Lancet says austerity is bad for Greeks' health

When your country's problems are so visible that
medical science can see them, you're in bad shape.

These guys even go into the mistake of bailing
banks with money that's needed for health.

What they didn't note was Merkel blackmailing
Greece so that it can spend more on tanks, and
less on health. The Lancet can't do everything.

Checkit:  New scientist

Greek austerity tragedy shows where not to make cuts

    16:23 26 February 2014 by Andy Coghlan

Austerity can be bad for your health. Greece has seen drastic increases in infant mortality, suicide and depression since the government made deep cuts to healthcare and social support services between 2009 and 2012. These fallouts may soon be reprised in other countries that have embarked on tough austerity measures, such as Spain and Portugal.

Following the country's financial crash, Greece cut its hospital budget by 25 per cent cut and slashed funding for mental health problems by 55 per cent. An analysis of health statistics shows that as a result, suicides increased 45 per cent between 2007 and 2011 and, over roughly the same period, cases of depression more than doubled and infant mortality rose by 43 per cent.

Needle-exchange schemes and free condoms for injecting drug users were also cut. By 2012, new HIV cases in this group were 32 times what they had been in 2009.

The country has also had its first cases of locally spread malaria for 40 years.

"The Greek experience shows the serious consequences of withdrawing health spending and social services," says David Stuckler of the University of Oxford, lead author of the analysis.

Spain next?

The worry is that a similar pattern will be seen in Spain, which introduced similarly savage cuts to health budgets in 2012 and 2013. "We think Spain will follow if the cuts are not reversed," says Helena Legido-Quigley of the London School of Hygiene and Tropical Medicine, who last year published a study on how the recession has so far affected health in Spain.

Legido-Quigley says that more recent developments such as the withdrawal of universal access to healthcare from 873,000 non-residents in 2012 could create conditions for epidemics of HIV and TB like those seen when services were withdrawn in Greece. She says there's still time to prevent similar epidemics in Spain, but only by restoring universal healthcare.

False economy

Stuckler says preventing epidemics is far cheaper than controlling them once they've begun. Last year, he produced estimates suggesting that healthcare spending actually boosts the economy, adding more than $4 to the economy for every $1 invested, compared with a drain on the economy of $10 for every $1 invested in defence, for example.

It's a false economy to cut spending on health and welfare, says Stuckler, and both Iceland and Finland survived economic meltdowns without doing so. Instead, they saved public money by not bailing out failed banks, leaving the private sector to pick up the bill.

"Short-term savings gained by drastic austerity measures should be weighed against their long-term costs," says George Slavich of the University of California, Los Angeles, who investigates the long-term effects of stress. "Living in a state of social and economic unpredictability, with inadequate access to healthcare, does not just contribute to short-term illness, it can also set in motion a set of biological processes that greatly affect lifelong health, and which can even lead to premature death," he says.

Journal reference: The Lancet, DOI: 10.1016/S0140-6736(13)62291-6

Proof of Troika fiddling

I'm going to place a text below which is
very good at analysing the politics of
austerity for Greece, and the flaws in
its application.

As this guy sees it, these flaws will mean
the end of the Troika's plans.
He shows how the Troika is acting on
behalf of the banks, and on behalf of
German military contractors and Merkel.

The ballooning military spending was one
clue that politicians were being paid off for
arms that Greece cannot afford and cannot
use. Submarines for example. It shows how
this is still going on now, even with austerity.

And Merkeel feigns innocence, like
"I didn't know Greece was spending so much
money. Schade"

His methodical style is also
very reassuring. He is academically
slicing the Troika and Greek politicians
into tiny pieces.

Let's see what happens next.

checkit: Mainly macro

Greece and denying responsibility

My earlier post making some parallels between attitudes to Greece and attitudes during the Irish potato famine of the 1840s was picked up by others in Ireland and Greece, and has drawn some interesting reactions. Thankfully most understood that, as I wrote: “Of course the Irish famine is different in degree and form to the difficulties being faced by many in some Eurozone economies.” So why did I still want to make the comparison? The trigger was the denial of responsibility highlighted by the Lancet study I referred to, and the common alternative view that all problems were down to a corrupt or inefficient Greek government and economy.

