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Subscribe to RSSUnless the Greek government can negotiate a deal, the troubled country could be the first in the European Union to default, sending its economy -- and, possibly, others -- into a death spiral. NBC's Keith Miller reports.
Reporter's Notebook
ATHENS – When you touch down in Athens, the signs of an economic slump are immediately evident. The arrivals hall in the domestic terminal is almost deserted, with flights within Greece having been cut back by about 25 percent. Outside the taxi pick-up point stretches a long line of yellow cabs going nowhere. It is symbolic of Greece's economy – stretched and stuck.
On the ride into town the driver explains that he's been waiting for me for seven hours. I was his second and last fare of the day.
Greece still holds the magic of an ancient Mediterranean country. The Acropolis, its columns lit majestically at night, juts grandly above Athens. It is a testament to one of the world's great civilizations.
But down here on the street, there is fear that Greece is unraveling as a modern state.
‘Economic death spiral’
You don't expect to see so many hungry people in a major European city. They line up each day looking for a handout in the soup kitchens and bread lines run by the municipality. But the 40 workers under contract to prepare a basic lunch of pasta and bread say they will lose their jobs in June because the city has run out of money to pay them.
A shoe shine man sits in front of a closed shop in central Athens Wednesday.
Essentially, the country is broke. And to borrow enough money to stay solvent, the Greek government has agreed to severe austerity measures imposed by the European Union, European Central Bank and the International Monetary Fund. The money will run out next month unless another chunk of the bailout is handed over. But the European Union wants even more cuts in government job, salaries and benefits.
Public employees have already taken a 40 percent pay cut and pensions are being reduced. The private sector has also been hit and unemployment is nearing 20 percent. A staggering 40 percent of youths between the ages of 18 and 24 are without jobs.
Take, for instance, Leo, a 64-year-old painter of religious icons for devout Greeks and tourists. His business dried up. The money ran out and he ended up living on the street. Evicted for not paying rent, Leo, who didn’t give his last name, took warm clothes, books and ten boiled eggs to his new home – a metal bench near a park in central Athens. He spent 45 days in the open with what he called the “unhappy homeless.”
What makes Leo unhappy is the realization that the government is to blame. "They borrowed," he said. "Every time they needed money they borrowed and then borrowed some more."
Successive Greek governments borrowed an estimated $498 billion, in essence to bribe the Greek people into being happy. Governments who could offer cushy office jobs, fat pensions and long vacations got re-elected. It made perfect political sense, but it was economic suicide.
A businessman in the aviation industry described the country, "as gripped in an economic death spiral."
Enough to make you sick
Yiannis Varoufakis, a professor of economics at Athens University was just as blunt when he told me, “This is Greece's Great Depression. If you look at the statistics it is indeed a deeper slump than what Greece went through in the 1930s.”
John Kolesidis / Reuters
A man reads a newspaper in an empty souvenir shop in the Monastiraki tourist area in Athens on Wednesday.
Imagine for a moment taking a 40 percent pay cut. Then suffer an increase in sales tax to 23 percent. Add on increased rates for electricity, a new tax on heating oil and the cost of a gallon of gas hitting almost $10. Oh and your pension is not secure, and your kids stay home because there aren't enough teachers. It is enough to make you sick.
And that's precisely what the Greeks are doing. Getting ill. Hospital admissions are up 25 percent. At the same time hospital budgets have been cut 40 percent so there are shortages of medicine and staff.
Nikitas Kanekis is the director of Doctors of the World, a charity that runs health clinics. He has the genteel manner necessary to be a pediatric dentist, but the economic decline has unsettled him. "We have seen four times the number of Greek patients over the last year,” he said. “We are afraid the humanitarian crisis can develop into a humanitarian catastrophe."
It may already be happening. The department of health reports that suicides are up 40 percent. And violent crimes including murder are up almost 100 percent. “We have all the characteristics we see in big cities in the Third World,” said Kanekis. “People with no shelter, starving people and people looking for doctors and medicine."
