Wednesday, 24 February 2010 17:15

I Think It's Confirmed, Greece Will Be the First Domino to Fall

I think it's safe to assume that the civil unrest in Greece over alleged "austerity" measures is real, and is material. According to CNBC, more than 20,000 protesters struck and marched through the streets. In a country of only 8 million people, that is an awful lot!

Greece strike
Police arrest a demonstrator during a
protest march to mark a 24-hour general strike on February 24, 2010 in
Athens, Greece.

Additional quotes from this story:

The Socialist government meanwhile hit back at
European criticism of Greece's fiscal management, accusing European
Union partners of double standards and poor leadership.

The 24-hour general
strike grounded flights and disrupted services but stopped short of
bringing Greece to a standstill.

Scuffles broke out on the fringe of the protest, with
police firing teargas to disperse groups of stone-throwing youths.

"No sacrifices, the rich
should pay for the crisis," demonstrators chanted as more than 20,000
marched on parliament in an otherwise peaceful protest...

In a sign of persistent market jitters, Greece's borrowing costs rose on
Wednesday after Czech Finance Minister Eduard Janota said Athens would
find it impossible to slash its budget deficit as fast as promised...

Deputy Prime Minister Theodoros Pangalos said
Italy, France and Belgium had used the same techniques as Greece to mask
their true deficits to qualify for the euro zone.

"You simply put some
amounts of money in the next year ... it is what everybody did and
Greece did it to a lesser extent than Italy for example," Pangalos told
BBC World Service radio.

said Germany was ill-placed to criticize Athens given its behavior
during the Nazi occupation of Greece in World War Two, including the
looting of central bank gold reserves...

... "Today, Europe's eyes are turned on us," said
Yannis Panagopoulos, head of the private sector union GSEE.

"We ask the government
not to give in to the desires of the markets, to set people's needs as a
priority and adopt a mix of economic and social policies that won't
lead to recession but to jobs," he told the rally.

Fitch Ratings on Tuesday
downgraded the ratings of Greece's four largest banks, expecting fiscal
tightening to weigh on the economy and loan demand, hurting profits.

The strike coincided
with a visit by EU officials assessing whether Greece is on track to cut
its double-digit deficit.


"The team of inspectors
coming from the Commission, the ECB and the IMF ... will get a taste of
the dynamic reaction of the Greek workers to the huge pressures from
Brussels," centre-left Eleftherotypia
newspaper wrote in an editorial.

Under the scrutiny of EU
policymakers and markets, the government has so far refused to give in
to protesters' demands.

Minister George Papaconstantinou
said on Tuesday the cabinet may decide
on more measures to cut the deficit after talks with the visiting EU

first joint walkout by the two major labor federations was the biggest
test to the government's resolve since it won October elections.

... Government officials said only about 16 percent of public sector
walked off the job, but public sector union ADEDY put participation at
90 percent.

Click here for Youtube
video: Reuters
and more

Of course, if any one knows to be wary of the MSM slant, it is me. So
let's travel around the world to get various perspectives.

From Al Jazeera , the last entity to take a Anglocentric/Eurocentirc slant on things:

Government officials said only about 16 percent of public sector
walked off the job, but public sector union ADEDY put participation at
90 percent...

European unrest

The action comes as fears over wages and job security grows among
European workers, sparking protests in a number of other countries in
the past week.

In France on Wednesday air traffic controllers continued to strike
after action began on Tuesday, causing massive delays and cancellations
at Paris' two main airports.

The action was called to protest planned reforms that workers fear
will lead to losses of jobs and civil servant benefits.

It came as Lufthansa pilots ended a strike in Germany and British
Airways cabin crews voted to launch one of their own.

Spanish workers unhappy about plans to raise the retirement age
marched on Tuesday but the main protest in Madrid seemed relatively
small, in a sign that the country's unions may be weakening.

Portugal's second largest union warned on Monday it would call more
strikes if the government extended a public sector wage freeze beyond
this year.

