Why Greece?

Yes, we've moved to Greece; Thessaloniki to be specific. On seeing this, a long-time friend sent me a message asking "But why move when the country seems in so much turmoil?"

It is a great question. Why would anyone move to a country that is in such a sorry state, after years of economic devastation and waste, where the pictures we see juxtapose ancient ruins with modern ruins and riots? Really though, the decision was easy.

Consider this the first, and not the complete, post on "Why Greece", and expect more posts to come. There is simply no way to say all there is to say in one post. 

Ivory figurine from the
tomb of Phillip II
(actual size: ~2cmx2cm)

When Francoise and I were considering where after Panama, which as you'll have seen is simply too corrupt for us to do anything meaningful, and the weather is too brutal to be enjoyable for other than a few months of the year, we considered several places. In Panama, the food is terrible, and the service culture simply does not exist, and "gringos" (any "white" or "European" looking person regardless of nationality, language or accent) are not welcomed other than as marks.

Greece is entirely different, in almost every way (other than corruption, but that will be a different story).

So where to begin? Greece is lovely, and the food is incredible. It is cheap, plentiful and fresh. Eating out is inexpensive (our meals out when there was no real kitchen where we are staying) have averaged Euro 35 (approx $40 for two people, with wine). And we have been over-ordering and over-eating. Since then, we have learned to order a third less.

And while it is possible to eat nothing but "classic" Greek food (tzatziki, souvlaki, fried calamari, fish, etc) is is also easy to find variations and experimentation, creating simply fantastic dishes and eating experiences. And all at very reasonable prices.

We have found a wonderful little place in the market in downtown Thessaloniki.
A small cafe on the market square, next door to a tourist souvenir shop on one side, and a bread shop and Orthodox icon shop on the other.

Greek people are famous for their hospitality and friendliness, and we see that around us every day, and in small ways. Certainly, there are rude people; they exist in every culture and community. But here it seems even the boy-racers in their (older) speedy kids cars, are polite and will wave a thank you as you let them merge ahead of you. I've had taxis wave me into traffic to merge ahead of them, and the natural response is, next time, to wave a taxi or other car into traffic in front of me. Simple politeness is contagious.


More important than simply being friendly, the people are good. What do I base that on? The way they treat animals. Complete strangers feed the stray dogs and cats, of which there are many. Every restaurant seems to have a cat or two, or three, wandering around outside. We joke that if the cats won't eat there, there you probably shouldn't either. Yet no one shoos the cats away, and the servers negotiate their way around the cats. Dogs definitely stay outside, but they lay around on the sidewalks and in the grass, waiting their turn.

Greece certainly has been through very difficult times and is still in that difficulty. But it has, I believe, turned a corner, and certainly, Europe has turned a corner in its view of Greece. After all, Greece carries a national debt of close to 200% of GDP (it was smaller, but the IMF/Troika's programme actually shrank the Greek economy, so the debt grew as a percentage of GDP). Greece has gone through a terrible depression, and many young Greeks have left the country in search of work. In addition, Greece is one of the countries on the fringe of Europe with a serious immigrant problem, fuelled by Turkey and the games that they are playing with Europe and the US.

Yet Greece has much going for it. For one, the terrible economic conditions have been buffered by the close family ties that exist in Greece. As families lost jobs and homes, the larger family welcomed them in. Children, including adult and married, moved back home with parents. The coffee culture ensured that the young unemployed could sit outside with their friends nursing a coffee for hours (at 1.20 Euro per, instead of $4 - $5 in the US or the UK).

As the difficulties really bit, shops failed across the country, more jobs were lost, and the cycle continued for years. But then something else began to happen. New stored opened, but with cheaper goods. New jobs were created at half the previous salaries. Rents went down, home prices dropped by almost 50% (they are beginning to rise again, but slowly). The economy "reset".

Of course, Greece is also on the front-lines of the Migrant Crisis, and its position in the Mediterranean and as a "front-line" state facing Turkey makes that inevitable. There are UN and EU programmes to help, but mostly common Greeks and international volunteers are filling the gaps.  