I wanted to make the parallel with the Irish famine for three reasons. First, there seemed to be the same type of deflection of blame going on today as at that time. Second, ideas about what could and couldn’t be done in terms of economic relationships were central. Third, the verdict of history is pretty clear with the Irish famine. The British government did provide some famine relief, but what history remembers is that it was not nearly enough. History remembers the action and inaction of the British government, and not the inefficiencies and inadequacies of Irish agriculture.

One response to my criticisms is that without Troika or IMF support, austerity would have been much more immediate and intense. This is of course true: unable to borrow at all, the Greek government’s primary deficit would have had to fall to zero even if all interest payments on debt had been halted. But as I noted above, the headline from history is not that the famine would have been worse still if the British government had not provided any relief, but rather that it did not provide enough.

Troika assistance to Greece made two major mistakes. First, wishful (at best) thinking about the amount of government debt Greece could support. Second, the Troika imposed a front loaded austerity programme that was far too severe. How much of the subsequent collapse of the economy was due to this is unclear, but few seriously doubt it played a major role. As I noted here, the estimates by the Troika of the impact of austerity that were made at the time ignored basic and widely accepted macroeconomic analysis.

Mistakes get made, particularly in a crisis. When these mistakes become evident, as they did pretty quickly in the case of Greece, there are two possible responses. The first is for those who made these mistakes to admit responsibility, and try and learn the lessons. I think the IMF has to some extent tried to do this, as I noted in this earlier post. The second possible reaction is denial, and to seek to blame others. It is this response that history does not look too kindly upon.

Denial takes many forms. There are many myths. One of the most invidious is that the failure of Greek debt to stabilise is because the Greek government failed to undertake the required austerity. This is simply not true, as this excellent study of all the assistance programmes to Eurozone countries by Pisani-Ferry, Sapir and Wolff documents. (See also the numbers I presented in this post.) The austerity programme was always far too severe, and became more so over time.

Another myth is that workers refused to cut wages, thus preventing the necessary adjustment in competitiveness. To quote the Pisani-Ferry et al study: “It is only for wage-based competitiveness indicators such as unit labour costs that the improvement is noticeable. Thanks mostly to downward wage adjustment, ULCs started to decline already in 2010 and the trend accelerated strongly in 2011-12.” So the image of the stubborn Greek worker refusing to face reality is incorrect.

There is also a denial of the extent to which the Troika promoted its self interest, rather than doing what was good for the Greek people. No doubt part of the failure to recognise the necessary debt write off was wishful thinking, but it is difficult to believe that it had nothing to do with who held that debt. As this Breugel study shows, the term ‘privatisation’ appears ten times more often in Commission programme documents than the word ‘poverty’. When it became possible that Greece might elect a government headed by Syriza, Greece was threatened with exit from the Eurozone not because the Troika believed this prospective government might do more harm to the Greek economy, but because they threatened to suspend interest payments.

A good example of this self interest is defense spending, and German built submarines in particular. Greek defense spending is well above the Eurozone average. An obvious initial austerity measure would have been a complete suspension of Greek spending on overseas produced military hardware. This is one example where austerity could actually be expansionary: Greece benefits from the reduced tax burden, but the demand impact is felt entirely overseas. Any fears about Turkey could have been covered by assurances from other governments. Indeed, given the alternatives, it seems criminal not to have made this a condition of Troika support. But of course this would be to ignore where this hardware was built - mainly in Germany and other Eurozone economies. 

As Merkel is reported as saying: “But we never asked you to spend so much of your GDP on defence”. Yet the Troika has not been afraid to ask for many things. One of the myths is that Troika loans have not involved much conditionality - as Pisani-Ferry et al note, “the Troika has immersed itself more and more in the sector-specific regulation of microeconomic behaviour.” The extent of corruption in the procurement of Greek military hardware is immense, but the bribes have been paid by companies in other Eurozone countries, particularly Germany.

It is clearly nonsense to argue that the damage done to the economy and health of the Greek people is all down to corruption and inefficiency within Greece and nothing to do with Troika actions. Denial of responsibility is particularly dangerous if it means not admitting your mistakes but instead repeating them. The tragedy of the Greek political class is not that they failed to enact Troika policies, but that acquiesced to them. The one ray of hope is that now the Greek government is no longer running a primary deficit, so it potentially has much stronger negotiating power. I only hope they use it. 

the River vs. Same-as-it-ever-was

And all this time, I thought Greeks were sitting home in
the cold and the dark, shitting their pants about
losing their home(s) to the tax man.
I mean "dark" because tens of thousand have cut their
electricity provision, and heating, willingly. 
 interlude


Some Greeks have actually been thinking philosophically about
how to stick it to the political system, not with guns,
but freedom. Freedom from politics and politicians.
Scintillating.Gandhi would have jumped for joy.

