Austerity Measures: Who Is Really Paying for the Bailout in Greece?
by Daisy Luther, The Organic Prepper
Everyone knows that when you fall on hard times financially, you tighten your budget. But it’s one thing to go through and examine your own personal spending, making decisions where to cut and where to continue spending, and quite another to have someone personally unaffected by those cuts make the decisions for you.
As the collapse of Greece accelerates, the most vulnerable citizens are paying for the bad decisions of the government.
Despite the wishes of the people of Greece, who voted overwhelmingly against accepting the “help” 10 days ago, the government has caved to the EU and is negotiating the terms of a third “bailout.” In the agreement, Chancellor Angela Merkel of Germany has deemed that none of the debt will be forgiven, but the payments could potentially be stretched out over a longer period of time.
Of course, the ins and outs of these billions of dollars don’t really mean that much to the individual people of Greece. And therein lie the lessons for the rest of the world.
While the government is making decisions despite the fierce opposition from the people, it is the everyday folks who will bear the painful brunt of the agreement. Those who are voting for this agreement in the Parliament will not be personally affected like the people struggling to care for their families.
Those most strongly affected are the people who already have the lowest incomes: minimum wage employees and the elderly. As well, people who saved their money and stashed it away in the bank will see their money vanish before their eyes. These are the people who are targeted to pay back this bailout money, not the people who overruled their vote and made the decision to accept the loan.
The bailout will increase poverty in Greece
In a recent article on Time.com, Victor Luckerson calculated what similar austerity measures would look like in the United States, should such a plan be enacted here. I’ve used his math in the following list:
- The minimum wage has been cut by 22%. While here, people are protesting our own minimum wage and trying to have it doubled, the very poorest people in Greece are losing more of their income. The equivalent: if our minimum wage was slashed from $7.25 to $5.66 an hour.
- Federal employees have gotten a pay cut of 15%. Since 2009, people working for the government of Greece have been subjected to continued pay reductions. The equivalent: $51,340 annually to $43,639 per year.
- Pensioners have had their monthly income reduced by 40%. We’ve often surmised that Social Security funds have been raided and there won’t be much left by the time the current workforce is ready to receive the money that they paid in. That’s what we’re seeing in Greece. The folks who are too old to go back to work and make enough money to live on have been the hardest hit of any group. The equivalent: $1,294 per month to $776 per month.
- Healthcare spending has been cut by 40%. This refers to government healthcare, so for Americans this would be for Medicare, Medicaid, and other social programs. The equivalent: $3,980 per person to $2,388 per person.
Add to these income reductions a painful new sales tax of 23%, up from 13%. Anything a person needs to purchase requires that they pay the government nearly a quarter of the price of that item to be allowed to do so. This isn’t just for luxury items or cigarettes. This sweeping tax includes things like food, firewood, clothing.
Now, imagine being a minimum wage worker in this situation. Your income has significantly dropped by 22%. Your expenses have increased by 23%.
Imagine being a retired senior citizen under this plan. Your income is down by 40% and your expenses have increased by 23%.
Effectively, your money has been cut in half, and in some cases 63%, all so you can help the government to pay off a debt that you voted against in the first place.
Greek banks are open, but access to money is limited
Banks in Greece have been closed for 3 weeks now. Although business could be conducted electronically, withdrawals were strictly limited. The doors have reopened, but that doesn’t mean that people can get their Euros out.
The daily cash withdrawal limit has been kept at 60 Euros per day (about $65 USD), but in a stroke of kindness, Greeks no longer have to go to the ATM each day to get their allowances. They can take it out on a weekly basis instead to the tune of 420 Euros.
Other banking restrictions also exist, according to an article on Zero Hedge. Checks can’t be cashed, only deposited. Customers can’t use their ATM cards or credit cards in other countries to withdraw cash, but they can now make purchases outside of Greece. There are restrictions on opening new bank accounts (although why anyone would possibly want to put their money in a bank is questionable.)
How to prepare for survival in a collapsing economy
Although all eyes are on Greece, there are 24 other countries facing bankruptcy and economic collapse.
Much has been written about the possibility of a similar type of collapse here in America. While some pundits declare that it’s absolutely impossible for such a thing to occur here, it’s indisputable that we, like Greece, are deeply buried in an astronomical amount of debt. We’ve spent more than we’ve earned as a nation. Social programs have drained the coffers with many recipients never putting money back in.
However, this is a debate for a different article. The focus of this one is that eternal question that preppers everywhere focus on:
What would we do if this happened to us?
A smart person observes the situation and figures out, well ahead of an actual event, the way to survive this type of scenario. Looking at the numbers above, the following suggestions could be helpful during such an event.
1.) Be wary of the banking system. As we’re seeing in Greece, possession is ownership. Any assets you might have that are not in your physical possession aren’t really yours. If you have thousands of dollars in the bank, and the bank locks down withdrawals the way they have in Greece, who really has that money? It’s not you.