So why Greece? Yes, my own history and the fact that there are still friends here plays a big part. But another part is looking at the global, US and European situations. When we considered France, my comment to Francoise was that this is a country (just like the UK and especially the US) that is waiting for it's "Greek moment". I said that I would rather live in a country that had that moment behind it, and not in front of it. I want us to buy a property closer to the bottom of the market than near the top, even if we will be buying mortgage-free. 

5 seconds of the Thessaloniki waterfront

Remember also that part of the horror of the Greek depression, imposed by the Troika/IMF/Germany was a requirement that the Greek government run a 3.5% national surplus. Greece for a few years now has been running a budget surplus. Imagine what would happen in the US if Washington actually ran a surplus? How many jobs would disappear overnight? Almost all US economic growth over the past decade has come from increased government deficits. Turn off the borrowed money, and the economy would contract massively. 

Without the deep family ties that exist in Greece, and with the even greater social fracture that is happening in the US, the period of adjustment to a "new normal" will be even worse. Charleston and Portland will be remembered as the opening shots in a new civil war. Yes, I really do think that is possible in the US. Especially when China and the rest of the world stop buying US debt.

In all of this, I'm taking the long(er) view. Greece has better prospects simply because it was been through the worst, while other countries have not started down that debt imposed path.

The imposed reforms of the Greek economy are, finally, beginning to pay off. The Bank of Greece has projected a 1.9% growth in 2019, and up to 2.5% growth in 2020. Yet unemployment remains just under 20%, and is exacerbated by a lopsided annual business cycle, with high tourism-based employment for six months of the year, and cyclical unemployment the other six months. 

What else then?

Casket of Philip II of Macedon

There is more history here than almost anywhere we can go, and it is all around us. Athens is only 4.5 hours from away, with all its history. 1.5 hours from here is the tomb (and associated museum, one of the best I have ever been in) of Philip II of Macedon, the father of Alexander the Great. The tomb was discovered intact in 1977, and all the artefacts are in the museum that is built around and over the tomb. 

A 1.5 hours drive and we are at the base of Mount Olympus (which on a clear day/night can be seen from Thessaloniki where we are) - Home of the Gods. 1 - 1.5 hours away are some wonderful beaches in the holiday area of Halkidiki. Paris is a 2.5-hour flight away on discount airlines, and London, where I will continue to work, is a 3.5-hour flight, also on discount airlines.

That is why Greece, for what it has now, what it had, and for what it will be like in the future.

The economy is recovering, and house prices have been inching upward over the past year, though they remain 40% down from their peak.

So to summarise, yes, even though Greece remains in a perilous state, it remains a wonderful place to live, and it is improving every day.

With Greece, “Europe” has nothing to be proud of

So Greece has exited the bailout. Wonderful. Great. Fantastic. I guess this means that the Germans have squeezed all the blood they, and their French puppets, can from that stone. The numbers of Greeks that will have died as a direct result of the “austerity” that was imposed on Greece will never be known, but that number will be dwarfed by the numbers of Greeks that have had to flee their country in search of work, only to become the highly educated baristas and shop and factory workers of Europe.

We can argue that Greece should never have taken the loans, and that indeed they should be paid back. That’s what you do with loans. 

A stronger argument is that those who made the loans should also be culpable, knowing as they did that Greece could never repay the loans, and knowing that they would push the default and pain onto others (the Greek people and/or European and international banks and through them to the shareholders of those banks). Equally culpable are the handful of Greece politicians and functionaries who aims to profit by continued electoral victory and control of the government, and by personal wealth from their part in the scamming of the Greek nation.

Just as there were those in the communities persecuted by the Nazis who collaborated for whatever reason, so there were Greek government officials and politicians who collaborated with the German and European banks to take loans that they knew could never be repaid.

Yet it is the behaviour of the various European players once the loans were made that shows the perfidy of the “European”, and their willingness to see other European children and elderly die for profit, and to see an entire generation without work. 

