It seems that the Greek bailout deal that was stitched together over the past week or so is already threatening to come apart. The latest is a report that European Finance Ministers will not disburse any funds until Greece implements the promised austerity measures.
Now stop and think about that for a moment. Does that mean no funds will be released until the Greek politicians actually fire 15,000 government workers? That was the promised headcount reduction that has been reported. Or perhaps they mean not until the Greek government actually cuts the minimum wage in Greece by 20%. With a 2-day general strike already called let yourself imagine what video footage we will be seeing shortly if the strikers hear about that while they are in the streets.
Perhaps they mean the promise to grow the Greek economy in 2013. But doesn't Greece need the money here and now in 2012.
Exactly what do the EU folks want Greece to "implement" and just what does "implementation" mean. This farce gets more and more disturbing as the days go by.
Finally, I did some digging and came up with the following data points.
First Greece:
- Population - 10.8 million.
- Workforce - 5.2 million.
- Unemployment Rate - 20.9% (about 1.08 million)
Now the United States:
- Population - 242.3 million.
- Workforce - 154.4 million.
- Unemployment Rate - 8.3% (about 12.8 million)
Now consider what the austerity numbers would be if "the Troika" was making its demands of the United States instead of Greece. This may give you some idea of the actual impact that the demands will have, and are having, on the Greek people and the Greek economy.
Based upon the proportional size of their respective workforces, the 15,000 person cut in jobs being demanded of Greece would equate to the USA putting over 445,000 people out of work.
Like in the US, Greece has elections upcoming this year. In fact their elections are in April. Pause for a moment and consider just how willing US politicians would be to vote to approve such an act in say July or August with the voters set to enter their polling places in just 3 short months.
And you thought the debate over raising the debt ceiling was contentious. That would look like a cake walk compared to debate over a plan to kick 1/2 million people out onto the streets.
Oh, and let's throw in plans to cut the US minimum wage by 20%, thus lowering it from its current $7.25 to $5.80 per hour.
That would be a real vote getter.
Then let's cap it all off with a cut in spending on Medicare by about 20% also. (The Greek government is pledging to reduce spending on medicine from 1.9% of GDP to 1.5% of GDP.)
Boy if backing that package of changes doesn't get an incumbent re-elected I don't know what will.
If you've grown tired of the "reality" TV shows that your cable or satellite service are offering I would suggest seeing if you could get the C-Span equivalent of the Greek Parliament proceedings.
Now that should be some entertaining viewing.
Have a good one
Curtis Bergquist
PRO Trader Manager
P.S. The The PRO Trader Service was up in 2011 and has beaten the market handily since the inception of our new management strategy.
