May 13 2012

The Erosion of National Democratic Politics?

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Posted in: Greek Politics, The Greek Debt Crisis
by Dr Nikitas Konstantinidis

The results of the May 6 parliamentary elections have heralded the end of an era in its post-dictatorial democratic politics (metapolitefsi) characterized by alternation in power by two catch-all parties, cartelization of government, and heavy statism. The people have expressed a strong aversion to established political elites of the center-left PASOK and the center-right New Democracy (whose vote shares added up to 32%, less than half of their sum total in the 2009 elections). The rise of SYRIZA, a pre-electoral coalition of left-wing movements, has been the major story so far. However, the existing electoral system – designed by New Democracy in 2006 as a buttress for an entrenched two-party system and stable single-party government – has led to a significant distortion of the democratic will in terms of the translation of vote shares into seats (New Democracy gained more than a third of the seats with only 19% of the vote). Continue reading →

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Posted by: Posted on May 13, 2012 by Ioanna Antonopoulou  

May 8 2012

Greece implodes as protests drown out its European vocation

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Posted in: Featherstone, Greek Politics, The Greek Debt Crisis

by Kevin Featherstone

On Sunday, Greece went on a binge-party, drinking to forget the nation’s economic woes and indebtedness. Voters wanted to punish the two main parties that have governed the country for the last four decades, holding them responsible for the austerity measures they’re suffering. So, the party that had won the previous elections – PASOK (centre-left) – saw its vote fall by 31 percentage points to just 13%. The main opposition party – New Democracy (centre-right) – scrambled to first place with just 18.8%, down by 15 percentage points.Not even a combination of ND and PASOK – continuing the recent caretaker government format – could command a majority in Parliament. Not surprisingly, ND leader Antonis Samaras failed to form a coalition against this background. Indeed, it may not be possible for any government to be formed – or not one that can survive – and fresh elections in June look very likely. Continue reading →

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Posted by: Posted on May 8, 2012 by Ioanna Antonopoulou  

May 8 2012

No dilemma

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Posted in: Greek Politics, Monastiriotis, The Greek Debt Crisis

The result of the Greek elections is no doubt ground-breaking. The collapse of PASOK to its pre-1980 electoral levels, the rise of the far-right to levels unimaginable since the restoration of democracy in 1974, the collapse of the traditional bi-partisanship, the elevation of the left to second place in the popular vote, are all elements of a radical re-drawing of Greece’s political map. With this radical change in the political landscape, however, the election result seems to have thrown the country into the worst of all possible outcomes: un-governability – and, with it, a further collapse of the economy, political instability through repeat elections and eventually a new default. But this need not be the case.

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Posted by: Posted on May 8, 2012 by Vassilis Monastiriotis  

Apr 30 2012

Can Hollande save Greece?

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Posted in: Monastiriotis, The Greek Debt Crisis

Following the result of the first round of the French Presidential elections, it seems that – at last – a new wind is blowing in the European sky. The much sidestepped “growth agenda” is slowly gaining currency in the European political discourse and calls for pro-growth measures, for a European growth strategy and for a reconsideration of the strict adherence to fiscal rules are no longer received as heterodox, as dangerous or marginal. Talking about ‘the growth question’ is becoming legitimate again, it is becoming mainstream! The orthodoxy of fiscal discipline of course remains. But talking about growth is no longer a taboo (before becoming too jubilant, however, see also this piece of deja vu). From all corners of Europe, from the Dutch labour party to the Governing Council of the ECB, and from the offices of the Commission to the streets of Spain, more and more voices – not only by the disillusioned public but increasingly from key political figures and policy officials – are heard calling for the need to establish pro-growth instruments to counter-balance fiscally-induced austerity. All this is nice of course – and much needed. And the Greeks may be excused to feel that they are vindicated, as they were among the first to question (and to suffer from) the austerity recipe. They may be excused to feel that something is changing also for Greece, that new allies are coming out to support Greece’s case for growth, that the spirit of Keynesianism is coming back – and, with it, salvation for the ailing Greek economy is on its way. But there is a problem – or two.

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Posted by: Posted on April 30, 2012 by Vassilis Monastiriotis  

Mar 30 2012

All the Wrong People are Applauding!

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Posted in: Featherstone, Greek Politics, The Greek Debt Crisis
by Professor Kevin Featherstone


The announcement from the Minister of Education, George Babiniotis, that the government is suspending the new law on the universities sends entirely the wrong signal on the programme of reform.  The Minister says that the law will not be applied at present given the financial pressures across the education sector, following well-known difficulties in school provision. While the latter are very regrettable and a cause for concern about the policy planning process, the new announcement panders to those within the university sector that depend on inertia and have little regard for how universities might contribute to Greece’s progress.  Those engaged in violent protests and blockades – actions that have scarred practically every campus in Greece – can proclaim a victory. Continue reading →

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Posted by: Posted on March 30, 2012 by Ioanna Antonopoulou  

Mar 23 2012

Are the European banks saving Greece or saving themselves?

