The authorities are making progress to put the public finances on a sustainable path, complemented with structural reforms to boost competitiveness and growth, while seeking an equitable distribution of the adjustment burden across all levels of society and protecting the most vulnerable.

Quick translation: The incumbent government is involved in the most enormous Procrustean exercise in the history of modern Greece. With ax and whip, with legislation prominent experts and jurists already warn is unconstitutional, with the kind of brashness that cannot, and is not, legitimized through “free elections,” the government is unhinging the lives of millions and plunging the country into despair. The “adjustment burden,” i.e. the brutal grab of a significant percentage of family income by fiat for transfer to creditors (?) is in full swing. The most vulnerable are among the first to fall to the onslaught. Never really protected in this country, they are now easy targets for mass economic slaughter.

Economic activity is declining as expected with the downturn projected to become more acute as the year goes on. The decline is led by cuts in government spending, with some latent buoyancy in private consumption. Inflation is running higher than expected as indirect tax increases are not (even partially) absorbed in margins. Unit labor costs are, however, moderating considerably, and unemployment is rising.

“As expected,” hundreds of thousands are losing their jobs and an unemployment rate of 20 percent by the end of the year is not just plausible, it is expected. The “latent buoyancy in private consumption” is sustained by the tail end of family savings and leftovers from other monies that cannot be replenished as the current catastrophe unfolds. After all the remaining pieces of silver are expended, it’ll be a toss even for people who thought they were “safe.” “Inflation is running higher than expected” ! What a surprise indeed!... but no surprise, really, with the government in a frenzy of VAT and excise tax increases, which have not led, however, to achieving entirely unrealistic rates of revenue increase. The killer effect on everybody’s pocket and the economy as a whole though remains intact since, oh dear, “indirect tax increases are not (even partially) absorbed in margins.” Who was loony enough to say that, somehow, the average Greek consumer was to be spared by understanding “margins?”

State budget implementation is on track with good expenditure control.

The deficit has been “cut” thanks, in large part, to the government stopping all payments due. This is the rough equivalent to a homeowner, severely in debt, suspending all payments to third parties, including the mortgage bank. Technically he is now (somewhat) liquid, even solvent. But, soon, the repo men and, most likely, the police will be beating down his door. “Good expenditure control” in his case leads to jail. In the case of the Greek government, it leads to congratulations from our “partners,” only tens of thousands of government suppliers and others with a legitimate claim for reimbursement are left high and dry. They, most likely, employ workers -- and they, most likely, will be laying off these workers as their businesses choke for lack of cash. “Good expenditure control” works wonders, doesn’t it? Some would even dare say the Greek government is declaring a “quiet” default amid all this pat-on-the-back-you’ve-been-good-boys approval from abroad!

The pension reform contains significant reductions in future pension costs, even though it is not clear that the authorities can bring them down from 12.5 ppts of GDP before the reform to 2.5 ppts in one step, as aimed in the program. A full actuarial assessment of the reform will take more time than foreseen in the program.

To put it bluntly, right now millions of people are wondering whether there will pensions at all in the future. “.... It is not clear that the authorities can bring them down from 12.5 ppts of GDP before the reform to 2.5 ppts in one step, as aimed in the program.” Few realize what this innocent sounding line truly means. But anything that is cut by 10 percent overnight, with everybody literally looking down the barrel of a government tax-and-slash gun, is bound to cause hemorrhage that will be recorded in history books. And, yes, the “full actuarial assessment of the reform” needs a little more time to come to a sound conclusion. Greece must be the one country even in deep historical memory that has been ordered from the outside to severely shrivel overnight the already tenuous retirement reality of millions of people without much else to sustain them in their latter years.

Banks face continued liquidity pressures and some solvency erosion but plans are in place to
deal with this.

What plans? Greek bankers are having nightmares that would not be discussed in public and won’t be repeated here lest we attract charges of “undermining” the government’s honest rescue efforts.

Deposits also are quite soft.

Yes, because you have to search with one of those enormous World War II anti-aircraft battery searchlights for Greeks, with even modest amounts in the bank, who are not actively looking for ways of taking their money out of this country. Press reports speak of some 19 billion euros having already departed. The real amount is one of the best kept Secrets d’Etat of these fear-laden times.

Structural reforms are progressing. The authorities announced a privatization program, labor reforms, a local government reform, and initiatives to liberalize closed professions.

This all sounds so robust and reassuring but, of course, entirely ignores Greek “idiosyncrasies” of DNA persistence. As for the “privatization program,” we would suggest that those really interested in the facts “on the ground” take time to analyze, say, the “privatization” of the Port of Piraeus and where it stands today; or such “initiatives” as the recent law to remove cabotage restrictions from the cruise shipping business in the Greek seas, which actually takes a roundabout way of keeping the restrictions by “rationalizing” them. As for the “closed professions,” we would certainly advise those taking out bets not to put their money on this “initiative” yet.

But not all is dark in this document. The report does recognize that there is “social anxiety over the impact of the measures” (read: fear, loathing, rage, and hate) and, yes, that “the authorities are concerned about the repeated skepticism in the press and among analysts whether Greece can work through the program without a debt restructuring” (read: concern over the certainty expressed by the majority that this country won’t avoid the ultimate stumble.)

Report or no report though, what we, the real, living, breathing targets of the “program,” find unbearable is being preached upon daily and unabashedly by politicians, who must be reminded every step of the way they are fully responsible for the scuttling of Greece -- and who will go unpunished, default or no default. As for the IMF authors, now and in the future, the have only one thing to really take to the bank: irrespective of the Greek government’s spiel, “social consensus” will never surround this ritual suicide, which the Japanese usually describe as harakiri or seppuku.

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