This past week you saw yet another Greek parliamentary vote on financial reforms demanded by their international creditors in lieu of additional bailout money. A worrying sign that had not been seen in a while were large scale and violent protests outside the parliament building. This Greek tragedy has continued for eight years now.
Over the course of that time it has threatened to bring down other peripheral nations and major banks throughout the EU which were exposed to Greek debt. Economic problems in even smaller nations of the EU can potentially endanger the stability of the global economy. It is a fresh reminder of why you need a gold IRA to hedge your retirement portfolio. Now would be a good time to consider what gold goes in an IRA as well as IRA rollover rules and regulations.
Greek Parliament Again Passes Economic Austerity Reforms
Monday saw the Greek parliament debating over and voting for more legislation on reforms in fiscal, labor, and energy sectors. The international lenders said the passage of such reforms was necessary for Greece to obtain the latest ongoing bailout funds. Greek Prime Minister Alexis Tsipras pledged that passing the package would help to bring an end to country’s dependence on bailouts (and would be the last such forced reforms), with:
“Today’s vote is pivotal for the country to successfully emerge from bailouts in seven months.”
A majority vote in the parliament did pass the legislation. The success for the government comes at a price for the country’s hard hit people and businesses. Changes included restructuring benefits for families, opening closed occupations, electronically managing back taxes and past due loan foreclosure processes, and making strikes more difficult to call.
Protesters Strike Over Legislation
The mood on the street was far from jubilant though. A twenty-four hour strike that concluded on Monday had interrupted city rail, subway, and bus services throughout Athens. Some of the scheduled airline flights remained grounded. Around 20,000 protesters filled the square outside of the Greek parliament as the government was voting despite the difficulties in getting there. Huge traffic jams brought Athens to a standstill for much of the day.
Most of the protesters remained peaceful, but some radical leftist ones turned violent. Police suffered from gas and paint bombs and stones before retaliating. In scenes reminiscent of past ugly protests, they were forced to use tear gas to break up the offending groups. Since Greece’s economic collapse began in earnest in 2010, the country has suffered through approximately 50 different strikes. The citizens have been infuriated by the austerity measures required of their creditors who include the International Monetary Fund, the European Union, and the European Central Bank.
One new issue in these reforms that infuriated unions related to changes to the way strikes can be called in Greece. These reforms mandate that unions will now have to obtain a 50 percent vote instead of the prior 33 percent one that had been required in the past. The administration has pledged that this only pertains to local union chapters. Prime Minister Tsipras reacted angrily to suggestions that his government is attempting to make it more difficult to hold strikes with:
“It’s a shameless lie that this government is enforcing demands by creditors and industrialists to deregulate the labor market.” The government is not “abolishing or threatening strikes.”
Yet despite these claims, both the international creditors and the business owners of Greece are in favor of reducing the numbers of strikes plaguing the country. These have impacted Greek productivity which consistently is a shocking 20 percent worse than the average for the rest of the European Union. It only makes the economic problems worse as part of the negative feedback loop.
Final Bailout from EU Awaited
This victory for the government means that they managed to meet the January 22nd deadline of a euro zone finance minister meeting. These countries will then determine if Greece achieved enough reform to successfully finish the 86 billion euros (or $106 billion) in their August ending program. This would give the country another 6.5 billion euros worth of loans.
The Greek government expects it to be approved, as Athens-based financial analyst Babis Papapanagiotou stated:
“Ultimately, Europe does not care about Greece and the Greeks. Members states simply want to put this affair behind them, and in that sense they are prepared to help the Tsipras government clear its bailout review.”
The country is hopeful it will be able to begin borrowing from the markets at the end of this final bailout in August as the third program concludes. They have been forced to obtain three separate bailouts totaling hundreds of billions in euros since their debt crisis erupted eight year ago.
Greek Economy in Ruins
The economy of Greece has been destroyed since 2010. Even with hopes that the bailouts will soon be over in August, the nation’s business confidence keeps declining. Growing public dissatisfaction with Athens’ failed promises to stop the austerity and end the harsh budget cuts are partly to blame.
These have resulted in a sharp decline in average household income of 27 percent. A third of Greek businesses have failed and nearly a quarter of the people have been unemployed. This chart shows how high the country’s debt payments were some months:
Today’s 21 percent unemployment rate is little better. Almost half of less than 25 year old residents lack a job. Half a million educated Greeks have left the country to find opportunities abroad. Pensioners have represented the financial mainstay for the majority of Greek households as the financial crisis continued. This is the case even though retirement benefits and payouts have been slashed by Athens up to 40 percent since the beginning of the crisis in 2010.
European Union statistics tell the story of the human tragedy this has caused. Today 22.2 percent of the people of Greece are labelled as “severely materially deprived.” This means that they can not pay for their rent or mortgage, keep up with their utility bills, or pay for heat in the winter. Forty percent of all Greek children are living under the poverty line now. The average family income has crashed to numbers last seen in 2003.
This sense of desperation leads to tax cheating. Surveys show that almost one fourth of economic transactions in the country are not declared. This has deprived the national government of 16 billion euros in lost revenue every year since the crisis became severe. It equates to fully nine percent of the entire gross domestic product for Greece. Corruption, inefficient bureaucracy, and high taxes have combined to scare away foreign investors the country desperately needs.
Ongoing Tragedy in Greece Encourages You to Hold Gold
For 2017, Greece has dropped to number 67 for the ease of doing business rankings maintained by the World Bank. This puts it in company with countries like Vietnam, Morocco, and Jamaica. Yet the still-struggling country’s debt is a significant component of European bank and the ECB’s balance sheets. Until Greece makes a true recovery, it is a potential threat to the European economy and banks throughout the region.
The ongoing Greek saga reminds you that you have to hold gold to effectively safeguard your portfolio. It is one of the reasons why you should own gold in times of financial crisis. Gold is the best proven historical defense for your retirement assets. These gold IRAs have particular storage requirements that will provide you with peace of mind.