October 1, 2023

Valley Post

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From arcades to whines and breakers

From arcades to whines and breakers

The image of weakness, confusion, loss of control over developments, inability to offer substantial solutions, and generalized “complaints” about the distribution of burdens and responsibilities are taking shape in the issue of the new wave of inflated re-evaluation. The end of the period of fiscal “flexibility” with the creation of fiscal deficits, subsidies, all kinds of permits and the sequence of monetary assessments of Greek debt by rating agencies creates conditions of government entrapment, which is passed between collusions.

The main source of concern is that the belief is becoming more and more entrenched – and indeed not only in Greece, but also internationally – that the new wave of price hikes is not temporary but acquires the characteristics of a new cycle of inflationary pressures. With the various “cutters” of profit margins in the consumer product groups, announced by the government, it is clear that they participate in this assessment.

The immediate consequence is that the government feels a clear need to deal with the situation in some way – especially that it is called upon to present its economic plan to the TIF and accompany it with some action. However, the period of subsidies “for the rich” and all kinds of permits is over, as Europe announces a return to fiscal austerity.

In addition, in the period after the TIF, in September-October, and then in December, the rating agencies’ monetary assessments of Greek debt are timed, judging the upgrade of Greek bonds to investment grade. In particular, the rating agency Moody’s ruling one week after the prime minister’s appearance on TIF, which belongs to the Big Three (the other two of the trio are Standard & Poors and Fitch) and is the most “conservative” in Greek debt upgrades, is crucial.

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So the government does not have much room for maneuvers and courage. It inevitably resorts to a policy of setting profit margins for a number of sectors: fuel, agricultural products, food, and school supplies. However, the kind of regulation it introduces arouses feelings of “injustice” and causes a lot of “grievance” mainly in the departments of small and medium-sized companies, who indirectly but clearly accuse it of bias in favor of “big” businessmen…

Regardless, both the authenticity (“one of a kind”) and the effectiveness of the procedures are highly disputed.

But the problems with the new wave of reassessments don’t end there. With the international sense that we are in for a new round of inflationary pressures, hopes of the European Central Bank (ECB) halting the cycle of rate hikes at the September General Council meeting are fading – along with Moody’s rating! A fact that will create new pressures on European economies, which are already condoning recession.

Under these circumstances, September and autumn in general can be expected to be politically difficult for the government – and even more so for workers and consumers, who constantly pay the “bill” for all crises.