It seems that Greece is still in trouble with the Athens Stock Exchange share prices tumbling rather abruptly in recent weeks. In the last 6 days or so the Athens Stock Exchange Composite Index has plunged by around 19 per cent on the back of growing political tension and the strong likelihood that the pro-austerity, Troika surrender monkeys in power at present will be tossed out and a new dialogue with Europe will begin. The snap election call has spooked the markets it seems. But I have also been puzzling about (read: been deeply suspicious of) the growth narrative that is being peddled about Greece by the European Commission and the IMF. There remain unsolved puzzles about the third-quarter 2014 Greek national accounts data, which is another way of saying they don’t quite add up. It may be that the alleged real GDP growth of 0.7 per cent was a statistical artifact – the case of incomes falling less slowly than prices. The evidence certainly suggests that is the case. That is what this blog is about.

There was an article in the French-language edition of Huffington Post last last week (December 10, 2014) – Sans Europe fiscale, le projet européen est condamné (Without taxes, the European project is doomed) – written by the President of the French Socialist delegation in the European Parliament, Pervenche Berès. Her committee role as a member of the EP includes the Committee on Economic and Monetary Affaris. She has been active in the debate over tax avoidance in the Parliament. Her substantive claim in the article is that the European Project, by which she includes retention of the Eurozone, will fail unless national governments work out how to raise more taxes to balance their fiscal positions. The article qualifies for inclusion in my – Friends list this – series. Although I accept it could be reasonably argued that the French socialists gave up any pretensions to progressive agendas some time ago and could reasonably be included among the groups we would consider to be neo-liberal. But that issue, while important, is not the topic of this blog.

Today is a blog lay day only because I now have to pay the piper for being Australian but having to undertake work commitments in Europe – a very long tiring flight. At least I can read a lot of detective novels. But there was a story on Monday in the Italian media that I report on now as a conclusion to my stay here in Italy. The only conclusion is that the Italian left should hang their heads in shame for being surrender monkeys to the neo-liberal forces defined by the Troika.

We had news this week that the annual rate of real GDP growth in Greece is finally positive after two quarters of positive growth. The austerity merchants are out in force congratulating themselves on a victory. Some victory. What the official data doesn’t publish are the long-term implications of the Depression that Greece has been locked in for the last six years. I look at that question in this blog (a little). Further, despite the claims by the European Commission and the lackies that it relies on to spread its distorted economic news that Greece has achieved a primary fiscal surplus, nothing is further from the truth. The fact is that the Greek fiscal deficit expanded considerably last year and despite all the austerity is still pumping public euros into the Greek economy and therefore supporting growth. The slight return to growth is not a victory for fiscal austerity but a demonstration that if large deficits are maintained for long enough growth will eventually rear its head.

The bets are on at the moment that the Eurozone will dip back into recession for the third time since 2008 such is the incompetence of the policy makers and the policy framework they have erected to operate within. There is constant talk that the ECB will once again step in to save the day but all they can do is stop a nation going broke by guaranteeing their fiscal deficits and/or buying their debt. The central bank has very limited capacity to actually stimulate aggregate spending, which is the source of economic growth when there is massive idle productive capacity. In this context, the vote on Sunday by Catalonians (well around 33 per cent of them), which was overwhelmingly yes (81 per cent), is interesting although I doubt it will lead to anything constructive – like the Community exiting the Eurozone and really becoming independent. Most likely, Spanish prime minister Mariano Rajo will come up with some fiscal compromise to relieve the calls about Spain robbing Catalonia blind and the same problems will persist. I don’t pretend to know much about the cultural issues but in the scheme of things as I show below the economic circumstances the Community finds itself in are a direct consequence of being part of the Eurozone. That would have to change for there to be any meaning to the calls for secession. I don’t hear those arguments coming out strongly at all.

The European Commission released its – European Economic Forecast – Autumn 2014 – which is its bi-annual statement of economic outlook. In his editorial to the outlook, Director General Marco Buti admits that “euro area is still projected to have spare capacity in 2016”, which means the Commission is overseeing economic policy choices that will deliberately impose a recessionary bias for the next two years (at least) and deliberately force millions of Europeans to endure joblessness, savings erosion and the march towards poverty and despair for the next two years. Its a statement of monumental policy failure and the Director General Marco Buti should resign immediately just after he sacks his policy advisers.