Entering a Death Spiral?
Tensions Rise in Greece as Austerity Measures Backfire
By Corinna Jessen in Athens
The austerity measures that were supposed to fix Greece's problems are dragging down the country's economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.
The feast of the Assumption of Mary on Aug. 15 is the high point of summer in the Greek Orthodox world. Here in one of the country's many churches, believers pray to the Virgin for mercy, with many of them falling to their knees.
The newspaper Ta Nea has recommended that the Greek government adopt the very same approach -- the country's leaders have to hope that Mary comes up with a miracle to save Greece from a serious crisis, the paper writes. Without divine intervention, the newspaper suggested, it will be a difficult autumn for the Mediterranean state.
This dire prognosis comes even despite Athens' massive efforts to sort out the country's finances. The government's draconian austerity measures have managed to reduce the country's budget deficit by an almost unbelievable 39.7 percent, after previous governments had squandered tax money and falsified statistics for years. The measures have reduced government spending by a total of 10 percent, 4.5 percent more than the EU and International Monetary Fund (IMF) had required. more
Boy Did The Banks Screw Ireland Up
Joe Weisenthal | Aug. 16, 2010, 1:00 PM
Irish Bank Shares Getting Hammered, As European Selloff Gathers Steam
Ireland is set to test the market tomorrow, offering 1.5 billion euros worth of four- and ten- year bonds.
In the meantime, the country's banks are getting hammered, and its spreads over German bunds are hitting brand new highs.
It's worth talking more what the heck happened to Ireland, especially since it's been the most aggressively responsible (austere) with regard to its public finances.
P O Neill at A Fistful Of Euros has a great post about about the stultifying effect a zombie banking sector can have on an economy.
The opening paragraph is worth the price of admission:
"A farmer goes into an embattled tractor dealer and reaches an understanding on the purchase of an expensive tractor. The farmer then goes to his local bank manager to get financing to purchase the tractor; as agriculture is not doing too badly despite the recession, there is some hope. But the bank has an unexpected response: we can’t give you a loan to buy that tractor, but we can finance one very like it — that we recently reposessed. So banks are in the farm machinery business, at the expense of actual farm machinery businesses." more