January 20, 2014
Judging by the collapsing Greek yields, which at this rate may drop below US bonds soon enough, the Greek economy has never been stronger.
Sadly, manipulated bond levels driven by yet another bout of pre-QE euphoria (suddenly the conventional wisdom is that the ECB will conduct QE in a few months as first explained here in November) no longer reflect anything besides a massive liquidity glut and momentum chasing lemmings. Alas, as usual the reality on the European ground is much worse. The latest example comes from the Greek Public Power Corporation which has reported that Greek households and corporations are finding it increasingly difficult to pay their electricity bills. In total, debts to the power utility from unpaid bills currently amount to some €1.3 billion and growing at an average rate of €4 million per day. Also known as the Grecovery.
Not surprisingly, it is the poorest households who have the bulk of the debt. Remember: “the rich hold assets, the poor have debt.”
Kathimerini reports more:
The lion’s share of that debt is owed by low- and medium-voltage consumers – households and very small enterprises. The total arrears of these categories amount to an estimated 600 million euros, of which some 65 percent concerns households. The debts of the broader public sector amount to 190 million euros. The arrears of corporations connected to the medium-voltage network total some 130 million euros, while mining company Larco alone has run up debts of more than 135 million euros.
So since such a substantial portion of low-income society, and in Greece that by definition means society period, is unable to even afford their electricity, the Greek state’s solution is perfectly anticipated for a country which is insolvent due to too much debt but can’t declare bankruptcy because it is ruled by a few not so good bankers: convert one’s basic social amenity into a liability, and pay it off over time. i.e., a debt.
In an effort to make it easier for households to repay what they owe and to boost the cash inflow into its coffers, PPC introduced a flexible and extensive payment plan scheme last year that over 700,000 consumers have joined. The scheme has proven so popular that the utility has given its customers the option of securing a payment plan via telephone in order to reduce long queues at its offices, as staff had been unable to handle the volume of applications.
PPC customers can now complete the process over the phone, by calling 11770 and applying to pay 12 monthly installments along with a down payment of between 20 and 50 percent. The category of socially sensitive consumers (the unemployed, those with low incomes etc) can pay their dues in up to 40 installments. Consumers only have to go to PPC offices to pay their installments.
In other words, for the low low price of €49.99, payable in 40 installments, you too can have electricity!
Which perhaps explains why the vast majority of households who had their electricity cut off opted not to fall even more in debt, but to take the short cut.
An estimated 7,500 households who had their supply cut off have now been reconnected thanks to a government decision to secure power for the country’s poorest households. There are, however, another 35,000 households, according to official figures, that have illegally reconnected their electricity supply, which is very dangerous.
Since Greece is now nothing more than a placeholder figurehead designed to preserve the stability of Deutsche Bank, the German export miracle, and the myth that all insolvent peripheral European banks are viable, who can blame them.