Greece's Ill-Advised Austerity Continues to Pain Greeks
Greece austerity politiciansYet more obvious alarms rang against the false wisdom of austerity this week, though sounding through the deaf ears of Greek and EU politicians. But the fat-headed false prophets will continue squeezing Greeks for as long as they’ll bear it, as creative expansionary economic ideas fail to reach their feta filled brain cavities, apparently the reserve tank for their globular bellies. Some will argue that there is no other way, given the thumb of the IMF and EU slave masters upon us. We argued otherwise in a recent article worth your notation, and an advised reading for those Greek politicians who think they have to eat whatever the troika serves them.

Greece blogOur founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Greece's Austerity Pains Greeks

This week, Greece reported unemployment at 17.5% for September. That was conspicuously improved from the 18.4% rate posted in August. Given that the data is not seasonally adjusted, you would expect the rate to have risen from the period more notable for tourism. Either Greeks have just got their priorities aligned differently than Americans, and chose to enjoy their time off in August (highly likely), or they’ve migrated throughout Europe in search of work. That would fit the increase in the euro zone unemployment rate for the same period, up to 10.2% in September from 10.1% in August. Perhaps Greece is exporting unemployment, something supported by data that follows here below.

Other economic data reported this week for the third quarter indicate a remarkable drop in economic activity. Obviously, the greatest driving factor for that is the loss of confidence in Greece tied to what seems an increased risk of a disorderly ejection from the euro zone. That same concern has driven long-term Greek debt yields to 32% (on 10-year bonds). The latest economic data showed Investment contracted by 15.2% from last year to 6.5 billion euros; private consumption fell by 5.5% to 33.7 billion euros; public consumption slipped 3.9% to 8.5 billion euros; wholesale turnover disintegrated by 10.9%; and imports fell by 4.3% to 14.2 billion euros. Only exports grew in the third quarter, rising 3.2% to 13.8 billion euros. Though I have to wonder whether exports included unemployed Greeks seeking work or the sales of used furniture and treasured family heirlooms across the border via eBay (Nasdaq: EBAY).

Given the latest economic destruction depicted in the third quarter data, Greece will likely fall short of its expectations for 5.5% GDP contraction this year. According to the Hellenic Statistical Authority (ELSAT), gross domestic product shrank 5% in the third quarter. For the year-to-date, Greece is short some 6.9% against the prior year. Based on a range of analysts’ expectations for 2.5% to 3.5% contraction in Q4, Greece is more likely to show GDP contraction of 6% for the year.

This, of course, means that Greece’s revenue projections are overstated, not to mention undermined by austerity. Therefore, its budget deficit is likely to again prove unsatisfactory to its troika of slave masters. Without a revelation of common sense among politicians, this event should propel the unholy death spiral that torments Greeks further with new impetus for more austerity in 2012. That is unless Greek and European politicians realize what students of the Great Depression already understand clearly, that times of economic strife are precisely wrong for budget controls including higher and/or new taxes. What Greece needs is an extended time span to achieve a better budget. Through a moderate implementation of less aggressive austerity, it could achieve a long lasting improvement that would also be digestible by its populace, and thus feasible.

Editor's Note: This article should interest investors in National Bank of Greece (NYSE: NBG), Hellenic Telecommunications (NYSE: OTE), Coca-Cola HBC (NYSE: CCH), Teekay Corp. (NYSE: TK), Navios Maritime Holdings (NYSE: NM), Navios Maritime Acquisition (NYSE: NNA), Navios Maritime Partners L.P. (NYSE: NMM), Tsakos Energy Navigation Ltd. (NYSE: TNP), Overseas Shipholding Group (NYSE: OSG), International Shipholding (NYSE: ISH), Excel Maritime Carriers (NYSE: EXM), Safe Bulkers (NYSE: SB), Claymore/Delta Global Shipping ETF (NYSE: SEA), Genco Shipping & Trading (NYSE: GNK), Diana Shipping (NYSE: DSX), Danaos (NYSE: DAC), Tsakos Energy Navigation (NYSE: TNP), Ship Finance Int'l (NYSE: SFL), Nordic American Tanker (NYSE: NAT), Seaspan (NYSE: SSW), General Maritime (NYSE: GMR), DHT Maritime (NYSE: DHT), Brunswick (NYSE: BC), Marine Products Corp. (NYSE: MPX), DryShips (Nasdaq: DRYS), Top Ships (Nasdaq: TOPS), Eagle Bulk Shipping (Nasdaq: EGLE), Sino-Global Shipping (Nasdaq: SINO), Paragon Shipping (Nasdaq: PRGN), K-SEA Transportation Partners (NYSE: KSP), Euroseas (Nasdaq: ESEA), Star Bulk Carriers (Nasdaq: SBLK), Omega Navigation (Nasdaq: ONAV), Knightsbridge Tankers Ltd. (Nasdaq: VLCCF), TBS Int'l (Nasdaq: TBSI), Golar LNG (Nasdaq: GLNG), Claymore/Delta Global Shipping (Nasdaq: XSEAX), American Commercial Lines (Nasdaq: ACLI), Deutsche Bank (NYSE: DB), ITA (Nasdaq: ITUB), Banco Santander (NYSE: STD), Westpac Banking (NYSE: WBK), UBS (NYSE: UBS), Lloyd’s Banking Group (NYSE: LYG), Barclay’s (NYSE: BCS), Credit Suisse (NYSE: CS), Allied Irish Banks (NYSE: AIB), Banco Latinamerican (NYSE: BLX), Bank of America (NYSE: BAC), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), JP Morgan (NYSE: JPM), Morgan Stanley (NYSE: MS), European Equity Fund (NYSE: EEA), Vanguard European Stock Index (Nasdaq: VEURX), Powershares FTSE RAFI Europe (NYSE: PEF), Europe 2001 (NYSE: EKH), S&P Emerging Europe (NYSE: GUR), Ultrashort MSCI Europe (NYSE: EPV), Vanguard Europe Pacific (NYSE: VEA), Wisdomtree Europe SmallCap (NYSE: DFE), Wisdom Tree Europe Total Div (NYSE: DEB), iShares S&P Europe 350 (NYSE: IEV), Morgan Stanley Eastern Europe (NYSE: RNE), DWS Europe Equity A (Nasdaq: SERAX), DWS Europe Equity B (Nasdaq: SERBX), Fidelity Europe (Nasdaq: FEUFX), Fidelity Europe (Nasdaq: FIEUX), ICON Europe A (Nasdaq: IERAX), Pioneer Europe Fund (Nasdaq: PBEUX), ProFunds Europe 30 (Nasdaq: UEPIX), Putnam Europe A (Nasdaq: PEUGX), Rydex Europe 1.25x (Nasdaq: RYAEX).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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