Germany, the ECB, IMF and we cannot forget the French banks (and others) have acted as the loan-sharks of “Europe” happily destroying one of their own “family” for profit. 
Further evidence of the impact on Greece from the austerity programme comes from a Bank of Greece report from 2016.

“The report of the Governor of the Bank of Greece reckons surveys conducted by Greek Statistic Authorities (ELSTAT) and according to which:

• a significant increase of 24.2% of people aged 15+ suffering from chronic health problem or chronic disease.
•  increase of more than 15% of people who limited their activities due to health problems in 2014.
• percentage of low-weight (below 2.5 kg) births increased by 19% in 2008-2010, and that this is associated with long-term negative effects on the health and the development of children.

Citing OECD data of 2013, the BoG underlines that 79% of the population in Greece was not covered with insurance and therefore without medical and medicine due to long-term unemployment, while self-employed could not afford to pay their social contributions.”

A January 1st, 2017 article in the Guardian makes the impact clear. “Figures released by the European Centre for Disease Prevention and Control recently revealed that about 10% of patients in Greece were at risk of developing potentially fatal hospital infections, with an estimated 3,000 deaths attributed to them.”

And so Germany profits from dead Greeks, and the French support their overlords, to ensure the security of their own banks.

Meanwhile, the rest of Europe bumbles along, hoping that one day the Germans will “share” some of the wealth that they continue to accumulate, to the detriment of the rest of Europe. On the German side, one wonders if they worry that one day the rest of Europe will say “enough is enough” and either leave the Eurozone or demand that Germany begin to contribute to the parts of Europe that pay for their current account surplus.

Source Wikipedia

One chart shows clearly the situation in Europe today, and why the Eurozone is in such danger. It is not the debt of Greece, or the bailouts for German and French banks and the ECB, it is the current account surpluses and deficits across Europe.

Without Europe to and the Euro to “level” costs and prices across Europe, the German Deutschmark would be so overvalued as compared with other European currencies. The Euro ensures that Germany is “cheap” while removing the options or ability for European competitors to adjust their costs and pricing via free-floating currencies appropriate to their monetary policies.

Greece stands out in the chart, with the massive drain in the early years of the century, with artificially low prices for imports and easy credit, much of which is reflected in the net Current Account surplus in Germany.

Now that Greece is officially out of the bailout, it is time for Greece to regain control of its currency, and of its future. The New Drachma is needed, and a Grexit a must for the future of Greece. It may also be the only action that can save Europe from Germany, if only by showing Germany just how important it is that they "share the wealth" or risk their own economy.

To see the future of the West, study New Zealand’s and Zimbabwe's crises

How long can the worlds' gluttony for debt continue? Seemingly forever, until it cannot. That was the experience of New Zealand in the 1970s and early 1980s when government subsidies ruled the economy until the country went broke. 

(Summary: New Zealand radically liberalised the economy, suffered through terrible social and economic pain, and emerged as a modern, vibrant and growing economy. Growing debt cannot last forever, and when a country hits the wall, it can go the way of New Zealand through the pain and recovery, or the way of Zimbabwe to more debt and devaluation, inflation and longer pain with not gain. Europe and the US have this in their future, we just cannot guess when, and we cannot guess which choice they will make.)

Through the first half of the twentieth century, New Zealand’s close ties to England ensured a steady flow of lamb and milk products from the former colony to “blighty”, at economic terms that benefited both the UK and New Zealand. This ensured that the New Zealand agrarian and rural economy continued to grow, benefiting the entire country. This also allowed for subsidies on imported goods, and on good assembled in New Zealand from imported parts (such as automobiles).

That could not and did not last forever. 

When the UK joined the European Common Market, they were required to abandon their Commonwealth trading relationships and imposed the common European trading relations, which included protectionism for European economies. New Zealand suffered. But so did Australia.