Transportation labour unions in the Czech Republic decided on Tuesday
to also hold a strike in the capital Prague next Monday in protest
against a new value-added tax on their workers' benefits.

The walkouts are the latest signs of a broader unease about jobs and
benefits, and what the future holds for a continent struggling to stay
competitive on a global scale.

Look at what's happening in Spain:
Spanish trade unions plan
massive strikes | Spanish News

Trade unions in Spain have announced plans to protest against Spanish
Prime Minister Jose Luis Rodriguez
Zapatero’s failed attempts to save the dwindling Spanish economy that
has led to one in five Spaniards being out of a job.

The economy remains in recession after almost two years and with
unemployment at 4 million and over one million Spanish households with
no bread-winners, the future for Spain looks grim.

Protests are planned for Madrid, Barcelona and Valencia. The strikes
were sparked as a result of Zapatero’s proposal to increase the
retirement age from 65 to 67, which Spaniards see as an unfair shifted
responsability for the
country’s financial woes onto the aging and
working people.

“They are making a grave error. Raising the retirement age goes
against workers’ rights,” said Mr Mendez, leader of the General
Union (UGT).

Many forecasts predict that the economy in Spain will continue to
shrink and unemployment could rise to 22 per cent. The rising budget
deficit in Spain has recently prompted bond markets to worry about a
similar crisis as the one currently unfodling in Greec

The Italian perspective on Spain from Circolo Luce Del Sud:

Tens of thousands protest across Spain at Zapatero’s pension

Graham Keeley — –
Tens of thousands of protesters took to the streets across Spain last
night in the biggest test of the country’s Socialist Government, which
is under pressure.

With a general strike threatened in the summer, the two biggest
Spanish unions staged protests in Madrid, Barcelona, Valencia and

The Union General de Trabajadores (UGT) and the Confederación
Sindical de Comisiones Obreras (CCOO), are planning to
stage 57 protests
in other parts of the country until next week.

Unions are angry about the Government’s proposed pensions reforms
which would extend the legal retirement age from 65 to 67. José Luis
Rodríguez Zapatero, the Spanish Prime
Minister who recently came under
pressure from financial markets to introduce measures to bring the
country out of recession, now finds himself threatened by his political
allies in the unions.

The protests are the first time that Mr Zapatero has faced street
unrest since he came to power in 2004. Leading members of the Prime
Minister’s party took part in the protests, a sign that his popularity
is dwindling.

Union anger has been mounting because Mr Zapatero changed tack in an
effort to convince financial markets that his Socialist Government was
serious in its efforts to recover from the worst recession in decades.

Spain’s rising debt has led to concerns that it could follow in the
footsteps of Greece, whose budget crisis prompted the European Union to
place it under scrutiny.

Don't underestimate the extent of the Spanish strikes. There are a LOT
of people involved. I've never seen a US strike of this magnitude...

Hey, the French AND the Germans are striking due to the ramifications of
a "united" Euroland:

PARIS, France - Disgruntled would-be passengers complained about
hundreds of cancelled flights and long airport waits as air traffic
controllers began a four-day strike across France on Tuesday.

France's civil aviation agency ordered airlines to cut back half of the
flights in and out of Paris' Orly airport and one in four at Charles de
Gaulle amid staffing
shortages caused by the walkout.

Five unions representing the controllers called the strike to protest
plans to integrate European air traffic control, which workers fear
lead to losses of jobs and civil servant benefits.

Fears about future job prospects prompted another strike across the
border in Germany this week that disrupted cross-border air traffic.
Thousands of pilots at Lufthansa returned to work Tuesday after
suspending a strike over concerns that cheaper crews from the German
carrier's smaller airlines in other countries could eventually replace

Lufthansa warned, however, that the normal flight schedule wasn't
to resume until Friday. Pilots and management agreed to suspend the
strike until March 9 and resume talks.