Fears about what may come next
Greek coalition leaders are meeting Wednesday to prepare their response to a draft deal on steep cutbacks demanded by creditors in return for a $170 billion bailout that could protect the country from looming bankruptcy.
They need the money to stave off crunch time on March 20 when a big bond redemption payment is due. Without the bailout, they risk a default that could send shockwaves throughout financial markets and the global economy.
No one is certain it will happen. To receive the previous handout, Greece promised to cut 30,000 public-sector workers, but only 1,000 have been let go. The government also promised to sell off 65 billion euros in state owned assets. So far only 2 billion have been sold.
The government is trying to raise money through increased taxation. There's a new property tax that is collected through the state-owned electric company. If you don't pay the tax your electricity is cut off. There's a luxury tax to hit the wealthy – a 30 percent tax on sports cars and yachts. There's even a tax on private swimming pools. The government is reportedly using Google earth to pinpoint pools even as some Greeks are said to be using camouflage nets to hide them.
Even the Greek Orthodox Archbishop Hieronymos II of Athens and All Greece, who rarely comments on issues not related to the church, is worried. “The unprecedented tolerance of the Greek people is being exhausted, rage pushes fear aside and the danger of social upheaval cannot be ignored anymore,” he warned in a letter sent to interim Greek prime minister.
The origin of the words tragedy and economy are Greek. In this crisis, they are too close to home.
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Good thing all of our leading economic indicators are heading UP.
More BS........wait til the bill comes due.
Except the net loss of over 1 million jobs since 2009 and the 2% normal job growth for a total estimated loss of about lets say 9 million jobs. How is that going up?
Oh yeah, the velocity of money through the system is at a crawl...how is that going up? Do you even know what the velocity of money is? I thought so.
How about the net loss of equity for the last several years? How is that going up?
Better call Bernie Madoff and check on your investments ltcommander72.
America really should take a lesson in all this.
Most Americans live with far to much debt. We are a country of borrowers that do not understand how to live within our means. Ultimately easy credit will fall apart and we will pay a heavy price for it. Just like the Greeks.
The main difference though is that the United States has a lot more resources and options available to us. Yes, as a nation we owe China a lot of money, but they will never collect. They know that if we fall apart so do they. They rely heavily on our un-ending appetite for cheap goods that they produce and sell to us so that they can then lend us money so we can buy more cheap goods from them.
The shrinking middle class in the United States is the product of poor business practices, not anything to do with our government. Manufacturing continues to be sent overseas to sweat shops and child labor camps and support positions get sent to countries that pay $5-10 a day for someone that barely understands English when you call for help. Companies buy other companies, borrow money against their assets, then abandon them to crushing debt while pocketing the money. The problem is that American business ethics have died.
Some Americans are, but they are called the lunatic fringe by the establishment.
It's interesting that many bashing socialism as failture base on some countries failure. The truth is pure capitalism and pure socialism are both bad. I agree that it's bad in Greece since the people want good social support while not willing to pay the taxes for them. It certainly can happen here soon too if people expect the same services without willing to pay the taxes. However, there are coutries where they balance the two well and do well. Germany, for example, has very good social support, but nobody here screaming that they are evil socialists. It's because they balance them well. Of course, they have a culture of savings and willing to pay their share of taxes help. It also helps that they are not spending a fortune on the military.
That is because we are their military!
Don't know if you remember all the grief Merkel was getting for cutting social programs to survive in the last few years.
The truth is there is no perfect government system to go by. They all have their flaws and failings. Take Despotism for example. If you have have benevolent despot it works very well. If not then you have a very bad thing.
Now most people think that the United States is a Democracy. It isn't. It is a Capitalistic Republic. The great flaws that our government often faces is that such a system is often slow to react and people tend to vote for what they want instead of what they actually need.
A certain level of socialism is good to ensure the well being and education of the population. But to much and you end up with a nanny state. Greece fell into the nanny state category.
