Financial Crisis in Greece

[Soldier of Macedon]

The civil unrest will be interesting as the Greek myths begin to disintegrate.

Interesting indeed, Greece is in big trouble as a result of its political, propagandist and financial manipulations, its government has lied to everybody; the people, the neighbours and the investors.

Now is the time for Macedonia to assert itself against Greek racism, as the latter have no more money to bribe their journalists and citizens into believing the false stories they are fed on a daily basis. It was inevitable in any case and it will last for some time now, but the time has certainly come, the Macedonians should argue their case intensely from now on, in all arenas and at all times. We have an upper hand, we should exploit it, if the roles were reversed they would be kicking us while we are on the ground, let's put things into perspective, the Greeks are in deep trouble at the moment, and arguing an artificial point of 'patriotism' that has been constantly trumped up by state-sponsored propagandists, is not on the agenda as a priority (or luxury) for them anymore.

http://news.bbc.co.uk/2/hi/europe/8497912.stm February 4th, 2010.

Customs officials and tax inspectors in Greece are holding a two-day strike to protest against government austerity measures, including wage cuts. The strike is disrupting Greece's import market, with lines of trucks being held at the country's borders.............

Farmers have already been protesting for weeks, demanding more government assistance. Civil servants are planning a strike next week and the country's biggest union, GSEE, voted on Thursday to hold a mass walk-out on 24 February..............

http://moneynews.com/Economy/EU-Gree...2/05/id/349043 February 5th, 2010.

Farmers began their campaign in mid-January to demand higher and faster subsidy payments, but began removing blockades in the early afternoon despite the government's adamant refusal to increase any payments to support crop prices.

Tax and customs officials were on the second day of a 48-hour strike that began Thursday, while civil servants will walk off the job next Wednesday.

Protesting farmers at the Greek-Bulgarian border have refused to comply with their colleagues decision and are vowing to maintain their tractor blockade under their demands are met, disrupting the transport of goods to and from Bulgaria.

Macedonia must make a strong statement, force the Greeks into a position where they will either appease their racists by spending more money on anti-Macedonian propaganda at the risk of further backlash from the EU, or, stay in-line with their so-called 'austerity' measures at the risk of racist groups like Greece's 'Golden Dawn' throwing a few rocks or Molotov's through the Germanically-inspired parliament in Athens.

[Buktop]

PMI or Production Managers Index, is one of the best indicators of a country's growth. Having said this, have a look at Greece's PMI

The PMI is derived from indices which measure changes in output, orders, employment, suppliers’ delivery times and stocks. As with all indices in this release, a reading below 50.0 indicates that the economy is generally declining; above 50.0 that it is generally expanding

http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=5814

And we can assume from the graph and other relevant information, that the negative trend for the first quarter of 2010 will continue.

Not a pretty picture...

[Risto the Great]

Maastricht Treaty bail-out

The Maastricht Treaty (formally, the Treaty on European Union, TEU) was signed on 7 February 1992 in Maastricht, the Netherlands after final negotiations on 9 December 1991 between the members of the European Community and entered into force on 1 November 1993 during the Delors Commission. It created the European Union and led to the creation of the euro.

It appears Greece is about to receive a "bail-out" from Germany and France. This is in direct contravention of the Maastricht Treaty. The “no bail-out” clause in Article 103 stipulates explicitly that neither the Community nor any Member State is liable for or can assume the commitments of any other Member State.

Macedonia follows (sometimes seemingly random) rules imposed by the EU and the EU member states ignore the rules imposed unto themselves.

Macedonia should demand a full explanation when this bail-out inevitably transpires.

[Risto the Great]

And to prove there is always devil in the detail:

http://www.eurointelligence.com/article.581+M5d8cf667bb1.0.html

The Maastricht Treaty’s no bailout rule is a bad rule because most of the time it is irrelevant, and the minute it become relevant, it is unenforcable. Luckily this poses no problem from a legal perspective, which is another reason why the no bailout rule is a bad rule: The minute the bailout rule becomes relevant, another rule takes precedence. It is contained in Article 100 of the Consolidated Treaty. We call it the Bailout rule.

