The dire prognosis comes even despite Athen's massive efforts to sort out the country's finances. The government's draconian austerity measures have managed to reduce the country's budget deficit by an almost unbelievable 39.7%, after previous government has squandered tax money and falsified statistics for years. The measures have reduced government spending by a total of 10%, 4.5% more than the EU and IMF had required.
The problem is that the austerity measures have in the mean time affected every aspect of the country's economy. Purchasing power is dropping, Consumption is taking a nosedive and the number of bankruptcies and unemployed are on the rise. The country's GDP shrank by 1.5% in the second quarter of this year. Tax revenue, desperately needed in order to consolidate the national finances, has dropped off. A melange of fear, hopelessness and anger is brewing in Greek society.
Unemployment in the city Perama hovers between 60 and 70%, according to a study conducted by the University of Piraeus. While 77% of Greek shipping companies indicate they are satisfied with the quality of work done in Perama, nearly 50% still send their ships to be repaired in Turkey, Korea or China. Costs are too high in Greece. the country, they argue has too much bureaucracy and too many strikes, with labour disputes often delaying delivery times.
Barely any of the country's industries can keep up with international competition in terms of productivity, and experts expect the country's GDP to fall by 4% over the course of the entire year.
A short jaunt through Athen's shopping streets reveals the scale of the decline. Fully a quarter of the store windows on Stadiou Street bear red sign reading -"Enoikiazetai" -- for rent. The National Confederation of Hellenic Commerce calculates that 17% of all shops have had to file for bankruptcy.
The entire country is in the grip of a depression. Everything seems to be going downhill. The spiral is continuing unabated, and there is no clear way out. The worse part, however, is the fact that hardly anyone still hopes that things will improve one day.
Inquiring minds just might asking "How long can Greece hold on?"
I do not have the answer to that, besides it's not the important question. A far more worrisome question is "When does similar strife spread to Spain, Portugal and perhaps even Italy?"
Part of the blame goes to the bailout plan itself. France and to a lesser extent Germany would not take haircuts on Greek debt. Aid to Greece by the IMF and European banks simply threw good money after bad.