World has become too connected for any country or even individual to remain untouched whenever financial disaster occurs. Problems on one side of the globe easily affect the other, and you cannot go a day without learning something of what happens in the world's financial markets.
Look at Europe. Last year, Greece ran into trouble when the real amount of its public borrowing became publicly known. Investors started to panic, forcing up borrowing costs, and it finally had to accept a bailout from the European Union and the International Monetary Fund.
Following on from that, Ireland went down the same path, with its public debt rising after the government intervened to assist its banking system. Then there was Portugal, which appeared to be another victim of market panic exacerbated by political uncertainty.
Since then, Greece, Portugal and Ireland have each been downgraded to junk status by influential rating agencies. These downgrades have caused intensifying panic over the public debt crisis in Europe.
Market anxiety has also hit Italy, the euro zone's third-largest economy. In a single week, that government's bond yield rose by a full percentage point, a speed that could have shortly driven the country out of the market had euro zone leaders not agreed last week on a second 109-billion (4.66 trillion baht) package for Greece and strengthened the region's bailout mechanism.
It seems financial market problems pile up for years but are ignored. Then suddenly the situation becomes unsustainable and everyone heads for the exits, causing panic across the globe.
This does not mean that markets panic for no reason. Indeed, Europe does have serious problems. The public debt of 14 of the 27 EU countries is equal to more than 60% of their gross domestic product (GDP). Looking at the 17 euro-zone countries, the debt is even higher at 85% minimum. Greece topped the chart with 142.8% government debt to GDP, followed by Italy (119%), Belgium (96.8%), Ireland (96.2%) and Portugal (93%).
European public debts are high compared with those of emerging markets. Think about Thailand, for example. No matter how much we complain about our government's spending on social programmes, Thailand's public debt to GDP is still only 41%, a long way to go to reach European levels.
Greece has until this month shielded everyone from taxi drivers and hairdressers to pharmacists and lawyers from competition and falling prices. That protection is now giving way to the social and economic changes in new laws promised in return for the debt relief by the European Union so Greece won’t lose the euro as a shared currency.
The list of more than 150 occupations that were closed to new entrants until the legislation went into effect on July 2 also included antique dealers, locksmiths, real estate agents and print media delivery services.
“It’s a Soviet-style economy without the benefits of the coordination and planning,” Yannis Stournaras, director general of the Foundation for Economic and Industrial Research in Athens, said by telephone. “Right now, the Greek economy operates under a number of limitations that don’t exist in other euro region countries or exist at a much lower level.”
More than 8,000 taxi drivers from across Greece gathered outside parliament on July 26 to protest. Scuffles broke out yesterday with officers at Piraeus, Greece’s biggest port, when about 3,000 taxi owners tried to block access to some piers, police spokesman Takis Papapetropoulos said.
Truck drivers led the frontline last year, staging blockades on national highways for more than a week, preventing delivery of raw materials and fuel to factories.
Ragousis is scheduled to meet representatives from the taxi federation today, his office said yesterday.
Greece’s budget deficit widened 28 percent in the first half of 2011, with spending exceeding targets and revenue falling short, according to government data published on July 20. The economy is forecast to shrink 3.8 percent this year after a 4.5 percent contraction last year, the European Commission in Brussels said on July 4.
Deregulating professions can help combat unemployment, which stood at 15.8 percent in April, the government said.
Jose Manuel Barroso, president of the commission, created a taskforce this month to direct funds to help Greece become more competitive, tackle unemployment and boost growth.
Greece ranked 83rd among 139 countries in competitiveness, down 12 places from last year and just below Egypt, whose president was overthrown this year, according to the World Economic Forum’s 2010-2011 Global Competitiveness Report.
Some workers formerly protected by regulation agree that change needed to happen, though they say the government hasn’t done enough to cushion the impact on livelihoods as people adapt to Papandreou’s austerity measures to win new international aid.
“Eliminating closed professions isn’t bad, that’s not what we are against,” said Nikolaos Giannopoulos, who has run a newspaper and magazine stand in Athens’s main Syntagma Square since 1983. “The way the changes were carried through was just completely chaotic and sudden. We are not against change but there is no clarity on anything being done.”
Giorgos, speaking from his taxi in Athens, said he’s been working at least 10 hours a day to cover the cost of purchasing his license. He’s now bracing for an influx of more vehicles on the road, operating with permits bought directly from the state.
More than 1,000 people have applied for taxi permits since the law change because the business is lucrative, Stournaras at the IOBE foundation said. Buying a license on the black market was the same as any business taking a risk, he said.
“Instead of lowering the number of taxis, the government is opening the gateway to a flood of new taxi drivers,” said Giorgos. “It’s wrong. There are already too many.