After Britain had joined the EEC Australian butter exports dropped by more than 90 percent; the Australian apple trade declined from 86,000 tonnes in 1975 to just 27,000 tonnes in 1990. The economic consequences of Britain's European ambitions for Australia were severe.

New Zealand was hit even harder, with pre-EM exports to the UK accounting for up to 55% of all exports (1958 – 1960), with 90% of milk and butter going to the UK, and over 95% of lamb (and 80% of mutton). This export market had grown New Zealand sheep populations into the 60+ million sheep, or 15 sheep for every Kiwi.

The short story is that with the loss of the UK markets, the New Zealand government and the National Party (the conservative and party of rural and agricultural New Zealand) attempted to hold up farming and rural incomes through subsidies. Up to 40% of the value of a sheep was in subsidies.

The only problem was that the National government (the conservative party) was running deficits like crazy to fund the range of subsidies, and the deficits were doing exactly what should be expected, devaluing the currency and increasing national debt servicing costs. Inflation was high, and a wage and price freeze did nothing to alleviate the problem, and international pressure was undermining the value of the currency.

And they continued to build that debt, and pay the subsidies, until one day the money ran out, or more realistically, until National and the Prime Minister were told by Treasury that the money was going to run out. The crisis had arrived.

So, having kicked the can down the road as long as they could, heaping subsidy on subsidy, hoping that it would all fall apart under the “next” guy’s administration, they ran out of money. It was their problem.

What to do?

Well, Robert Muldoon did what any responsible politician and Prime Minister should do – he got drunk and while drunk, called a snap election, knowing full well that National would lose, and the problem would be Labour’s.

Not surprisingly, National lost, and Labour won. A multi-year devaluation of the currency, ballooning sovereign debt payments, rising unemployment, and a disconnection from urban New Zealand meant it was time for a change.

The only small problem was that the day after Labour won, NZ Treasury went to the new (soon to be installed) government and said “Sorry to tell you this, but there is no money for your programme. In fact, you might not even be able to make the sovereign debt payment that is due soon.”

The can had been kicked as far and as long as possible.

So began years of economic restructuring in New Zealand, with years of associated pain up and down society. With no subsidies, large numbers of farms became financially unsustainable, with bankruptcies and forced sales. There were stories of farmers committing suicide as the auctioneers arrived at the properties.

Automobile assembly plants closed with the loss of jobs. Imports rocketed in price, and taxes increased to nose-bleed levels. I remember 66% income tax over a (fairly low) level.

Labour had the courage to throw away their platform and enact wide-ranging economic reforms. The pain was incredible. 75,000 manufacturing jobs and over 20,000 jobs in the public sector were lost in the five years from 1987 - 1992. With the pain of liberalising the economy, employment began to grow again through the 1990s, and New Zealand became one of the most open economies in the OECD (from a position of being the least open of 24 OECD economies in 1984).

The sale of State Owned Enterprises resulted in both massive pain, exportation of profits from the privatised industries (such as Telecom NZ), but also the modernisation of industries that remained in government hands as businesses (such as NZ Post), most of which became profitable businesses returning an ongoing dividend stream to the Crown (NZ Government).

Unlike New Zealand, when Zimbabwe hit the wall of national debt, they kept printing money and borrowing, resulting in devaluation and inflation, and ultimately a ruined economy (with a little help from property confiscations and destruction of businesses). 

  

Looking at the chart above, national debt exploded to almost 140% of GDP, dropped, then peaked again at 147% of GDP before dropping again. Why did it drop? Without even minimum fiscal discipline, international lenders simply would not buy Zimbabwean national debt at any price, and maturing debt had to be repaid – with printed money. The cycle repeated, and debt to GDP has stabilised around 80%. 

What stopped the international community? When “the inflation rate reached a peak of 89.7 sextillion (10^21) percent” in 2008.

New Zealand, by contrast, managed to keep inflation, while high for a period, relatively under control, and the economic reforms and fiscal discipline provided the comfort required to manage international expectations of the value of the currency. Inflation peaked before Muldoon was forced out (by his own policies) and was brought under control by the Lange government.

