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[turkkan]

SUFFOCATED BY DEBT
Greece Teeters on the Verge of Bankruptcy
http://www.spiegel.de/international/eur ... 15,00.html

By Manfred Ertel

Greece is on the brink of bankruptcy despite the fact that the global recession has yet to hit the country with full force. Strikes are paralyzing the country and the EU is putting on the pressure. But the government is still trying to put a positive spin on things.

For 33 years now, Dionisis Sargentis, 58, has been selling medical and orthopedic supplies to hospitals, products like screws and clips for damaged vertebrae or broken joints, implants, and surgical instruments. He started out as a one-man business. Today he has 13 employees and annual sales of nearly €7 million ($9.3 million).



One would think that his line of business would be recession-proof, given that there is always a need for medical supplies and his regular customers include major public hospitals in Athens.

And yet Sargentis is currently on the verge of going out of business. "I love my work," he says, "but the business is no longer worth it." For four-and-a-half years now, the public hospitals haven't paid him for the supplies he has delivered. At the moment they owe him somewhere around €4.5 million -- more than half his company's annual sales.

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Now he's fed up with waiting. Together with a number of other hospital suppliers he drove up in front of the General Hospital of Attica (KAT), which has the largest orthopedic department in Athens. But instead of delivering new supplies, he removed existing stocks from the clinic's storerooms. "We're only repossessing what belongs to us," he said. "They were just on loan." Sargentis and his fellow hospital suppliers are hoping that the Greek government will get the message and finally pay up.

As of Dec. 31 last year, the Greek government owed the 75 member companies of the Greek association of medical equipment suppliers, which Sargentis is president of, almost exactly €800 million. An entire sector of the economy is on the brink of ruin. "Everyone has their backs against the wall," he said.

There is a systemic reason for this. In Greece, hospital suppliers sell their goods to clinics on what is virtually a commission basis. The clinics pay only for what they use and in most cases only after a considerable time lag. Two to two-and-a-half years are considered normal waiting times. The suppliers take that into account in their planning. The orders made by the hospitals serve the companies as security for bank loans they take out to pay salaries and to place new orders with manufacturers. This is the way the business works -- or rather, this is the way it used to work.

But now the banks have stopped cooperating. They are refusing to provide new loans and this has caused the entire system to collapse. "It has cut off our oxygen supply," Sargentis says. "We are being suffocated by debt." But it is not the hospital suppliers' debts the banks are worried about -- it is the highly indebted Greek government they no longer see as being creditworthy. Companies like Sargentis's are the unwitting victims of the change in attitude.

No wonder, then, that there is so much public displeasure being expressed against the Greek government. Over the past few weeks, workers and public employees have been calling strikes across the country. Last Thursday, tens of thousands of people took to the streets in Greece's major cities, paralyzing public life. Trains, buses, and ferries stopped running. Hospitals offered only emergency services. Public schools were closed.

"The workers shouldn't be made to pay for the crisis," angry demonstrators shouted. They hold the government of Greek Prime Minister Costas Caramanlis responsible -- both for the bad old habits and the new financial crisis.

Crisis? The situation in Greece is not all that bad, insists Panos Livadas, the government's secretary general of information. The shops and cafés are full of customers, he points out. The Greek economy is "really indestructible. I don't understand these international situation assessments."

Livadas's job is to make people see things through rose-colored glasses. He explains that in 2008 his country's economy expanded by 3.2 percent, "one of the highest growth rates in the euro zone." Over the past four years, he says, economic growth in Greece has been twice as high as the overall average in the currency union countries.

He characterizes Greece's banking sector as being "basically sound" and "in considerably better condition" than those in other EU countries and in the United States. He notes that Greece was the first EU country to provide a government guarantee for personal savings up to a total of €100,000. Nothing seems to be able to shake the official's self-satisfied depictions of Greek reality.

But is this what the situation really looks like?

Short of Cash

One needs luck, especially in difficult times. At the crisis summits of EU member countries in Brussels, Prime Minister Caramanlis was lucky in the sense that the community was under such strong pressure to act in response to the crisis in Eastern Europe that not very much attention was given to the situation in Greece.

But now the European Commission has instigated disciplinary proceedings, because Athens has exceeded the euro zone budget deficit limit of 3 percent for the third time in a row. The results of audits carried out by Brussels look very different from the information in Livadas's glossy brochures.

In EU statistics, Greek government debt is listed as amounting to 94 percent of the country's gross domestic product. Italy is the only other euro zone country which has a higher level of government debt. Greece also has the lowest credit rating of all the euro zone countries. It has to finance its government debt under terms which are worse than for any other euro zone country, with the exception of Malta.

Greece has yet to break its old habits. The level of competitiveness is low, much-needed reforms are overdue, government bureaucracy is bloated and corrupt, and the country continues to live beyond its means. Even though the national pension funds are chronically short of cash, female public employees with school-age children are allowed to retire at the age of 50.

Educated young people from the middle class have little prospect of finding employment, despite being well qualified, and are forced to take casual jobs to make ends meet. As a result, many young Greeks are forced to live with their parents until they are well past the age of 30. The anger of the "€700 generation" -- as the young people are known -- over their situation exploded last December in weeks of rioting throughout the country.