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Posted in: Featherstone, The Greek Debt Crisis, The Greek Economy

The financial institutions overseeing the bailouts are ignoring the domestic impacts of austerity measures

Who is rescued by the bailouts of the European debt crisis? The question won’t go away. Last week, Greece was granted a second bailout in order to avoid a catastrophic disorderly default. Few observers believe it will be enough to avoid the need for a third bailout, at least in the medium term. This week, the story of the euro crisis has shifted to Portugal as expectations rise on the financial markets that she too will need a second bailout. It wasn’t supposed to be like this: Greece’s first bailout almost two years ago was to be a one-off; more recently, EU leaders have repeatedly insisted that there would be no repeat of its second package. Once again, they appear King Canute-like: whatever their claims, they cannot turn back the waves of scepticism from the markets. Continue reading →

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Posted by: Posted on March 23, 2012 by Ioanna Antonopoulou  

Feb 26 2012

Deflation in Greece!? What do they (not) know?

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Posted in: Greek Society, Monastiriotis, The Greek Debt Crisis, The Greek Economy

The latest Interim Forecast by the European Commission makes some gloomy predictions for the Greek economy in 2012 but, interestingly, on the issue of inflation it states:

Constant-tax inflation in 2011 was 1.2% in 2011. However, for an economy in deep recession, the inflation rate reveals deep inflexibility in product and services markets. In 2012 the price rise trend is expected to be reversed, resulting in slight deflation of 0.5%. The main driving force stems from anticipated falls in disposable income and consumer spending due to wage cuts in the private sector.

 (added emphasis is mine; the repetition is theirs!)

It is of course a positive sign, that the economists at the Commission have come to realise what ‘any fule kno’ in Greece: that downward price rigidities in the country are immense. Perhaps in the future they may make the additional step and come to realise that, by implication and given the sizeable reduction in nominal wages in 2011, inflation in the country is not (predominantly) driven by wage pressures.

But what is more startling in the text quoted above is the anticipation of deflation in 2012. This is based on a very simple principle of (neoclassical micro-)economics: the decline in disposable incomes shifts the demand curve to the left and the economy adjusts reaching a new equilibrium at lower prices (and lower consumption). So prices fall. And this is deflation! [Add to this the market deregulation measures (licensed professions, wage bargaining, and all that) and we get an extra fall of prices, through the outward shift of the supply curve – although the Commission report does not seem to make much of this (just a quick comment on “medium-term” effects).]

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Posted by: Posted on February 26, 2012 by Vassilis Monastiriotis  

Feb 20 2012

Greece: Playing against the clock

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Posted in: The Greek Debt Crisis, The Greek Economy

 

 by George Tsebelis
 

This is a critical time for Greek debt negotiations, and, regrettably, communication between the Greek government and the “troika” (the combination of the Commission of the EU, the European Bank, and the IMF) is out-of-sync. There are obvious reasons. The track record is negative (the first bailout failed, thereby necessitating a second one), and each side has many things to blame the other for, with neutral observers seeing both sides. It is true that the memorandum was focused mainly on financial issues of debt repayment and not on economic recovery of Greece to enable it to service the debt in the long run. It is also true that the Greek side fails to meet the goals set by the plans. Continue reading →

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Posted by: Posted on February 20, 2012 by Ioanna Antonopoulou  

Feb 17 2012

No rest for the wicked…

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Posted in: Monastiriotis, The Greek Debt Crisis

So, after months and months of refusing to even discuss about doing the obvious, the ECB has now signalled that they will do a debt swap with Greece – this weekend. But those who for months now have been arguing that this is not only a moral, but also a financially sensible, thing to do should not start cheering as yet. For there is another twist to the story.

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Posted by: Posted on February 17, 2012 by Vassilis Monastiriotis  

Feb 16 2012

Greece and its euro-zone partners: why two sides that say they agree can’t find their way to cooperate effectively

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Posted in: Featherstone, Greek Politics, The Greek Debt Crisis, The Greek Economy

 

by Professor Kevin Featherstone  

The European Union is built on structures of economic co-operation, yet the sovereign debt crisis is testing to the limit its ability to avert a financial disaster.  In the current Greek imbroglio, both Athens and its euro-zone partners seem unable to achieve their aims and are finding it impossible to convince the markets they have found a way out.  Given both sides proclaimed a Greek default (and possibly an exit from the euro-zone) is what they wished to avoid, how come they haven’t been able to cooperate and secure their shared goal? Continue reading →

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Posted by: Posted on February 16, 2012 by Ioanna Antonopoulou