The national debt was also brought under control and paid down, and while spending and borrowing have increased, debt to GSP ratio remains well under 30%; healthy by international standards, and simply low by OECD and “First World” standards. 

  

Where to the “West”?

Current debt levels in Europe and the United States are simply unsustainable. And yet the borrowing continues, and balanced budgets (forget about paying down debt) so not exist in any of the major European countries or the US. This cannot continue forever, and the real question is equally simple:

Will the “West” chose the New Zealand route of hard choices and “short term” (3 – 5 years) pain, or the Zimbabwean choice of continued printing of money, devaluation, and hyperinflation?

The following graphic shows the results of the choice made by New Zealand, and the choice made by Zimbabwe. The grey is 1994, blue is 2004, and green is 2014. Zimbabwe’s choice effectively destroyed their economy and they have lost more than a decade. New Zealand’s choice has, after a difficult period in the 1980s and early 1990s, resulted in a consistent and solid growth.

 'C' = Household consumption expenditure, 'G' = General government final consumption expenditure, 'I' = Gross capital formation, 'X' = Exports of goods and services, 'M' = Imports of goods and services

http://zyaneconomics.appspot.com/#/finmodel/

What New Zealand in the 1970s and early 1980s also shows us is that politicians will continue with their profligacy until they cannot. They will keep kicking the can down the road until they cannot. They will keep hoping that their policies can continue until the “next guy” has to deal with it.

We know this because it already happened, in New Zealand and then, to a lesser extent, in 2008, resulting in TARP and bailouts of industries that lasted for years in the US and across Europe. 

Unfortunately, the ammunition to replicate that kind of stimulus probably no longer exists, and as with Zimbabwe, the first period of money printing did not teach politicians that this was a major danger, but seems to have taught them that they can do it again, and again. Now the Fed (in the US) and the ECB (in Europe) face the problem of QT - Quantitative Tightening, a process as fraught with risk as the original QE. Growing economies do not like restrictions on the money supply.

So what choices will the politicians make next time? Whatever the answer, I suspect we will see the results before long.

Insanity, in 19 bullets

The United States of Amerika has become one of the most insane countries in the world.

I've written a series of posts on what could end the current record-breaking "recovery". What is missing from all of those posts is a list of the individual items of insanity that collectively represent a very Dark Swan in the form of the collapse of Amerika as a nation. I have started to use Amerika because the America that I knew, and the Constitution I swore to protect (from enemies foreign and domestic) no longer seems to be meaningful. I consider this my form of protest, something still theoretically protected by the First Amendment to the Constitution.

This list of insanity bullet points does not include anything that the man-child, probable Russian puppet (or at least patsy), and also possibly early stage dementia suffering porn-star paying adulterous "fucking moron" (me quoting others, not stating this as a fact) is doing to distract from the internal problems, and in fact internal problems that he is encouraging. This also excludes the quislings in Congress who would rather destroy the country than admit what their leader, with their support, is doing. 

Some examples, in no particular order:

1. The police can pull you over and take you assets on the grounds that the policeman thinks, maybe, you might use those assets to commit a crime. It is then up to you to engage a lawyer to fight in court to have your assets returned to you. In 2014 police departments across the US seized more in value from citizens that the total value of assets stolen in burglaries. Asset seizures now account for reasonable parts of police budgets. So, the police are encouraged to steal from the people.

2. In a number of states, there are "open carry" laws that mean a person can walk down the street, or into a shop, openly carrying an assault rifle. Therefore, in such a state, you have no idea if the person with the gun is a nut, a terrorist, or just has a very small penis.

3. Meanwhile the organization (NRA) that rents congressmen to ensure no laws are passed that will reduce the ability of their members to sell guns, also refuses to allow people to carry guns at their national convention. I wonder why? In addition, we recently learn that the NRA will happily take money from anyone, including non-Amerikans. That the NRA is basically an anti-Amerikan entity happy to overthrow the Constitution (while pretending to protect it) can be seen in the appointment of their new president, a man who when in the Military, overrode instead of protecting the Constitution, as he swore to do (protect it, not override it).

