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The crisis in the real economy is irreversible

07 April 2015 / 14:04:03  GRReporter
1712 reads

While the Greek government is slow in reaching an agreement with the creditors of Greece, arguing that it is making tremendous efforts to achieve the best for it, the Greek economy is increasingly sinking.

Greek commercial companies are under great pressure from their foreign suppliers, as the majority of them insist on receiving the full invoice value of the goods delivered, thus violating the original arrangement. Their argument regarding the pressure on Greek companies is the fear that Greece could formally declare bankruptcy, even as early as the 9th of April, if it failed to repay the loan to the International Monetary Fund. The companies have no access to financing, as banks have suspended lending for many months, and the lack of funds will force some them to cut staff and many others will probably close down.

Although the real economy is in a deplorable state, the Greek cabinet negotiates only to reduce the primary budget surplus that it is obliged to attain in 2015 from 3% to 1.5%, as stated by journalist and economic analyst Kostas Stoupas.

In his analysis for the economic online edition he writes, "It will happen, if it happens at all, after the negotiations for the signing of a new memorandum, probably named "Development and Equality Agreement", which will start in June and are not expected to end for several months thereafter.

If we take into account the staff cuts that the commercial and processing companies which import goods and materials from abroad will be forced to undertake, the loss of tax revenues and social security contributions to the state and private insurance funds will be much greater than the benefits of today's talks of the government with the creditors. Moreover, 50-60% of public opinion supports them, because they are presented as successful...

In terms of economy, Greece will probably attain no surplus but will instead report a deficit at the end of the year. Therefore, the government negotiates nothing. It destroys the lives of thousands of people for nothing..."

Stoupas writes that the insistence on the part of foreign companies to be paid the value of supplies in full is indicative of the state of the real economy. According to him, this detail proves the opinion that the collapse of the economy, social security contributions and state funds will have reached a state of explosion by early summer.

Suspension of payments by the state of its obligations in Greece is also indicative of the state of the economy. Examples of this are the major delays in repaying the pharmacists by state insurance funds. Employees in the industry told GRReporter that, if the delays continued, they would not be able to procure the necessary medicines that they have to immediately pay the suppliers for.

Kostas Stoupas emphasizes that Greece has already passed the point at which it could have reversed the disastrous course of the economy. "Even if a government of national salvation were formed tomorrow, with key participation of individuals who enjoy the confidence of financial markets, the economy could stabilize only after 6-12 months. The complete stabilization of the situation in the country requires political stability for 10-20 years, collapsing the public administration and the tax system and creating them from scratch, as well as bank deposits amounting to 200 billion euro.

If these things do not happen, wages in Greece will continue to fall, unemployment will be high and it will only be a matter of time before pensions will be reduced."

Tags: EconomyCompaniesSuppliersGovernmentNegotiationsCrisis
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