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The Greek spending cuts in U.S. terms
Protesters run away from tear gas during clashes between protesters and riot police near the Greek parliament in Athens on February 12, 2012. Despite the protests, a new round of austerity measures was agreed upon over the weekend.
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Jeremy Hobson: It was another tense weekend in Greece. Protestors lit buildings on fire in Athens, as lawmakers did what they had to do to get more bailout money -- they passed major spending cuts and reforms.
Marketplace's Stephen Beard reports.
Stephen Beard: The measures are exceedingly unpopular among the Greeks. Think about this: if it were happening in the U.S. Greece's minimum wage will be cut to $728 a month; in the U.S., the federal minimum is almost twice as much. 150,000 Greek public sector posts will go; if the equivalent cut occurred in the U.S., 600,000 would be losing their jobs.
Student Anna Marie Piscapani says the extra austerity has deepened the gloom in Greece.
Anna Marie Piscapani: We're in constant fear. We cannot depend on anything; we cannot plan anything because we do not know what's coming. We don't see hope.
There's even uncertainty over whether the latest measures will win Greece a second bailout. The eurozone finance ministers are demanding some further cuts, and will meet on Wednesday to consider whether Greece has done enough.
At the European desk in London, I'm Stephen Beard for Marketplace.
Yes Greeks are facing some very hard times, but Mr Beard’s over simplified and therefore inaccurate comparisons do not help us to understand what is happening. Greece’s public sector as a proportion of the population is obscenely huge, and you cannot make any meaningful comparison of minimum wage without factoring in the cost of living (and one can easily argue that the US minimum wage is way to large). It is also true (look at Ireland) that if Greece was not dragging these reforms out, if they had simply got them done and moved on, they could have been well on their way to recovery.
I wish to correct Mr. Beard's comment that the US minimum wage is nearly double the Greek soon to be lowered to $728 per month amount. Since the US minimum wage is $7.25/hr (some states have somewhat higher amounts), if a person had a 40hr work week, their monthly gross income would be $1,160. This is nearly 60% more than $728. I don't consider 60% to be nearly double.
Given that a full time minimum wage job in the States earns someone a gross income of $1,160 per month, I strongly disagree with dmulliga's comment above that, "one can easily argue that the US minimum wage is way too large"!
I also wish to thank the commentor below who reminds us of the banking fraud which is the main reason for all of the current economic chaos.
Your reporting has been strong on how the public benefitted from the credit culture cultivated by Southern European finance ministers....building a subway, paying public salaries for non-existant work, or people once never having vacations taking them. What you don't explain is that these people were only getting what was normal in an advanced society.....a job, some leisure, public transportation. This is not misuse.
What happened in these countries, just as happened in our country, is all that money taken by banks in loans was divvied up amongst the top and useless projects produced a money laundering process channelling money to friends and family. One bank executive steals $600 million from his bank (a lot of money in Greece) and the government retrieves a small percentage upon investigation, just as is happening here.
Goldman Sachs and Deutchbank created illegal financial instruments to hide the sovereign debt that allowed for more loans (and is the center of outrage at Greece et al), flooding the market with credit and then betting for/against the final outcome, which they controlled.
Sound familiar? Do we hear/read this at Marketplace? Sadly, NO.