French union leaders hope the strike in France - coinciding with a
seasonal school holiday - will pressure President Nicolas Sarkozy's
governing conservatives before next month's regional elections.

And in Portgual, Portugal Strike
Poses Threat -

LISBON -- Unions representing Portugal's public-sector workers are
preparing a national strike to challenge a wage freeze that is key to
government efforts to cut a towering budget deficit. But will the unions

The March 4 strike highlights political challenges faced by the
government of Socialist Prime Minister Jose Socrates. In seeking to
close a budget gap worth 9.3% of gross domestic product in 2009 - more
than three times the European Union's 3% limit – the government is
running headlong into union culture.

Europe's weaker financial are groaning under the weight of
their vast budget deficits. Greece admitted late last year that its
deficit was four times larger than previously thought. Spain and Ireland
also face financing problems.

This year's labor action comes after an earlier effort in 2005 and
2006, including wage freezes and pension reforms, also generated a
strong backlash from unions. But that action had little effect on the
government, which was able to force through its program because it held a
majority in parliament until last year.

This time, the government appears to be moving slowly, even though
has the tacit support of the opposition.

The March 4 national strike was called
by Frente Comum, a coalition
of unions that together represents about 350,000 of Portugal's roughly
500,000 public-sector workers, out of a total population of 10.6

"We're losing purchasing power. We're
losing our labor rights," said
Ana Avoila, Frente Comum's leader, adding that
government workers have
seen their purchasing power eroded by nearly 8% in the past decade. The
union is calling for a wage hike of 4.5% this year.

Under the budget plan presented on Jan.
26, government workers,
including teachers and healthcare
professionals, will have their
salaries frozen. The wage freeze is one of several measures to reduce
the deficit in 2010, including lower subsidies for purchasing new cars
and changes to pension rules to penalize early retirement among
public-sector employees. A new tax on executive bonuses in the financial
sector was one of the few changes to boost revenue.

Before the 2010 plan was presented,
debt-ratings agencies had been
calling for a big reduction this year in order to meet the EU's demand
that the spending gap be under the 3% limit by 2013. Instead, the
proposed budget contained a reduction of only 1 percentage point this
year and investors responded with a sharp sell-off of Portuguese
government bonds.

As I have stated in my previous posts,
social unrest will either weaken governments or cause some governments
to appear weak. If they don't forcefully respond the markets will
consider them incapable of enacting the "recommended" budget cuts. If
they do act forcefully, social and civil unrest becomes amplified. There
is a very, very slim chance of the Eurozone
getting out of this both intact and unscathed. My next post on the
topic will trace the correlations and inter-connectedness of the various
sovereigns throughout the whole world, and predict who is the most
vulnerable and who is subject to the most damage when (not if) the first
domino falls.

For more on the Pan-European Sovereign Debt Crisis series, see:

  1. Can
    China Control the "Side-Effects" of its Stimulus-Led Growth? Let's Look
    at the Facts
    - Explains the potential fallout of the excessive
    fiscal stimulus in China. While not European, it is quite likely to kick
    off the daisy chain effect.
  2. The
    Coming Pan-European Sovereign Debt Crisis
    - introduces the crisis
    and identified it as a pan-European problem, not a localized one.
  3. What
    Country is Next in the Coming Pan-European Sovereign Debt Crisis?
    illustrates the potential for the domino effect
  4. The
    Pan-European Sovereign Debt Crisis: If I Were to Short Any Country,
    What Country Would That Be..
    - attempts to illustrate the highly
    interdependent weaknesses in Europe's sovereign nations can effect even
    the perceived "stronger" nations.
  5. The Coming
    Pan-European Soverign Debt
    Crisis, Pt 4: The Spread to Western European
  6. The
    Depression is Already Here for Some Members of Europe, and It Just
    Might Be Contagious!

  7. The
    Beginning of the Endgame is Coming???

Last modified on Wednesday, 24 February 2010 17:15