Let us start with Article 103, section 1, the famous No bailout rule. It says that the community shall not be liable for the debt of governments. (We have a Consolidated Treaty attached to this article) Here it is in full:

The Community shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.

There it is: Thou shalt not bail out


But when a government gets into acute difficulties Article 100 of the consolidated Treaty takes over. [Note that in an earlier version we erroneously cited Art. 119, which is the bailout article for EU countries outside the eurozone. Thanks to Daniela Schwarzer who pointed out this important error. See her post on Eurozone Watch.]


Art 100, section 2, says that in case of exceptional occurrences beyond a member states control, the European Commission first makes some recommendations on which the Council can decide financial assistance, acting on qualified majority. This is laid down in Article 100, section 2:


Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council, acting by a qualified majority on a proposal from the Commission, may grant, under certain conditions, Community financial assistance to the Member State concerned. The President of the Council shall inform the European Parliament of the decision taken.


There you have it, Article 100, section 2 is the Bailout Clause. Nobody needs to circumvent any laws. If, or rather when, Ireland evokes exceptional circumstances beyond its control, there will be a meeting of finance ministers, which by a qualified majority will decide on a bail out Ireland – in the form of a loan, perhaps together with the International Monetary Fund. Of course, such a bailout is voluntary from the perspective of the donors. If country X does not want to bail out, and gets outvoted on QMV, it cannot be forced to put up any money. We do not see a situation arising in case of Ireland, as even the German finance minister Peer Steinbruck now sees the need for such action. Our interpretation of this departure from Germany’s official “Everybody is doing their own shit” policy (according to Sarkozy) is quite simple: Steinbruck probably expects a default to happen, and is afraid that it might spread fast and get really expensive. So he wants nib in the bud. Another misjudgement probably, but then who is surprised?


In any case, you can safely forget the No Bailout clause. It is a total irrelevance from a political, economic and also from a legal perspective.

Mind you, this was not beyond its control. Nobody else is to blame.

[Risto the Great]

comments re bail-out

http://www.guardian.co.uk/world/2010/feb/10/greece-france-germany-euro

The roots of Greek profligacy are going back to the 80s when the socialist government of the populist Andreas Papandreou started an orgy of public spending. From then, even the relatively short lived conservative governments in Greece, followed, more or less, the same model. Now Greece has almost hit the wall with big current account deficit, big budget deficit and huge debt. Although not default, that spectre is looming.

Greece spends the highest GDP percentage in EU for public services although some of them are completely ineffective, and at the same time the private sector lacks competitiveness. From some aspects Greek economy looks like the former communist countries' economies. Its a bizarre anachronism. The only excuse that must be granted to Greece for its huge budget deficit is the huge defense budget, over 4% GPP, due to a constant threat from Turkey. The German and French citizens may not be happy at the prospect of a bailout with their taxes, but they also must have in mind that Greece is one of the best clients of their arms industries.

A bailout is not a solution for the Greek problem which is not simply financial or economical, but political, as well. This must be solved internally, and now Greece looks like moving sluggishly towards that direction. The discussed form of a kind of bailout must be interpreted as a eurozone defense against speculation that may undermine euro, and the fear of a domino effect.

The French and the Germans fully endorsed the protectionist and corrupt policies of Greece over the last 2 decades with Greece maintaining a closed economy to foreign investment and seduing the Greeks into the Euro curreency with a flawed Greek economy that is not internationally competitive in the Euro. Suited French and German business interests.

Well if the corrupt Greek disaster model suited French and German business interests over the last 2 decades, the French and the Germans should pay for the Greek tragedy they endorsed.

France will help Greece to avoid bankruptcy so that Greece can buy 6 new French frigates bit.ly/92mE21 ) and speed up the German submarines deal and order a few dozens Euro-fighters and pay those overdue Olympic security systems bills. Oh, almost forgot: and because of European solidarity...