For decades Greek people "lived well and WORKED LITTLE...and all on borrowed money" ?? Are you f-cking kidding me? Do your research Keith Miller- For years, Greeks have only been 2nd to Koreans in weekly/annual working hours. You're such an idiot. It's a miracle that you have any job let alone as an NBC news corresponde
Am I the only one who thinks about these things but wasn't Greece virtually destroyed by flames (at least 25%) in 2007 when the wildfires went through it and wouldn't that have an impact on the economy also? Just sayin'...
The only stable life is one which you produce the food on your plate and shelter over which you avoid the weather. Society as it is called is merely a Bubble that is produced by stratification of the classes and allowing the ones on the top of the heap the live off the backs of the ones on the bottom. All based on the fact that we are NOT all born equal. It's the responsibility of the ones that are born able bodied and well to tend to the ones not so fortunate. In general we must work to EARN our daily bread.
Margaret Thatcher said: "The problem with socialism is that sooner or later you run out of other people's money."
Lynn W
Very well said! The problem is those that are working - living off other peoples money, state, city & government employees, think we are talking about people on welfare.
These people do not understand they are not producing a marketable product that the rest of the world can use or consume and in essence they believe they are doing U.S. a favor to have such special benefits, salaries, health care and retirements that 95% of blue collar workers no longer have.
When you at the bottom looking up civil service jobs start to look appealing.
Too bad most are not willing to do what it takes to get one or keep one for three decades.
Lesson learned from Greece! I will only vote for a Politician who tells me the truth, that my USA is in trouble and needs to be fixed immediately. No more "feel good" politicians for me that say we need to borrow our way out of debt. Roll up your sleeves you President wannabees, lets see what your made of instead of that kiss butt, reelect me, everything is getting better lie, that has put us in this hole.
I bet you won't be voting at all come November. :)
Seriously, they all side step the real issues........they're more interested in gay marriage, abortion, etc. and think the american public really cares about those issues................election, after election, after election, we hear the same issues debated, over and over and over again!
The issue in Greece is 2 fold, no one paid their taxes and spending was obviously WAY WAY out of control for obvious reasons stated a 100 times above.
While I agree with shrinking the size of government and cutting spending we have to deal with our health care system as a 10% increase in spending per year(that's been going on for 10 years) is not sustainable, time to seriously take a look at whats Canada is doing RIGHT and move that direction.
hikeswithdogs
Is that why so many Canadians come to the U.S. for serious medical problems? They do not want to wait 6 months to be treated?
I remember from 2008 articles that Goldman-Sachs, after sending suits around the earth to sell derivatives to governments, contracted with the Greek government to receive the fees charged in landing-departures from government own airports to pay back the loans. Will Goldman-Sachs allow acceptance of 25% less in payments?
Get off of Goldman Sachs..........whether people like it or not, they pretty much saved this countrys azz during the financial crisis. Now, I have no particular love for banks, but they are one of the few financial firms that did the right thing during the crisis.
First I have heard someone say that. Goldman-Sachs saved this country's ass during the current financial crisis, 2007-2012? Current, Housing crisis is still going full steam. A $25 billion settlement is being refused by at least three states. Goldman-Sach saved this country's ass? I thought it was the billions in taxpayer bailout's that saved this country and never heard of a Goldman employee losing a cent.
Also instead of people trouncing the lower income tax payers for not paying taxes go to the Tax Code implemented over many decades by Congress and you find out why. Do a trial entry on Taxact.com software and you pay or don't pay what the law says.
Out of the Greece and into the Fire. Good example of government spend and tax out of control. We can look for this to come to us when the Obama debts come due. More black history in the making..
unknown, first of all it has NOTHING to do with race! It doesn't matter if Obama is green, yellow or Red with pink spots. It's about his out of control spending. He has spent more in 3 years than Bush spent in 8.
Margaret Thatcher said: "The problem with socialism is that sooner or later you run out of other people's money."
FYI Obama is more white than black. Secondly If the shoe fits wear it I always say.
Greece's failure is directly linked to their long term near-stand still manufacturing production. Any nation who doesn't produce goods cannot have a successful Western economy. Production is the reason why Germany is far ahead the rest of the EU nations and is looked upon for bailing out Greece.
You do realize that Germany is behind the creation of the EU.................right? Now that you know, you might want to take a good hard look at the condition of germany before they created the euro.