4. Almost anyone can buy an assault rifle and/or handgun, but buying a pressure cookers makes you a potential terrorist. Cooking for yourself instead of eating out has become the sign of a sick mind that must be watched, and of course a potential terrorist.

5. The Fed cannot raise interest rates to any meaningful level, because to do so will increase US government debt payments to a level that will bankrupt the government (and the country). So more stimulus will be added, with the objective of pumping the money supply enough to ensure that interest rates remains low. There is plenty of evidence that this is destroying the savings and retirements of a generation.

6. The "Wealth Effect" requires that the Fed be more interested in propping up asset prices in the short term, with little or no regard for the negative impacts when stimulus is no longer effective (which might be now). The "Wealth Effect" is based on the idea that if stocks/equities and other assets (like houses) go up in value, people will think they are rich and there will be greater spending and therefore greater economic activity.

7. Borrowing is future spending brought forward. Eventually that future will be "now". The Fed and government are stealing the future's spending, beggaring us, our children, and quite possibly their children. But as long a "now" doesn't happen until the next person is in office, all will be good.

8. After promised to reduce the deficit, the Republican Party and Trump have actually, even though they control both houses of Congress and the White House, actually raised the deficit and predictions are now for multi-year $1,000,000,000,000 deficits through the 2020s. Does the expression "unsustainable" mean anything to anyone?

9. Companies are considered "people" and therefore political contributions or advertisement are considered "free speech" and are protected by the constitution - effectively protecting the right of corporations to use money to drown out the voice of the people.

10. Fewer jobs are created each month than the number of people entering the workforce, yet unemployment continues to decrease. After all, if you are not receiving an unemployment benefit or are not "actively looking for work" then you are not counted as unemployed. Of course, unemployment benefits only last so long.

11. The jobs that are being created are mostly in the service sector and are low wage jobs. Couple that with importing educated labor to displace US educated workers through the H1B1 program, and corporations, with the help of the government, are able to push down wages for what should be the remaining higher-wage jobs. A great race to the bottom.

12. The labor participation rate is as low as it was in the late 1970s, but unemployment is at 4.0%. Either large numbers of couples are able to live on a single income (which we know is not true), or something else is happening.

13. The national debt is now greater than 100% of GDP and rising, with no end in sight. Unfortunately the Fed and congress seem to be taking a lesson from Japan - that a country really can go on buying debt from itself to fund itself forever (really?). All this when economists are telling us that a Debt to GDP ratio of greater than 90% will demonstrably reduce GDP growth. That >100% debt to GDP is for Federal debt only, and does not include state or territory (such as Puerto Rico) debt, or local (such as Chicago) debt.

14. The two political parties' candidates are a Sheep in Wolf's Clothing vs a Wolf in Sheep's Clothing. Both are equally scary, for different reasons. Neither will save the country, let alone actually make changes that will reduce the coming pain of default and economic depression. Both are crooks, but of different kinds and times. They fight to retain their seats in Congress and do not care about the country or the future.

15. Home ownership rates are at their lowest in decades. The dream of home ownership, through government programs encouraging unsafe lending, quite possibly contributed to the GFC (Global Financial Crisis) and the Great Recession. The increased ownership has unwound, yet the dream remains.

16. The country is probably as polarized as it has ever been. Republicans from Democrats, Black and Whites and Hispanics from each other, Muslims from everyone else. All this in a context of a social media world designed to reinforce existing positions and prejudices. The "Melting Pot" has become the boiling pot.

17. In the last financial crisis, the US Government bailed out the major banks, with a very large chunk of the bailout money then being paid out in bonuses to employees of the Too Big to Fail (TBTF) banks.

18. TSA and the abrogation of the Constitution through the Patriot Act (and extensions) while providing "security theatre" only, serves as a proving ground for how to complete the subjugation of the population - the "Sheeple". I've been known to mutter "Baa baa" when standing in the TSA lines.

