Financial Crisis in Greece

[Bratot]

Austerity policies risk Civil War in Greece


Greece’s austerity measures cannot prevent default and will lead to a breakdown of the political order if continued for long, a leading German economist has warned.

“This tragedy does not have a solution,” said Hans-Werner Sinn, head of the prestigious IFO Institute in Munich.
“The policy of forced 'internal devaluation', deflation, and depression could risk driving Greece to the edge of a civil war. It is impossible to cut wages and prices by 30pc without major riots,” he said, speaking at the elite European House Ambrosetti forum at Lake Como.
“Greece would have been bankrupt without the rescue measures. All the alternatives are terrible but the least terrible is for the country to get out of the eurozone, even if this kills the Greek banks,” he said...

[Makedonetz]

I read that papandreao was going to impose heavy taxes as people were not paying taxes for many houses they owned! I hope they sink....and the money they were paying to deceased pensioners bites them in the Hell-Arse!

[Frank]

Back to the question that angers us all why wasnt Hellarse removed from the EU zone at least temporarily until its deals were investigated

[Risto the Great]

Back to the question that angers us all why wasnt Hellarse removed from the EU zone at least temporarily until its deals were investigated

Because it undermines the myth of a solid EU that is firmly managing the entirety of Europe. There will be plenty of covering up for years to come.

[Prolet]

Frank, The EU uses Greece to do the dirty work for them as its the border between Turkey and the Middle east. This is why Cyprus is in the EU when its not even a unified country.

[Onur]

Looks like Greeks started a new campaign of civil disobedience.

They fill the basket in supermarkets but they refuse to pay at the checkout or they ask for a discount instead!!! . They protest highway ticket prices and pass the checkpoints without paying it either

Militant shoppers target austerity measures in Greece

Activists protesting against Greece's austerity measures are trying a new form of civil disobedience.

Militant shoppers are protesting about prices and asking for discounts on prices they say they can no longer afford.

http://www.bbc.co.uk/news/world-europe-11256557

Is the situation THAT bad over there, so they cant even buy food?


Watch the video on this link;

http://www.bbc.co.uk/news/world-europe-11256557

[thessalo-niki]

Yeah, we're dying over here. Help! Help!
Water! Water! Wat...
________________________________
Odysseas Elytis - Our name is our soul

[Onur]

Yeah, we're dying over here. Help! Help!
Water! Water! Wat...

Then what is this? People are doing this for fun? Or civil disobedience is some kind of norm over there?

[DirtyCodingHabitz]

I hope they never recover. It would be even better if they could just corrupt as a country so we can take our land back

[Big Bad Sven]

ECB outraged by Slovak refusal to aid Greece-sources

ECB outraged by Slovak refusal to aid Greece-sources

Fri Sep 10, 2010 11:03am EDT

* Trichet outraged by Slovak "no" to Greek loan

* ECB would not back Slovak euro entry, had it known

* Won't back other applicants if a risk of similar action


By Martin Santa and Jan Strupczewski

BRATISLAVA/BRUSSELS, Sept 10 (Reuters) - Slovakia set a bad example by refusing support for a loan to Greece, and the European Central Bank will not support euro entry by others unless sure they will not take similar steps in the future, ECB President Jean-Claude Trichet was quoted as saying.

A memo from this week's meeting of euro zone finance ministers, seen by Reuters, said Trichet was outraged at the refusal by Slovakia to participate in the Greek bailout.

Several EU officials said privately Slovakia could be snubbed by some of the 26 other EU member states because its decision is likely to complicate talks on the bloc's budget, making the rich net payers less willing to grant aid to poorer countries.

"Trichet was outraged at the last Eurogroup by Slovakia's refusal of a bilateral loan to Greece and said that had the ECB known Slovakia would behave like that, it would not have endorsed Slovakia's euro adoption," the memo summarising the discussion said.

"It sets a bad example for future candidate countries. Also (he said) that the ECB would not back future euro zone applicants if there is a risk they will do something similar."

Two euro zone sources confirmed Trichet made the comments.

"That is a fairly faithful account of what was said," one source said.

The parliament in Slovakia, the poorest of the 16 countries that use the euro, last month ruled against contributing 816 million euros ($1.05 billion) to a 110 billion euro bailout fund for Greece [ID:nLDE67A21W].


