Austerity? We don’t need no stinkin’ austerity!
ATHENS: Drivers waited in queues for hours at petrol stations across Greece on Friday as a week-long customs strike over pay cuts left many pumps dry.
So let’s tee things up here. Greece came up with an austerity plan, which was approved. Then we hear GDP for the 4th quarter of ’09 was revised downward, which renewed calls for austerity on the part of Greece’s government. And since the call came for a tougher austerity plan, we’ll call that Austerity 2.0.
So this shows how the Greek people are taking it. By striking. And breaking plates. I take that back, the plate breaking isn’t being reported. But the strikes are:
Last week, a civil servant strike grounded flights, shut down schools and government services, including hospitals, in a 24-hour protest. A larger, general strike is planned by public and private sector employees for Feb. 24.
Keep striking and breaking those plates, Greece. See where that gets you.
But the mention of strikes in France is for a different, yet more bothersome reason:
Workers are protesting over the possible permanent closure of Total’s Dunkirk plant in northern France, hit by low margins and poor demand – a problem besetting many European refiners.
Strikers, who want Europe’s largest refiner to restart production at Dunkirk after Total stopped output in September, are in the process of halting production at the group’s five other refineries, union officials said.
Total, and its European refinery cohorts, are dealing with something more than just a wage freeze or pouting and whining over austerity measures that they need to take. If poor demand and low margins are being faced by everyone in the market, then there’s an issue with the structure of the market itself. I would offer that this is a situation where consolidation via mergers and acquisitions would make sense for the right price, but this is Europe. Very little makes sense over there because they’re more concerned about clinging to vestiges of what once was (jobs in an industry ripe for consolidation), as opposed to tackling the problem facing the market.
Indeed, these events may be more about France (since I’m in the mood to pick on France at the moment), clinging to its own visage of importance and relative strength and stability than anything else. After all, it’s easy to talk about offering support when it’s not your own money on the line, and it’s easy to talk about ensuring job security when it’s not your security to give.
Add it all together, and it implies some fundamental weaknesses in the Eurozone: political/governance issues to be exact. In one case, the people have an inability to deal with the effects of austerity and fiscal responsibility. In the other, an inability to deal with market changes and consolidation. More specifically, an inability to let market forces work.
Talk about cutting off your nose to spite your face…