The bailout will completely destroy its economy and unfortunately people that cannot afford this heavy taxation will not be able to survive. Both goverments present and past had lived of the corruption and people's tax and service. This country has never given anything to its people apart from history! History will not make them appreciate or care anymore for their country. This leads to more aggression and frustration especially from young people. The irony is how this bailout comes from the countries that got stronger and richer by colonizing and leading other countries to their complete destruction and poverty! One more for their list....

"Greece is too big to fail"

Allow me a little correction:

Greece is too small and can be bailed out, fortunately...

Greece should just declare itself to be a Premier League football club, then it wouldnt have to pay anyone back and could just carry on as normal.

I love the smell of resentment on the morning.

[MP_MK]

Interesting Article

http://www.brusselsjournal.com/node/4310/print

The EU’s Horrible Honeymoon
By Paul Belien
Created 2010-02-08 12:42
Last week, Barack Obama snubbed the Europeans by refusing to attend next May’s European Union summit in Madrid. The Europeans are very upset. But that is not the worst of their problems, and neither is the looming bankruptcy of Greece. Analysts fear that Spain might sink the euro, the EU’s common currency, and with the euro also the dreams of greater political integration.

At this point Europe is not even halfway its 100-day political “honeymoon” since the Treaty of Lisbon, which transformed the EU into a state in its own right, came into force. So far the honeymoon has been a nightmare. Since the beginning of the year, the EU’s currency, the euro, is on the brink of collapse; Greece has been placed under EU financial supervision to prevent it from going bankrupt. Now U.S. President Barack Obama has announced that he will not attend next May’s EU summit in Madrid. It was to have been Obama’s first visit to post-Lisbon Europe – the consecration of the new political order.


Washington informed Brussels last week that Obama is not coming because it is not clear who is his European counterpart. Since the Lisbon Treaty came into force on January 1st, Europe has its own President, Herman Van Rompuy. This former Belgian politician chairs the European Council, the assembly of the heads of government of the 27 EU member states. However, there is also José Manuel Barroso, a former Portuguese politician, who is the president of the European Commission, which is the EU’s executive body. And there is José Luis Rodriguez Zapatero, the Spanish Prime Minister, who is hosting the Madrid meeting and as such co-chairs the summit meeting of the EU heads of government with Mr. Van Rompuy.


Messrs. Van Rompuy, Barroso and Zapatero all want to be the first to shake Mr. Obama’s hand and receive the deep bow which the American President is in the habit of making to foreign leaders. Because of the embarrassing intra-European squabble about who should have the honor, Obama has declined the invitation until the Europeans have figured out which of them is the most important.


Obama’s decision has come as an unexpected blow to the European leadership. It has upset them so much that they are considering postponing the summit to the autumn. Meanwhile, they have begun quarreling about who is to blame for the present debacle. The Europeans generally agree that the vainglorious Zapatero is mostly to blame, but others are damaged more. “The Spanish have made a mess of the summit but Van Rompuy and the post-Lisbon EU institutions will carry the can in the long term. The squabbling has damaged the EU in the eyes of the most powerful nation in the world,” a senior EU official said.


Although Obama’s snub hurts Europe’s pride, the euro’s monetary problems are far more serious. They not only affect Europe’s finances and economy, but may also tear down the political EU framework. When the European Commission placed Athens under EU supervision last week, Greece was almost bankrupt. Brussels has forced the Greek government to present a plan to drastically reduce its budget deficit from 13% to 3% by the end of 2012. The plan will cost the Greeks blood, sweat and tears. It includes a freeze on civil service wages and the postponement of the retirement age. Brussels has invoked new EU powers under Article 121 of the Lisbon Treaty, which allow it to reshape the structure of Greece’s pensions, healthcare, labor market and private commerce.


