Greek Economy: THE WORST IS YET TO COME ..

This year the country remains in recession sixth year in a row, and ahead of it's citizens stand major new challenges. The trend of closing businesses, strikes, reduced pays and pensions continues in this year as well, and the Greek institutions warn of worsening situation because of rising unemployment and poverty. Greeks are convinced that evil is yet to come.

Sometime before midnight, Thessaloniki Square "Aristotelus". Dozen immigrants, with music from a cell phone, with visible mood jump around the empty stage, on which for the New Year's Eve in the past performances had known Greek singers like Sakis or Despina Wanda ...
Frightened by the frequent attacks of the "Golden Dawn" in Athens, many African immigrants arrived in Thessaloniki, although there is a lot lower earning. They cell ​​CD's or hand-knitted gloves, which no one wants to buy.

"The glamour of the New Year's celebration has been long gone. Now days mostly immigrants  come to the Square. Compared to the countries from which they come from, Greece is still ideal for them, although the Greeks are desperate and without money because of the crisis. The hardest thing is first to have, and than not to have, and they say worst is yet to come" - commented some of the Thessalonians that we met in the square.

The entrance in the new year was symbolically marked with modest firework, which looked more like marking a small wedding. It is cut  on everything.

New 2013 for the majority of Greeks only brings old problems, uncertainty and even more savings and reduced incomes and pensions. Strikes remain commonplace. Communal workers, who didn't collect garbage for days  in Thessaloniki, continued with the strike in the new year, and were joined by the rail workers in the first day of 2013.

Luckiest will be satisfied to preserve their work with reduced salary, no bonuses and additional  working hours for two years until retirement. In the first half of last year, 150.000 Greeks lost  their jobs, information released recently by the European Commission (EC). The country currently faces high unemployment, which reached 26% and is among the highest in the European Union (EU). Estimates are that by the end of this year it can reach up to 30%. Before the crisis it was 7.6%.

An hour after midnight, streets of Thessaloniki were already overflowing with people. Smiling and drunk, they all rushed to their favorite bars and clubs, such is the order, bohemian, in Greek, to celebrate the new year, despite all the negative forecasts for 2013, that Greek newspapers were full of these days.

SIXTH CONSECUTIVE YEAR IN RECESSION

This year the recession in Greece will be worse than what was previously expected, much worse than it was stated in the budget. Greece, which is pressed by debts, will notice higher budget deficit than predicted two months ago. It is expected that the economic activities of the state in 2013 will be reduced by 4.5%, although they were previously projected with a fall of 3.8%.

On the other hand, the Greek government intends to save 9.4 billion euros in 2013, which is significantly more than the 7.8 billion planned by the previous projection. This measure will be implemented through further reductions in state salaries, pensions and benefits.

The country that is in her sixth consecutive year in recession is expected to achieve positive growth even next year. EU in her autumn forecast predicted that Athens in 2014 will have economic growth of 0.6%, and the Greek economy will then sink in about one fifth of the level before the outbreak of the crisis ...

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Posted in: Business,Economy,World News

Greek syndrome is eating the Balkan - Greece's collapse will cause a drain of capital from the region?

Greek financial collapse could lead to a severe economic downturn in the region of the Balkans, as well as among other countries which are not in the euro area, but had years of business ties with Greece, warn economic analysts.

No one can predict how events will develop after the parliamentary elections on 17 July in Greece. Fears are not unfounded: Greek banks hold in their hands 15% of the charter capital of credit organizations of neighboring countries. Thus, the primary investments are invested in the economies of Bulgaria, Romania, Macedonia, Albania and Serbia.

Analysts warn of the possibility of a Greek bankruptcy and say that the switch from Euro into Drachma will have negative affect for the business in the region. European Bank for Reconstruction and Development makes a defensive ferrule around Greece, and according to the bank's claims, this could prevent a massive capital drain from the Balkans. Namely, the European Bank reached an agreement with three Austrian banks, large financial investors in the region, for the unfavorable liquidity in Eastern Europe.
Problems arise in the other Western Balkan countries that do not have the Euro, but are financially related with Greece. By itself this means it is possible a deeper crisis in the Balkan countries.
Analysts recall that something similar happened in 2008, when due to the complicated financial situation, the Scandinavian countries withdrew significant funds from banks in the Baltic States, and came to the economic downturn in the region. Because Balkan countries are more unstable in economic terms from the Baltic, the consequences can be very serious.
Analysts believe that the fast transition from Euro to Drachma is not possible. The process will take at least a few years. During that time other foreign banks, among others and Russian, can buy subsidiaries in these countries, and that way replacing the Greek capital.
Experts warn that the outflow of funds to Greece from its Balkan subsidiaries will cause panic among investors and they'll begin to invest in more reliable sources, such as Germany and Switzerland ..

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Posted in: Economy,World News

USA will bankrupt before Europe?

In the past three years, Americans have managed to convince us that the crisis is over, but not in Europe.

While Europe, with many troubles established the first elements of proficiency corresponding  with the globalized world and began to control its public debt, they do not want to admit that the weakness of American democracy enable to increase the level of spending and public revenues suddenly to fall at unprecedented level.

Situation that the next president will face, who ever that would be, will be daunting.

At first glance, all is well on the opposite side of the Atlantic Ocean: Silicon Valley continues to be the leading place in world creativity. New York is still the most fascinating city in the world. American film continues to inspire the world. US armed forces are still allocated worldwide and democracy and security depends on them. US independence is secured by new sources of energy. Wrapped in her own optimism, America believes that will only be enough for some time to borrow, expecting growth to come back and swallow the debt.

But debt is growing much faster than ever before in the history of the United States (more than a billion dollars each year), almost faster than any country in Europe, and in two years will exceed 80 percent of GDP, which is more than double the level in 2008.

To finance the debt, this year federal budget borrows $4 billion, and debt servicing exceeds the defense budget, social security and health care system.

It will work as long as the creditors agree. They are of two types: Federal Reserve (U.S. central bank) which continuously print money (to borrow the state and commercial banks), and the new forces that have become richer with increasing of energy prices and this way invest their redundancy - in order this country to look strong and secure, in order not to exist alternative investments and in order US to be used as a mercenary.

Bank of federal reserves now owns one-sixth of the public debt, which is the highest level in US history. National funds will begin to diversify their investments. Financing of the US debt will be harder.

Logically, this will soon cause a decrease of the value of the dollar, increasing interest, which in the end would be disastrous - rise in interest rate for only one percent will increase the debt servicing of $100 billion.

At that point, US will declare bankruptcy. Can no longer help the unemployed of total 17 percent, would not be able to feed the 50 million people who would not survive without public kitchens, will not be able to repair old bridges and roads. Will not be able to rebuild its education system, which is disastrous (except most prestigious universities, where currently foreign students are becoming majority) and may not be able to maintain its military force.

If there isn't any technological breakthrough, or war economy, the decline of American society will seek pittance. But no one in Europe will benefit from it ..

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Posted in: Economy