19. Meanwhile, the exercise of protest by kneeling for the flag is presented as some form of treason and disrespect, when the protesters themselves have very clearly and carefully explained exactly what they are protesting.

Sadly, all "sides" are so polarized that there will be no movement toward common solutions. One side will make a proposal, the other will reject it out of hand. And round and round it will go. And when it does fall apart, there will be enough blame to go around to ensure that the country continues to be polarized, avoiding anyone being held to account.

"This cannot end well" is so right, and when it ends, it will be in the breakup of the United States of Amerika. A civil war is coming, and if not that, then the imposition of the ultimate police state. 

First of course there will be the Second Great Depression, and that cannot be far way. People who actually understand the economics are already predicting a recession in the second half of 2019 ("if there are no Black Swans before then"). 

Yet Black Swans are all around, mostly in the unsettling of international markets by the current traitor in the White House, who hops from one artificial international crisis to another, all with the goal of distracting us from his crimes. "Fake News" will be the cry, from him and his toadies.

If there is any good news, it is that the Praetorian Guard can only be bought for so long, and any Galba, Ortho, or Vitellius (I admit, I always forget the third in that list) will have a short shelf-life. That includes the current Galba, who with his sons Uday and Qusay (as some are calling them) will be discarded when the time comes. Yet we need to remember that the very process that Galba came to power because the prior Emperor was mad and the system had collapsed.

Galba's end wasn't pretty, and my own guess is the best this Galba can hope for is a pillow over his head, and not to be publically murdered in the Forum by his Praetorian Guard.

Stop talking about Austerity as you have no idea what that means

It is disgusting to hear the British and French bleat on about the horrors of Austerity, as if they actually had any idea of what they are talking about.

My friend Andrew Brice in Wellington, New Zealand has produced some simple but effective graphs that showing GDP growth across the world from 1994 to 2014. Looking at the graphs for somewhere like Greece, and you quickly see what Austerity really means.He is graphing World Bank data since 1994 on a range of economic data points for all countries. While not setting out to show "Austerity", the graphical presentation does provide some interesting information. His site can be found here.

I've selected four countries for the chart below: France, Greece, Spain and the United Kingdom.

Notice how the GDP points expand fairly uniformly for France and the UK. Each point on the spider diagram, for the three reference years, shows growth, indicating and reasonably balanced growing of the various key elements of GDP.

Not Greece, in which that growth virtually implodes for 4 of the five factors between 2004 and 2014. Only 'X' - Exports, continues to grow, and that at a slower rate than the previous decade. Household consumption, General government, Gross capital formation and Imports all collapsed. Gross Capital Formation is less than it was in 1994.

Spain looks only marginally better.

Yet for the UK and France, all five indicators continue to expand through the crisis and into the second decade of this century.

GDP growth graphs for http://zyaneconomics.appspot.com/#/finmodel/

In the UK and France, governments have attempted to bring spending under control, and in large measure have failed miserably.

Oxfam's report on Austerity in the UK is a wonderful example of not understanding reality. "Since 2010, austerity – primarily in the form of deep spending cuts with comparatively small increases in tax – has been the UK government’s dominant fiscal policy, with far fewer measures to stimulate the economy. The stated aim of austerity was to reduce the deficit in the UK to give confidence to the markets and therefore deliver growth to the economy. While austerity measures have had some impact on reducing the deficit, they have delivered little growth, and public debt has risen from 56.6 per cent of GDP in July 2009 to 90 per cent of GDP (£1.39 trillion) in 2013."

It is almost as if "Austerity" actually only means "we cannot have everything that we want". Economies just balance what is required to keep the lights on, tax rates that do not disincentive investment, balanced against social programmes that effectively avoid rioting and revolution. In which case Austerity has become the a rejection of a "give me mine" mentality.