Brad M.
Sorta reminds me of where we are heading. When the U.S. had steel mills, paper mills and many other companies manufacturing products the government and states had enough revenue to hire many unionised public employees and give them good salaries, health care and retirements.
Now the situation is becoming upside down. Fewer manufacturing companies, most went over seas because of governmental regulations & unions, and those that still operating do not offer a fixed retirement and health care benefits after 30 years of employment like the union public sector enjoys. Paid via tax dollars.
I guess we will see in November if there are more union public people working verses the blue collar private sector employees?
To answer your question "momstheword" GreeK wildfires of 07' affected roughly 2% of Greece's land (670,000 acres) mostly burning forests, olive groves, citrus groves, vineyards, etc. "At least 25%" is a bit of an exaggeration. The economic impact was substantial but comparatively insignificant
Do Greek fraternities use Greek letters also or do they use letters from our alphabet?
If I remember correctly, Greece got screwed pretty good (monetarily wise) when they joined the euro.
That's because they had way too much debt.
Most of the comments represent people choosing FEAR over ANALYSIS. The Greek crisis is not an example of the consequences of all social spending, but rather an example of extremely excessive social spending. We need to avoid the extremes. Let us not develpo into a Greece: but, let us also not develop into a Mexico, where all of the wealth is concentrated into the hands of a few extremely wealthy individuals. Extreme capitalism is as bad as extreme socialism.
JZech,
LOL..........in case you haven't noticed, we have.............all of the people's wealth is in Washington and guess how many of our elected officials are rich........then do a check how many of those rich are democrats.
Then check and see which ones have any sense of morality or a sense of loyalty to their workers instead of stockholders. Look at GM to answer that one genius.
Morality and loyalty.............in Washington............are you kidding?
The US has not seen "extreme capitalism" since the 1700's; and there is nothing to indicate that it was a bad thing back then.
The current financial crises was caused by the US government and the Federal Reserve, not CEO's, Bankers or other market entities.
You are blaming the market for the sins of the state.
The House Of Cards ....
We have somehow survived three quarters of a century of social engineering and fiscal experimentation by a multitude of nations around the world. It is now apparently quite evident that, no matter the political ideology, corporate control, crony capitalism and extensive social safety nets can not exist and thrive in unison. The economies of the entire planet have overpromised, overborrowed and overspent way beyond necessity or reason. The fact of the matter is that this house of cards is teetering on collapse and there is little that can be done to reverse the eventual implosion. Additionally, with the world's population spinning out of control, the future is rather bleak for any prospects that any economy will add anywhere near the number of jobs needed to absorb the tidal wave of humans to the work force. Realistically, the world is on a long and slow decline for the next few decades before planetwide social and fiscal challenges are met with some new paradigm that can effectively deal with the massive problems that are only beginning.
Peace to all
You hit the nail on the head! And that IS the major problem in the world today. All this money talk, all debt talk, all the credit talk..............It's all BS, the world could go back to using notches in a stick, as it once did, to determine wealth.
I'll take an olive over an airplane any day. I'll take date over a microwave any day, I'll keep my chickens to feed me another day and you keep your gold. And In Greece's case.......they should tell the eurozone and the IMF.......you keep your loans and we will keep our olives and their products.........by force if necessary.
Pfffftttttt....... Did I miss something. Greece fell victum to the credit default swaps that the US bankers used to embezzel TRILLIONS of $. Now the IMF is in there loaning them money as long as they sell off the state assests to US corporations. The IMF has been run out of South America for doing the same thing. Same with Iceland, Ireland, Spain etc etc. They have all fallen victums to US corprate fraud. And not 1 banker is in jail although the US has locked up plenty of poor people for all kinds of BS. Get Real America!!
SADLY --The Greeks have been living HIGH on the Lamb since the end of WW II !
Together with the Italians maybe they can get together and start a New Country?
At least the Food will be Good!
Just like here in the US. In both the US and Greece, the OLD PEOPLE voted themselves more and more benefits at the expense of their children. Now that the economies are broken those benefits will be paid in quality of life. Welcome to the third world. Thanks a lot BOOMERS.