NO COMMENT

"Some European institutions voiced concerns about Slovakia's stance on the Greek loan during the Eurogroup meeting. Since this was a meeting of a confidential nature, we will neither confirm nor decline individual comments," Slovak finance ministry spokesman Martin Jaros said.

The ECB had no comment.

In its convergence reports, the ECB evaluates how well non-euro zone EU members fulfil euro entry criteria.

Besides inflation, the euro entry criteria are: budget deficit below 3 percent of GDP, gross public debt below 60 percent/GDP, nominal long-term interest rates no more than 2 percentage points higher than the average of the three states with lowest inflation.

Bratislava said taxpayers in a country that has kept its debt under control should not have to bail out a profligate one.

Slovakia's new right-leaning government opposed taking part in the bailout despite a pledge by the previous administration to support Greece, where the budget deficit had ballooned so much that it threatened the stability of the euro zone.

The aid package will go ahead despite the refusal by the Slovak parliament, but Bratislava's position dealt a blow to euro zone unity in the face of the financial crisis and Slovakia has run into sharp criticism from European governments.

However, the Slovak position has been backed by the Czech Republic, a country that has taken a slow approach toward euro entry and currently has no target date.

A major issue in the Slovak refusal to help Greece is that Slovakia, which only joined the euro in 2009, is the euro area's poorest state and its wages and pensions are far below those in Greece, which makes aid to Athens widely unpopular.

The monthly minimum wage in the ex-communist country which joined the European Union in 2004 is 308 euros, well below the Greek minimum legal wage of 863 euros. (Writing by Jan Lopatka; editing by Stephen Nisbet)

http://www.reuters.com/article/idUSLDE68915I20100910

[Big Bad Sven]

Good work on Slovakia for standing up and not allowing themselvs to be forced by the racist EU to assist a failed shithole country like grease.
The response from the french idiot just shows that the EU is not a happy little economic union but a pseudo-empire ruled by germanics and frenchmen. All other smaller and weaker nations. mainly eastern european ones, are nothing more then slaves and cannon fodder.

Notice in the article that new member Slovakia is still relatively poor and its wages are much more smaller to the grks - this just shows joining the EU wont magically transform your lives into prosperous happy times - macedonians should take notice.

Funny thing is the Czech republic wanted to leave Czechoslovakia because it had to support the "poor" slovak republic, and slovenia wanted to leave yugoslavia because it was sick and tired of supporting the poorer republics like Bosnia and macedonia. Yet ironically in their new little EU bubble they are now forced to do the same thing, but this time support a bigger problem - GREECE.

Have fun guys

[Risto the Great]

Totally agree BBS.

Also (he said) that the ECB would not back future euro zone applicants if there is a risk they will do something similar.

Surely a question for the Macedonian EU aspirants is "would you join the EU if there was a proviso that you HAD to support loans to countries such as Greece?"

[Soldier of Macedon]

Good on the Slovaks for showing some courage and integrity where the rest of Europe happily submits to the demands of Germany and France.

[Pelister]

The New Greeks havn't been able to produce honest statistics in any field - economics, demographics, fiscal balances...etc, since 1830.

The Slovaks were right to snub them.

[TrueMacedonian]

Is Ireland the next Greece?

http://curiouscapitalist.blogs.time.com/2010/09/22/is-ireland-the-next-greece/

Is Ireland the next Greece?
Posted by Michael Schuman Wednesday, September 22, 2010 at 5:18 am

Spanish Prime Minister José Luis Rodríguez Zapatero declared to The Wall Street Journal this week that the economic crisis in Europe has ended. "I believe that the debt crisis affecting Spain, and the euro zone in general, has passed," Zapatero said. He probably hasn't been watching the ongoing trials and tribulations of Ireland. Once the zone's official poster child of reform, Ireland has found itself in the bright spotlight of investor concern in recent weeks. Bond markets have signaled that investors consider Irish sovereign bonds increasingly risky to hold. The spread between the yields on Irish bonds and benchmark German bonds has been widening, even reaching a euro-era high earlier this week (before tapering back slightly). Ireland has not yet been shut out from fresh borrowing – the government successfully sold $2 billion of bonds on Tuesday. But the government only raised such funds at a cost much higher than in previous auctions.