“The envisaged correction of the deficit is feasible but subject to risks,” says EU Commission President Barroso – an understatement. The Commission fears a backlash from the Greek unions, who might organize strikes and bring down the Greek government. Trade unions in other countries are nervous, too. They warn that it is unacceptable that the European Commission intervenes in setting national wages.


The EU’s Monetary Affairs Commissioner Joaquin Almunia declared that the Greek targets will be enforced strongly and that, if necessary, even more draconian measures will be taken. “Every time we see or perceive slippages, we will ask for additional measures to correct these slippages. Never before have we established so detailed and tough a system of surveillance,” Almunia said. He has demanded quarterly updates on progress towards reduction targets, as well as a first report on 16 March. “This is the first time,” he said, “we have established such an intense and quasi-permanent system of monitoring.”


Much is at stake. In the coming weeks, the strength of the euro will depend on whether the markets believe that the government in Athens is strong enough to implement the reforms or trust that the other eurozone countries will bail out the Greeks. This year the eurozone governments have already borrowed a record €110bn from the markets, thereby forcing up the cost of borrowing for countries with the weakest public finances, such as Greece, Portugal, Spain, Ireland and Italy.


Nobel Prize winner Joseph Stiglitz warns that the plan to slash Greece’s budget deficit could end up stifling the country’s economic growth. He said that the whole eurozone should share responsibility for the Greek situation. This view is not shared by other economists. Otmar Issing, a German economist and a founding member of the European Central Bank (ECB), points out that successive Greek governments have falsified the Greek budget figures for years, in an attempt to deceive Brussels and the eurozone monetary authorities, such as the ECB. What is happening today is the result of “years of violating rules, cheating on figures, financing consumption, public and private by huge debts – this is a way which has to be stopped,” Issing told the BBC. “Any sign that help might come, would undermine the efforts which are needed to reform the Greek economy.”


For political reasons, too, a bailout would be counterproductive. “German and French taxpayers cannot pay for Greece,” Rainer Brüderle, Germany’s Economy Minister, said at the World Economic Forum in Davos. A bailout would mean that the taxpayers in one country are liable for the failures and mistakes of a government in another country. This will not be accepted in countries such as Germany, who will have to foot the bulk of the bill. Axel Weber, President of the German Bundesbank and a member of the ECB Executive Board, told the German financial paper Boersen Zeitung: “Politically, it would not be possible to tell voters that one country is being helped out so that it can avoid the painful savings that other countries have made.”


Bailing out the Greeks will lead to a surge of anti-EU feelings in other countries. The alternative is to allow Greece to default on its debts. This, too, would have devastating consequences for the euro and affect all the countries in the eurozone. Hence, there seems to be only one way out: Greece must leave the eurozone. Legally, however, a country cannot be thrown out of the eurozone. Nevertheless, the British economist John Kay wrote in the influential German financial newspaper Handelsblatt that “if there is political will, it [i.e. throwing the Greeks out] might happen. Bureaucrats, lawyers and bankers would solve the technical difficulties. Central bankers cannot afford not to have an emergency plan for that.”


Even if the situation in Greece can be stabilized, the EU’s nightmare is far from over. The next eurozone dominos that might fall are Portugal and Spain. Portugal’s deficit reached 9.3% of GDP last year, Spain’s 11.4%.


Greece and Portugal are small countries. No matter what happens, they will not break the euro, writes Wolfgang Münchau, the associate editor of the Financial Times. The Greek situation may even be considered as something of a joke. “European farce descends into Greek tragedy” and “Spartan solutions from Brussels will be fought by Athens” are two titles of recent articles by Münchau. However, Spain, the eurozone’s fourth-largest economy, is another kettle of fish. “The clear and present danger to the eurozone is Spain,” says Münchau. “Spain, like Greece, has suffered from an extreme loss of competitiveness during a period in which it relied on a housing bubble to generate prosperity. While the Greek government is at least beginning to recognise the need for reform, perhaps too late, Spain’s political establishment remains in denial,” he writes.