The EU is now no longer willing to accept lethargy on the part of the Greek government. European Commissioner for Economic and Monetary Affairs Joaquín Almunia called for significantly harsher cost-cutting measures, a "prudent wage policy in the public sector," and greater efforts with regard to structural reforms. Georgios Provopoulos, the governor of the Bank of Greece, the nation's central bank, warned his countrymen against "self-satisfaction" and spoke of a looming danger of national bankruptcy. And Greece has still to feel the full effects of the global recession.

"The negative factors you see here are all leftovers from the past," says one EU diplomat, adding that most of them are homegrown. Economic experts are anxiously waiting to see what's going to happen this summer. They fear there could be a decline in the tourism sector, one of the most important pillars of growth in the Greek economy, accounting for 17 percent of gross domestic product. The volume of tourist bookings from the United States is reported to have dropped by up to 50 percent. The number of British vacationers, some 3 million annually in the past, alongside 2.3 million Germans, is expected to shrink by up to 30 percent.

The situation of banks that invested in Eastern Europe and in the Balkans is uncertain. Greek financial institutions invested billions of euros in bank takeovers or in setting up their own branches in Romania, Bulgaria, and Serbia. Given that the value of the national currencies in some of those countries has fallen dramatically, what were originally seen as attractive investments in developing economies could well turn out to be huge losses.

That's what the crisis looks like in Greece. "Nobody wants to see it, but everybody is afraid of it," says Kalliope Amyg, a young political scientist. "The country is dancing on a volcano."

'We Don't Know What Tomorrow Will Bring'

In Greek, there is no direct translation for the verb "save" in a monetary sense. And that is precisely the way the Greeks live.

Greece continues to have a flourishing informal sector. "It helps to stabilize people's incomes and standard of living," observes one European businessman who works in Greece. "Families try to have as many separate sources of incomes as possible."

For 24 years, Popi Kalogeropoulou, 48, has worked as a graphic artist for publishing companies, most recently for the women's magazine Young. At the end of last year she was laid off. The magazine was forced to cut costs, which meant job cuts.

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Fortunately it didn't take her long to find a new job. Since mid-January, she has been doing the layout for a weekly newspaper. The pay she was offered isn't bad, more than €2,000 a month, which is a bit more than what she was getting in her last job.

The only thing is, she wasn't given a contract -- she is being forced to work under the table. "I'm being made to do something I don't want to do," she says. She was paid for the first time eight weeks and one day after she started. But she only received €1,000 -- in cash, naturally. "Companies are simply taking advantage of the crisis," she says.

Nobody believes that Greece will be able to cope with the crisis, if and when its hits the country with full force, using just its old inefficient habits. "We don't know what tomorrow will bring," says the entrepreneur Dionisis Sargentis.

Sargentis only knows what will happen if the Greek government continues to be unable to pay its bills and the companies in his sector are unable to sell their goods. "This will spell the end of the health care system in our country." Among other things.

[kurupetos]

Turcunt, This is the CYPRUS FORUM

[turkkan]

gavur, if you can post about turkey we can post about greece. Now go cry about kyrenia.

[kurupetos]

gavur, if you can post about turkey we can post about greece. Now go cry about kyrenia.

You can post about anything, but how is this related to the Cyprus Problem?

Don't worry I don't cry!

[turkkan]

Well after the countless discussions on whether you are greek or not, whether greece will help you in any eventual war or not, what it has done diplomatically to help you etc etc, i assume some issues related to greece will also affect cyprus.

[Raymanoff]

turkkan, you picking on the country with the living stardaRDs of your dreams... you still marry donkeys and eat goat testicles for breakfast. U r worse than Gypsies... and u have guts to talk about Greece's economy... haa ha ha ha ha

[kurupetos]

Well after the countless discussions on whether you are greek or not, whether greece will help you in any eventual war or not, what it has done diplomatically to help you etc etc, i assume some issues related to greece will also affect cyprus.

First of all, I am Greek Cypriot, citizen of the Republic of Cyprus, EU member & independent country. If you care to know, the RoC is one of the most stable economies in the EU and hasn't been affected by the econ. crisis.

Thereby, I have nothing to do with the Republic of Greece and her economy, unlike my TC compatriots, who chose to steal some land, with the help of Turkey and form a pseudo state recognized by none, and by that they are completely dependent by the RoT.

Are you preparing for war against us? We are ready! We will fight with the help of Greece or alone.

[turkkan]

turkkan, you picking on the country with the living stardaRDs of your dreams... you still marry donkeys and eat goat testicles for breakfast. U r worse than Gypsies... and u have guts to talk about Greece's economy... haa ha ha ha ha

Raymanoff, as a russian speaking even if you are from ukraine you laughing at turkey is really quite hilarious. Do you have any clue how many of your women ('natashas') are banged day and night in the slums of istanbul?

Are you preparing for war against us? We are ready! We will fight with the help of Greece or alone.

Without greece you are in no position to fight any wars both in the diplomatic field or the military field. And trust me, you are not ready for war at this moment in time.

[kurupetos]

The RoC economy is thriving! We recently ordered the most modern, state-of-the-art main battle tank type of the Russian military: the T-90. 41 of them coming soon and they will be ready for you.

[Raymanoff]

i'll drink for that... badabooom mofos