I just discovered what all the 'river' business has been about
in the Greek media and Twitter. The Potami Party.
Not Pyjama, Potami. River.
It's a political "party" that's only been around for 6 months,
and its "leader" is a happy-go-lucky journalist
named Theodorakis.

He has no manifesto. He wants people to have a say.
People in their malnourished daze have actually
had the strength to vote for this guy.

He got 6% in the Euro elections, and he sounds more
like a candidate for Eurovision.

That's 2 members in Brussels, and the same as the
Party of Assholes Formerly Known as PASOK.
Same as it ever was? No. It's a refreshing dunk in a river. the whole John the Baptist rebirth. Take me to the Potami checkit: theguardian http://www.theguardian.com/commentisfree/2014/mar/13/stavros-theodorakis-river-greek-potami-european-elections Stavros Theodorakis's 'river' party aims to get Greek politics flowing in the right direction With only two months until the European elections, Potami is already polling 6%, due to its rejection of traditional party politics Alex Andreou Thursday 13 March 2014 08.59 GMT Stavros Theodorakis's Potami 'aims to be a movement that includes people from all walks of life [that addresses] the deficit of real-life experience in politics'. Photograph: Aristidis Vafeiadakis/ZUMA Press/Corbis The word on everyone's lips in Greece is "Potami". It is the name of a new party, or movement to be more accurate, created by the respected journalist Stavros Theodorakis barely two weeks ago and already polling around a staggering 6% in national surveys. It means "river" because its founder hopes that many will be able to join it, add their creative waters to its flow and that, like a river, it will stir up – but also bring clarity and vitality to – what he sees as the stagnant pool of established party politics. I meet Stavros (he insists on everyone calling him by his first name) in the offices of his new party – a first-floor apartment in an inconspicuous block of flats in a residential part of Athens, converted to provide a working space. "Come in," he says, adding that "it's all suddenly got very busy." Well, yes, if you decide to start a party from scratch and put it in the hat for the European elections in two months' time, I imagine it would. "What do you want from me?" he asks with a friendly directness, which has become the trademark of his investigative television programme Protagonists over the years. "I'm not doing interviews yet." So we settle on this being a coffee and a chat instead. How does he respond to the charge levelled by some that, despite good intentions and an admirable start, Potami doesn't have a coherent and sound ideological basis? "We don't," he agrees proudly. While it is clear that his sensibilities are centre-left, he considers rigid ideology a hindrance. "Everyone wears their party specs," he explains, "and sees the world with a red or blue or green tinge." He thinks this brings a lack of clarity, that such labels act to segregate politicians and make finding solutions to practical problems more difficult. "Even the way they sit in parliament is silly – in blocks of party MPs, all putting on a uniformly approving or disapproving expression depending on who is talking." He asks: "Why shouldn't I sit next to an opponent so we can discuss an issue and try to convince each other or a colleague from another party with whom we might have common ground?" He considers a rigid party system a disadvantage, rigged to facilitate not listening to each other or the electorate. This is one of the reasons Potami is not putting forward any candidates for the municipal and regional elections that are also happening in May. "What do I know of local issues in, say, Crete, to try and impose an overall, national strategy?" So why start at the European elections? "It's cheap," he responds with a smile – there is that disarming honesty again. He is not standing in the European elections himself. Refreshingly (and rarely for a politician, even one as new to the game as he is), he doesn't consider himself qualified. His English is not good enough, he says. Potami aims to be a movement that includes people from all walks of life – doctors, builders, architects, students, intellectuals, employed or unemployed. The credo at the core of its existence is to address the deficit of real-life experience in politics. We talk some more about the party system and his belief that it promotes a closed shop of career politicians. The right is laden by nepotism, dominated by particular families with respectable surnames, by privilege and by connection. The left has similar problems because it rewards people who have been loyal to the party (or the union) by promoting from within. In both cases, according to Theodorakis, the end result is that the candidates put forward have a CV packed with political experience but little else to recommend them. The motto at Potami is "politics for all". Theodorakis is to be enthusiastically applauded. Whatever the political limitations – and perhaps lack of polish – of what he is doing, the bottom line is that he is doing it. In a world seemingly full of citizens who are either apathetic or see themselves as passive recipients of government policy, active ownership of one's fate and that of their nation should be encouraged. He will come under fire over the next few months without doubt. He represents a serious challenge to the status quo – and not only in a strictly Greek context. Established parties in most mature democracies have become floppy and complacent. Their sole raison d'être is to be elected, with little idea of what that means or what they might achieve when in power. They define their policies strictly with reference to the direction in which they are in danger of losing votes, rather than the national interest or a core set of values. Imagine a pop-up party like this suddenly challenging the Ukip-obsessed Tories from the centre or Labour from the left. A measure of political unpredictability may act to keep politics honest. Conspiracy theories are rife – in a country which is a bit of a specialist in the field – about who is behind Potami, who might be funding it, what interests it might represent. Political players and commentators alike seem prepared to countenance every possibility except one: that someone with broad appeal could just decide they are unhappy with what is on offer and do their own thing. And that it could be successful. In many ways, this simplest explanation is, politically, the most dangerously explosive and optimistic one.