His pessimism is shared by Professor Nouriel Roubini of the Stern School of Business at New York University. He says that Spain poses a looming and serious threat to the future of the eurozone. “If Greece goes under, that’s a problem for the eurozone. If Spain goes under, it’s a disaster,” he told the World Economic Forum’s annual meeting in Davos


If Brussels puts Madrid under EU supervision or forces Spain out of the euro, the repercussions for Zapatero will be worse than missing a photo-op with his political hero, Barack Obama. However, in this matter, too, the man who is to blame most for the debacle, is not the one who will suffer most harm from it. It is unlikely that the euro can survive a Spanish catastrophe. It looks as if 2010, which should have been the year of its triumph, is going to be an annus horribilis for the EU.

[Bratot]

What Goes Around...Comes Around

Nobel Prize winner Joseph Stiglitz warns that the plan to slash Greece’s budget deficit could end up stifling the country’s economic growth. He said that the whole eurozone should share responsibility for the Greek situation. This view is not shared by other economists. Otmar Issing, a German economist and a founding member of the European Central Bank (ECB), points out that successive Greek governments have falsified the Greek budget figures for years, in an attempt to deceive Brussels and the eurozone monetary authorities, such as the ECB. What is happening today is the result of “years of violating rules, cheating on figures, financing consumption, public and private by huge debts – this is a way which has to be stopped,” Issing told the BBC. “Any sign that help might come, would undermine the efforts which are needed to reform the Greek economy.”


Bailing out the Greeks will lead to a surge of anti-EU feelings in other countries. The alternative is to allow Greece to default on its debts. This, too, would have devastating consequences for the euro and affect all the countries in the eurozone. Hence, there seems to be only one way out: Greece must leave the eurozone. Legally, however, a country cannot be thrown out of the eurozone.
Nevertheless, the British economist John Kay wrote in the influential German financial newspaper Handelsblatt that “if there is political will, it [i.e. Throwing the Greeks out] might happen. Bureaucrats, lawyers and bankers would solve the technical difficulties. Central bankers cannot afford not to have an emergency plan for that.”

[Sovius]

Hatred is its own poison. Perhaps, the world will see a fundamental turn around pushed to the surface by the people who are going to be paying the heaviest price now. Its the young people of Greece who are going to have to carry this burden far longer than its older generations.

[fyrOM]

smirt na dusmanite bez geref. toa ni go misleja nas.

[Risto the Great]

I like this one:

Yes! Sure! Bail 'em out. We paid for the banks, the automobile industry, the farmers, Afghanistan, who cares if we add Greece or any other dysfunctional organization or country to the list? It's just money.

Maybe we can ask Google to buy the European Union? At least, we'll have a nice logo and free email.

[Bratot]

Greek bailout deal reached at EU summit

http://www.guardian.co.uk/business/2010/feb/11/eu-summit-greece-bailout-imf

[Jankovska]

Britain, though, has already ruled out contributing to any rescue. The chancellor, Alistair Darling, said there was no plan to use UK taxpayers' money to support Greece.

Glad I am not paying for them

[Prolet]

Yeah right whos going to pay up?? Spain is close to going under, Portugal is not too far. Germany and France cant cope with their own problems they are scraping the barrel here

[Jankovska]

Yeah right whos going to pay up?? Spain is close to going under, Portugal is not too far. Germany and France cant cope with their own problems they are scraping the barrel here

I don't care who pays for it. I don't care if they actually do. But if the UK says NO I am happy. And they have.

[Bratot]

Hatred is its own poison. Perhaps, the world will see a fundamental turn around pushed to the surface by the people who are going to be paying the heaviest price now. Its the young people of Greece who are going to have to carry this burden far longer than its older generations.

Justice!

They have lied, falsified, manipulated, cheated everyone all around and they are doing the same shit from the beginning of their pitful state.

I shall show no sentiment for them in any way, sho nadrobile to neka srkat!