JEM,
Get a grip...........the world economy tanked because of computers and the internet.........it has absolutely NOTHING to do with the baby boomers.
The world economy tanked because we bought what we didn't need with money we didn't have.
FTWorld- Those in charge will make sure thier @$$es are covered, and in Greece they are taking going Greek to a new level.
This is the direction obama's agenda is leading us. ANYBODY but obama in 2012.
we are next...
No, Italy, Spain or Portugal is next, then us.
You forgot Ireland.
LIberals just keep pressing your reps and senators for more spending and Greece will the shining example for you to set your goals to. If spending got Greece where it is then the U.S. is heading the right direction for self destruct. All economic indicators show that....not the bs that the administration is publishing people. Not just the current either....the current regime whomever it is cooks the books to CYA always have and always will. Until the working man is represent in our government then NOTHING CHANGES.
If you want to see the "Working Man" represented, than vote RON PAUL if he makes the ballot or LIBERTARIAN if he does not. Working people are not represented by mainstream politicians and so long as the voters keep demanding mainstreamers like Obama and Romney, the country will decline.
JEM,
Pssst...........Ron Paul's a baby boomer!
Ron Paul wont make it under a libertarian vote, and the votes will then go to obama. So, lets hope Ron Paul gets on the ballet as a Republican.
@ dam tired, actually the baby boomers are the ones that were born during world war 2 as all the soldiers wanted to leave offspring in case they were killed. Ron paul is a bit older then that. OK quite a bit older.
Vote none of the above!!!!!
Lets not forget that Greece and the US are both democracies. The economies are being driven over a cliff because the voters demanded it.
How many Boomers in the US care about the fact that 40 cents of every dollar on their social security checks is money borrowed against their children? They know because it has been in the news many times recently, but oldsters just don't care. How many Boomers complained when AARP twisted George Bush's arm into signing the prescription drug benefit to an already bankrupt Social Security system.
Democracy is all about getting what you want and making somebody else pay for it. Baby Boomers have for years voted for more and more benefits that their children would have to pay for. Now the bill is due and will be paid; if not in cash than in life.
In both Greece and the US, Boomers voted for themselves far more benefits than the system could possibly carry without breaking; and now it is broken. Thanks a lot BOOMERS
JEM,
You seem to have some really deep seated problems with the Baby Boomers........well guess what, if it weren't for the baby boomers............you would be here on this earth.............you might want to remember that in all of your rantings agains them.
I do not rant against the Boomers, I rant against what they have done. As a person under 50 who faces retirement with no Social Security, no Medicare, no Pensions and no other programs for which the Boomers bankrupted what was once a great nation to get; I have a lot of anger.
If it were up to me; Social Security and Medicare would both be canceled today. It is not fair to have massive welfare programs set up where those paying for them have no hope of being covered by them.
I am angry at Boomers for transforming what was once "Land of the Free" into the worlds "Prison Nation". You could have voted the other way at any time.
============================
You Boomers could have saved this country at any time by voting LIBERTARIAN and you could also save it now by supporting RON PAUL; but you will do neither because Boomers value their government benefits more than their children's future.
.
JEM,
I too fall your category............and believe me, job wise I have been screwed my entire life............but I do not blame the baby boomers for my problems or for the state of the economy.
dam tired of this
If you vote Democrat and/or Republican cycle after cycle as the Boomers did, than you are guilty of screwing your children as the Boomers screwed you. The vote is a powerful thing that should not be used carelessly.
For your children's sake:
Vote for Ron Paul if he makes the ballot.
Vote LIBERTARIAN if he does not.
Vote LIBERTARIAN for all Senatorial and Congressional seats
....and yet, majority of Greeks (or is it Geeks?) can hardly wait to see the country declare bankruptcy & get the hell out of EU. Won't take salary cuts or pension concessions from secure & happy-go lucky govt jobs -way to go suckers.
Greece isn't the only country looking to bail on the EU........many of the countries are starting to figure out they made a mistake.