a protracted Cold War between people and government

This segment will describe the apprehended warfare that
is going on in Greece due to the invasion of the Troika.
Greeks, having been overrun by larger nations, are
sizing up their enemy and considering how to react.

The Greeks tend to have their own homes, free and clear
and they are beginning to fear losing their homes. One
source of that fear is a new property tax, paid through
the electricity bill and given to the government.

They already have problems paying for electricity and
heating.
Heating used to be with deisel central heating. Now,
many in Athens have gas. Neither of these combustibles
are cheap enough and so they are also cutting off  their
fuel supply and so in the colds of winter, they burn wood
in a stove. The city stinks of burning wood. Some with
a bit of cash, have electric A/C-heat units for heating.

On the good side, light pollution is
way down as people are having their
electricity cut off as well, willingly. And the
candle business is seeing 10% growth.
And with no A/C unit, power use is way down!

It's a green revolution. thank you politicians!
You will save the world.

more seriously, it's literally a Cold War. brrrrr

The one thing the people are focusing on is keeping their
hard-won home. If the government takes homes
from families, they may as well roast the public
to keep the country warm. 

Emerging markets are rising. That's good for Greece

because Greece is now part of the Second World.
It has left the room where the big boys are
playing and is waiting in the wings with
Mozambique, for example.

That is to Greece's benefit, because the
emerging countries are riding the BRICS
coattails to success.

So, Greece has a chance to start again, with
the minor issue of a mortal debt hanging
over its head.

checkit: Bloomberg

Greece Cut to Emerging Market at MSCI in World First

By Tom Stoukas - Jun 11, 2013 10:32 PM GMT

Greece became the first developed nation to be downgraded to emerging-market status by index provider MSCI Inc. (MSCI) after the country’s stocks plunged 91 percent since 2007.

The MSCI Greece Index will no longer be classified as a developed market as it failed to meet criteria regarding securities borrowing and lending facilities, short selling and transferability, New York-based MSCI, whose equity indexes are tracked by investors with about $7 trillion in assets, said in a statement. The gauge consists of two companies, Hellenic Telecommunications Organization SA, the country’s largest phone operator, and Opap SA, Greece’s biggest gambling firm.

Locked out of bond markets since April 2010, Greece was forced to accept two European Union-led bailout packages as public opposition to pension and wage cuts derailed the pace of promised economic reforms. The benchmark ASE Index (ASE), which has 60 members, sank 83 percent since October 2007.

Operation a success, but patient died

This is as good an update on the situation in Greece
as you'll find in the Guardian.

Another source says that Prof Arweiller of Paris
was talking with a BIG international money
man, like Soros perhaps, who told her that Greece
will have a government at least until the
German elections. After that, it's all open.

