to choose how to pay the people in retirement. There’s a lot of retired people here. He has to chose who he is going to pay: the people’s pensions or the European Community. I hear this on the news. So no one knows what is going to happen, we will be the last ones to know. But what’s sure is that we’re going to end up paying for this.

But hey, there is nothing we can do so try this, it’s homemade “tsikoudia”, this is pure alcohol from grapes. If you drink one, it’s good for the stomach.

TMM – … and if we drink two?

RO – Well you need one for each leg. If you drink only one, you’ll walk like this… (mimicks limping) so you’ll need a second one.

Beyond this relaxed appearance, many Greeks are indeed concerned where their country is going. Many things should be changed, particularly in the public sector, but as Helena said, there aren’t many options and things they can do to change that.

However on Friday the 26th of June, after heated discussions with its european partners, Greece’s PM Alexis Tsipras changed that. He declared that the reforms that were requested of its creditors were against what Syriza was elected on and called for a referendum on July 5th on whether or not the bail-out should be accepted.

You can find the transcript of his speech here, subtitled in English. It’s only 6 min, have a look.

Late on Sunday, the Bank of Greece recommended banks to remain closed on Monday. Capital controls are officially in place and Greece will definitely default on its IMF repayment.

Next week will surely be a chaotic one for Greece and Europe.

-Nick

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