November 12, 2012
The Greek parliament passed an austerity budget yesterday, agreeing to a further €9.4bn of cuts including to all state salaries and pensions. Next year will see the economy shrink for the sixth consecutive year according to government forecasts, declining a further 4.5pc. Unemployment is already at 25pc and, despite spending cuts, state debt will hit 189pc of GDP next year (and rise to 192pc the year in 2014/15 according to Fitch).
The news cycle in Britain may have moved on, but the rioters haven’t. A further 15,000 surrounded parliament yesterday. The country is so wracked by financial and social breakdown that it now resembles a hospital patient in a vegetative state, kept alive by measures which only heighten the pain experienced before the inevitable end.
There is no way that Greece can pay back the Troika. It is already trapped in a debt spiral. Greece has a €5bn debt payment due this Friday on a three month Treasury Bill. T-bills, which are short-term bonds designed to be paid off relatively quickly, are the only form of debt the Greeks are allowed by the Troika. This one only came into existence to fund a Greek repayment to the ECB earlier this year (conveniently debt ceilings tend to get overlooked in these cases).