Here's the review:

In a few words: Greece is still in freefall

checkit: Guardian

Talk of recovery in Greece is premature – and all about justifying austerity

Bank bosses and politicians are trying to convince the world that Greece is on the mend – but this boosterism is all about justifying the shock therapy imposed on the eurozone

        Aditya Chakrabortty  

        Monday 3 June 2013 19.59 BST       

Perhaps you remember reading about a basket case called Greece. The first domino to fall in the eurozone crisis, it was officially broke and only kept afloat by hundreds of billions in euros from Europe and the IMF. To secure the loans, Athens had to slash spending, lay off or cut pay for thousands of public servants and flog state assets. The result was social uproar, political turmoil and economic collapse. Hundreds of thousands of Greeks took to the streets. The country faced ejection from the euro, what economists drolly dubbed a "Grexit". In short, it was in a deep hole. But if that's your image of Greece then you need to update it: that's so spring/summer 2012.

Over the past few weeks, Athens' top brass have been trying to convince the world that happy days are here again. Prime minister Antonis Samaras now talks of the Greek "success story". The boss of the central bank and the finance minister say Greece has turned a corner. Editorialists in the national press and parts of the international financial press dutifully nod their assent. And those with Greek or European assets to sell clap along: "Forget Grexit – it could be Greecovery instead," ran one particularly bone-headed "research" note I received on Friday.

What's at stake here is a much bigger prize than whether an economy worth 2% of Europe's annual GDP really is on the mend. It's about justifying the shock therapy imposed on distressed members of the eurozone.

This was frankly put by Maria Paola Toschi, a market strategist at JP Morgan, in the FT last week. "If Greece can present itself as a recovering economy, having taken the medicine of fiscal austerity and supply-side reform, then the reform agenda of the European Central Bank and International Monetary Fund will be given a further boost."

If the elites of Europe and Washington can claim to have "healed" Greece, then they can shrug off criticisms of eurozone austerity. And they can also defend an economic model that just three years ago looked as if it had crashed into a wall.

Yet the exhibits the boosters are using do not a case make. Athens shares doubled in the past year? Cheap money from central banks and investors desperate for returns can play funny tricks. Wages have fallen? Yes, but the business investment that was meant to follow on from that hasn't materialised. The public finances are back in some kind of order? Taking an axe to the welfare state and public services will do that; still, few think Athens could go a day outside the sovereign version of debtor's jail.

And no one is seriously disputing that the economy remains badly sick; the OECD predicts Greece will face its seventh year of recession in a row in 2014. More than one in four Greeks are out of a job; of young Greeks, nearly two in three. Around 60% of those out of work haven't been employed in more than a year. According to a recent piece by Nick Malkoutzis and Yiannis Mouzakis for Ekathimerini, there are 400,000 families in Greece without a single breadwinner.

Although I was one of those who opposed the austerity imposed in Greece from the outset, I would far rather have been proved wrong. As someone who reported from Athens on a few occasions in 2011, and who has a number of Greek friends, I'd like to see them flourishing.

As it is, the most that can be said for the elusive recovery is that Germany and the rest of Europe have decided to keep Athens in the single currency and to keep supplying it with euros. From that has come a measure of financial stability which has attracted investors. The silent run on the banks, with savers pulling out their money, has stopped; but the financial institutions now function more like deposit vaults than dispensers of credit. And there have been some important cultural and institutional changes, as fund manager Jason Manolopoulos points out. Before the crisis, the government didn't know how many civil servants it employed; now it does. And, should you wish to trade in the middle of a depression, it has got easier and cheaper to set up a business.

But pit those gains against the near-collapse of the health system, the rise of the neo-Nazi Golden Dawn and the clampdown on investigative journalists such as Kostas Vaxevanis, persecuted for publishing a list of super-rich tax dodgers.

While the economy remains catatonic and civil society is in crisis, all such boosterism amounts to is a 21st-century version of claiming the operation was successful; it's just a shame the patient died. It's a more dramatic variant of something George Osborne and the austerity crowd are trying in the UK, too: to define down what success looks like.

Two summers ago, I sat with economist Yanis Varoufakis on his balcony overlooking the Acropolis, and asked him to sum up the outlook for Greece. "It's in freefall." Last night, I asked him the same question. "It's still in freefall."

Then he told me a story. Last year, his book The Global Minotaur was a bestseller in Greece, ahead even of Fifty Shades of Grey. But, he said, he had not received a cent in royalties. Why not? His publisher hadn't received any money from the bookshops, which were all bust. Rather than chase them, put booksellers out of business and finally kiss goodbye to getting any money, the publisher preferred to leave it be. So the shops, the imprint and the author all got by on nothing.

That sweet little story of economic inertia seems to me to say a lot.