That begs the crucial question: How vulnerable is Ireland to a sovereign debt crisis?
The worry is that the country's ongoing banking crisis, continued poor economic performance, high government deficits and rising sovereign debt could combine to bring into question Ireland's solvency. Ireland's banking sector has been slammed by property-related losses and the government is still digging the economy out of the problem. Nonperforming loans – which were 9% of total loans in 2009 -- likely haven't bottomed out yet. In August, rating agency Standard & Poor's estimated the total cost to the state of bailing out the banking sector would reach the equivalent of 58% of Ireland's GDP and that as a result, its government debt-to-GDP ratio, the primary measure of a country's sovereign debt burden, could hit 113% by 2012. Earlier this month, in a bid to calm investors, the government moved to split nationalized Anglo Irish Bank into two pieces, one which would house its deposits and the other that would attempt to recover as much as possible of its beleaguered loan portfolio.

Ireland's problems go well beyond the banking sector. In a recent report, Credit Suisse summarized just how ugly things have gotten: GDP is 10% below its peak (in real terms), the budget deficit could hit 12% of GDP this year, and government debt has risen by 60% of GDP since 2007.

But despite these woes, some analysts have argued that Ireland is not in the same predicament as Greece. That Credit Suisse report goes on to say that Ireland seems to have its problems under control. Here's a bit of the reasoning:

Markets are right to be concerned about Ireland. But there are several positive points that shouldn't be disregarded. The process of deficit consolidation is well on track: the deficit has already started to fall…Ireland is also in an extremely strong financing position. This year's funding needs have almost all been met. We estimate next year's financing needs to be a manageable €30bn (18% of GDP). That's especially the case as we think the Irish government holds over €20bn in cash, providing a considerable buffer if market conditions become problematic. And perhaps more importantly, recovery is underway…The euro's recent decline, boosted by falling prices in Ireland, has led to a sharp improvement in competitiveness. That's having an effect – industrial production is already back above its pre-recession peak.


So Credit Suisse concluded:

Ireland's problems are considerable, and will likely remain so for some time. But, so far, the government and the economy seem to be doing reasonably well at coping with and addressing them.

Barclays Capital in a recent report reached similar conclusions:

We believe a default is unlikely because of: the Irish government's policy track record; the potential willingness of the EU to help Ireland should it suffer additional problems; the global search for yield; and finally, the more comfortable liquidity position.

But that doesn't mean Ireland is out of the woods. Barclays expects the Irish economy to contract again in 2010, by 0.5% compared to the year before. Barclays also holds out the possibility that Ireland may need aid to get through its financial crisis:

However, the lack of fiscal space over the medium term to tackle future unexpected losses in the banking system does constitute a source of market instability. In our view, if the macroeconomic conditions deviate from our baseline recovery scenario and unexpected losses crop up in the financial sector, then the government's best option at stabilizing adverse market dynamics would indeed be by drawing on financial assistance from the EU-IMF… We believe that the Irish government has, to a large extent, deployed the right economic and financial policies thus far. The problem is that, despite these policy efforts, the government has very few options left of its own.

Perhaps more worrying than Ireland's specific problems is that we're constantly asking which European nation is the next Greece. That shows how Europe has not yet arrived a true, comprehensive solution for addressing its debt and growth problems, or the investor concerns created as a result. Mohamed A. El-Erian, chief executive of fund management firm PIMCO, wrote on the FT's Alphaville blog that the persistence of high bond yields for countries like Ireland shows that Europe's entire strategy for dealing with its weaker economies needs to change:

The failure to reduce risk spreads means that the public sector bailout is not working. Rather than provide assurances of better times ahead and, thus, encourage new investments, ECB/EU/IMF support funding is being used by existing investors to exit their exposures to the most vulnerable peripheral European countries. This situation cannot be sustained forever. It undermines any chance that the most vulnerable countries (e.g., Greece) have of limiting the collapse in their GDP and maintaining social cohesion; it contaminates the balance sheet of the ECB; it exposes the revolving nature of IMF resources to considerable risk; and it raises the risk of renewed contagion.

I'm happy that Spain's Zapatero is feeling more confident. And he probably has good reason to be, since Europe has made progress in solving the problems that sparked its debt crisis. But not enough progress.



Read more: http://curiouscapitalist.blogs.time....#ixzz10Gbmi19x


It's amazing how the word "Greece" continues to mean "bankrupt nation"