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"A penny for your thoughts"

Friday, May 18, 2012

Greece on the brink of collapse

Conditions are already hard for business people in Greece, with the country in its fifth year of recession. Greece imports 40 percent of the food it consumes, nearly all of its oil and natural gas and much of its medicine. Greece runs a primary deficit - spending more than it takes in taxes and by itself it would be shut out of international markets and have no one to borrow from. There are no run on banks to withdraw money because many Greeks have precious little left in the bank. Many have been surviving on [$500] 400 euros a month, which has to cover tax, bills, food and medical costs."

Anti-austerity Greek leftist Syriza party, which was the second-most popular party in elections earlier this month, has grown even more. They are counting on the International Monetary Fund, the European Central Bank and euro zone governments who hold most of Greece's 250 billion euro debt decision to keep things going rather than drop the curtain on Greece's euro dream and absorb the losses themselves. Greeks plunged their country into turmoil by voting overwhelmingly on Sunday 6th May 2012 to reject parties behind an EU/IMF bailout and are defiant to do it again. Greeks say they want a rescue plan that would not hurt the poorest and middle class as much.Greeks want to be on an equal footing with other people and not just slaves of some countries as commented by a Greek worker. Public spending in Greece pension system is at its worse with 35 years of work to earn a full pension. 80% of wages in Greece are in pension payment and are paid out 14 times a year. Greeks get a pension calculated on the last five years of their working life, which tend to be the highest-paid. German, Italian and Portuguese pensions are based on wages worked over a lifetime. Spain bases them on the best 15 years of work.

A 52-year-old teacher in a private school in Athens gets 400 euros ($496) a month from the Greek government, part of her late mother’s state pension. Under the current system, she qualifies to receive the payment for life as the only surviving child of a deceased civil servant, provided she doesn’t tie the knot. Female civil servants with children under 18 can get early retirement. Unmarried daughters of state workers say the payment became a factor in staying single.

The Greek government has identified at least 580 job categories deemed to be hazardous enough to merit retiring early — at age 50 for women and 55 for men. Vasia Veremi may be only 28, but as a hairdresser in Athens, she is keenly aware that, under a current law that treats her job as hazardous to her health, she has the right to retire with a full pension at age 50. Greece’s patchwork system of early retirement has contributed to the out-of-control state spending that has led to Europe’s sovereign debt crisis. Greece’s pension system is unsustainable. Greeks won't give it up and the country, save tourism does not have businesses or industries that could drive a recovery by leaving Euro without its debt-cutting targets.

A Greek exit from the 17-nation euro zone, or "Grexit" risks turning the nation into what would be close to a failed state on the edge of the European Union, one of the most prosperous societies the world has ever known. The likelihood of a Greek exit from the euro is now so high that even political leaders committed to avoid it admit preparations are under way.

External link: Europe, US and the world brace for messy impact from Greece
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