Yet contrast that with 10 things the Greeks cannot do (from July 2015 at the height of the crisis). If you want to see real austerity, look at Greece. Could the UK or French governments survive cutting pensions by greater than 50%. Or unemployment higher than 25% (and 50% for under 26 year olds)? What would Oxfam say to 45% of pensioners living below the poverty level, and food consumption dropping by almost 30%?

United Kingdom

Looking at the GPD growth chart for the UK it is almost easy to see the source of discontent. Yet it needs to be remembered that the economy has continued to grow (once over the Global Financial Crisis - GFC - induced great recession) and is now larger then it was in 2008.

UK GDP Growth, 1994 - 2014
Note the continued expansion of all five elements

 
Personal income has (as of 2015) grown to exceed personal income, inflation adjusted, pre-GFC. It took a long to time recover, and certainly the average POME (Prisoner of Mother England, or is that short for Pomme de Terre?) has had a rough ride. But pensions have continued to be paid, the health service has continued to treat patients, and to expand the range of coverage and care provided. The economic effectiveness of that service may be up to question, but that is a factor of quality of provision, not total expenditure in GDP terms.

France

France is not significantly different, with growth across all five data points through the years. Yet France (and the French) are mired in a psychological paradigm that says that they are suffering, oh so horribly, from massive austerity. Each new president is elected on a promise of change, or in the case of Sarkozy, "rupture" with the past. Yet for twenty years, each new president has been met by strikes at the mere hint of market reform legislation, strikes lasting weeks and covering the entire country sometimes. Each president has caved. Even the French military has a better (much) record of refusing to surrender.

France GDP Growth, 1994 - 2014
Not bad for coming through the GFC

Yet looking at the image above, you would think that France has had fairly steady growth, especially when you consider that between 2004 and 2014 there was the GFC knocking their economy into deep recession, and their being in a Europe that has seen lackluster growth at best over the past half decade.

Greece

Turning to Greece, we see a very different graph, in which the only growth has been in exports. The years between 1994 and 2004 showed good growth, in line with the UK and France. Yet with the GFC and their debt crisis, loss of sovereignty and destruction of the social welfare system, the years 2004 and 2014 we can see what austerity really means.

Greek GDP Growth, 1994 - 2014

The collapse in Greek GDP growth has been across the board, with only exports growing past 2004 levels, and that only marginally. The other four indicators have all collapsed, with Gross capital formation falling to below 1994 levels.

Compare that to the GDP performance of Greece's four land-border neighbours; Albania, Bulgaria, Macedonia (well, okay, the Former Yugoslav Republic of Macedoia to give it the official name) and Turkey. All four have experienced consistent and continual GDP growth.

 These countries have come through revolutions, civil wars and military dictatorships, but have then spent 20 years growing. And growing. Meanwhile their Eurozone neighbour has suffered at the hands of creditors and "friendly" governments. "But it's all the Greeks fault, they are perfidious and profligate, and they borrowed the money". All true (well, except the perfidious). Yet looking at the rouges gallery of neighbours, can we really say that the Greeks are any worse?

Greek is in austerity. And this is real austerity; the kind that results from the markets losing faith, and the bankers engaging in as much Moral Hazard as the Greek government itself. Yet when the bill came due, the banks (as effectively representatives of other governments or the ECB and IMF) decided that only one side of the perfidious (and here I mean it) cabal would pay.

Summary

The United Kingdom and France should, to use the English colloquialism, "shut their pie-holes". They are not in austerity, and do not actually know that it means. They are living *slightly* above above their means, but continuing to borrow like drunken sailors.

True Austerity is Greece, and this is in their futures when the markets say "enough". Then we will see real austerity in those two countries, as government debt becomes unavoidable and unsustainable. Greece saw:

– 25%: Fall of gross domestic product
– 28%: Reduction in public sector employees
– 28.5%: Drop in food consumption
– 61%: Drop in average pension (833 euro)
– 45%: Number of pensioners living below the poverty line
– 26%: unemployment (50% at ages under 25)

This is the real face of austerity, and something the UK and France should really fear. Today's weak attempts to controls spending are only a start, and a poor one at that.