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Getting closer to the "D" day for Greece

 

 

 

Credit: Reuters/Yiorgos Karahalis

 

By Harry Papachristou and Renee Maltezou

 

ATHENS | Sun Feb 5, 2012 6:39pm EST

 

ATHENS (Reuters) - Greece's coalition parties must tell the European Union on Monday whether they accept the painful terms of a new bailout deal as EU patience wears thin with political dithering in Athens over implementing reforms.

 

Technocrat Prime Minister Lucas Papademos put on a brave face as he tried to get leaders of the three parties in his government on Sunday to sign off on the terms of a 130 billion euro ($170 billion) rescue, which Greece needs soon to avoid a chaotic debt default.

 

Papademos said in a statement the party chiefs - who may face angry voters in parliamentary polls as soon as April - had agreed measures including wage cuts and other reforms as part of spending cuts worth 1.5 percent of gross domestic product.

 

But a spokesman for the PASOK socialist party said a number of major issues demanded by the "Troika," representing Greece's EU, European Central Bank and IMF lenders, remained unresolved.

 

Talks on the new bailout, which would be Greece's second since 2010 - and an accompanying deal to ease the country's huge debt burden via its private creditors accepting deep losses on the bonds they hold - have dragged on for weeks, stretching the EU's patience to breaking point.

 

"Things are very tough and difficult," a Greek government official said, requesting anonymity.

 

Now the parties - PASOK, the conservative New Democracy and far-right LAOS - must respond to a working group of senior euro zone finance ministry officials who are preparing for a meeting of their ministers later in the week.

 

"The political leaders must give their response in principle by noon tomorrow, so that it can be taken to the Euro Working Group in Brussels," said PASOK spokesman Panos Beglitis.

 

BIG ISSUES

 

Beglitis made clear the leaders of the three parties still had much to negotiate as the noon (1000 GMT) deadline for a response nears.

 

The most contentious remaining issues are labour reforms demanded by Greece's lenders and how to shore up domestic banks, which are up to their necks in Greek government bonds now worth a fraction of their face value.

 

"There are two big issues left - labour and banks ... those have been left for tomorrow," he said.

 

By late on Sunday, no meeting of the Euro Working Group had been formally scheduled for Monday but it could confer either by conference call or schedule a face-to-face meeting at short notice, depending on the outcome of talks in Athens.

 

Greeks have been worn down by a deep recession, now in its fifth year, and wave after wave of austerity measures imposed under the first international bailout in 2010.

 

Alarmed by the prospect of yet more budget cuts, Greece's two main trade unions said they would call a 24-hour strike for Tuesday in protest against policies which they say have only driven the economy into a downward spiral.

 

"Despite our sacrifices and despite admitting that the policy mix is wrong, they still ask for more austerity," Ilias Iliopoulos, secretary general of public sector union ADEDY, told Reuters.

 

ADEDY and its private sector sister union GSEE, which will join Tuesday's strike, represent about 2 million workers or roughly half the country's workforce.

 

KNIFE EDGE

 

With Greece facing 14.5 billion euros of debt repayments in March, a bill it cannot meet without further bailout funds, the stakes could not be higher.

 

Greek officials have emerged increasingly despondent after each round of talks, complaining that the European Central Bank, European Commission and International Monetary Fund troika was stubbornly refusing to yield on demands to cut the minimum wage level, axe holiday bonuses and fire public sector workers.

 

New Democracy and the far-right LAOS party in particular have staunchly opposed further wage and spending cuts, arguing they risk pushing Greece into an even deeper recession and imposing more pain on struggling Greeks.

 

Papademos, a former central banker, said progress had been made during Sunday's five hours of negotiations with New Democracy chief Antonis Samaras, PASOK head George Papandreou and LAOS leader George Karatzaferis.

 

The budget cuts worth 1.5 percent of GDP this year appeared to be more than the troika wanted initially although with the Greek economy on a downward trajectory that is a moving target.

 

Greece's lenders, initially demanded spending cuts worth about 1 percent of GDP - or just above 2 billion euros - this year, and insist all political leaders endorse the cuts irrespective of the outcome of the elections.

 

Papademos said the measures to cut wages and non-labour costs aimed to make the Greek economy more competitive, but he gave few details.

 

The slow progress in Athens has angered Greece's European partners. Euro zone officials say finance ministers told Greece on Saturday it could not go ahead with an agreed deal to restructure privately held debt until it guaranteed it would implement reforms.

 

"There is a great sense of frustration that they are dragging their feet," one euro zone official said.

 

 

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I doubt the average individual or family in Greece will accept more austerity being pushed on them by unelected EU "officials" in their effort to ensure the "haves" within the EU continue to "have".

 

Greece is a basket case economy

 

The only way forward is for it to reset it economy and it cannot do that within the EU.

 

How bizarre is it that in order to pay its huge debt - it needs another huge bailout?

 

That is like a family paying the interest on a crippling overdraft via an even more expensive credit card

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Just a thought Clive

Do you think that the reasons that Greece have made no anouncement is because they are not actually discussing the new austerity measures they are discussing what to do outside the Euro instead

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Most certainly Syd.

 

I am certain they are playing the long game.

 

As for Gold - the predictions are that it could go through the 2000 mark as Gold becomes more attractive than the US$. Because we should not forget that whilst the EU has some real problems - so to has the US.

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Only another day to wait. Bet you they default.

 

Have built up a considerable cash bank in the home

Have been to the supermarket and laid in enough food and water to last us three months, filled up both cars and six bottles of gas.

Putting in a rainwater recycleing tank this week to flush the toilets.

 

Now they can do what they like with their Euro/GBP/dollar

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Syd - 2012-02-06 6:39 PM

 

 

Only another day to wait. Bet you they default.

 

Have built up a considerable cash bank in the home

Have been to the supermarket and laid in enough food and water to last us three months, filled up both cars and six bottles of gas.

Putting in a rainwater recycleing tank this week to flush the toilets.

 

Now they can do what they like with their Euro/GBP/dollar

 

Email me your address Syd just in case I need a bit of help :D :D

 

Dave

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Really good series on Radio 4 - I heard a bit of part 2 (of 3) yesterday where they were talkin about the problem of the original treaty in that whilst individual countries are required NOT to allow themselves to get into financial difficulties, the EU can only apply fiscal censure AFTER the event! Which by then of course make the problem worse.

 

There is also a statement from an EU official now saying that Greece leaving the Euro would not be an issue for the Eurozone! Really!!! - if that is the case why on earth were they not allowed to slip away quietly rather than throwing Billions at a basket case economy that is never going to be able to hold its own against the stronger currencies of the Eurozone.

 

Worth a listen I would say

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It is, indeed, a fascinating series, Clive. It is available on I-Player, but sadly there is no written transcript. If you thought what you heard interesting, I'd recommend listening to part 1 also, and the whole of part 2.

Series called Europe's Choice. Alan Little. It is quite dense, and repays repeating in places - to be sure you actually heard what you think you heard! :-)

Link here, if interested. 30 mins each. http://tinyurl.com/6toceqt

I'm now hugely looking forward to part 3!

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Having considered long and hard the financial difficulties face by the 'PIGS' and the Euro zone I have concluded that the 'financial wizards' are as knowledgeable and as well informed as .............

 

http://www.mediastorehouse.com/image/sandwich_board_man_doom_571323.jpg

 

 

 

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German exports fall at fastest rate in three years, sparks fears over Europe's bulwark economy

 

telegraph.co.uk

FEBRUARY 08, 2012

 

German exports fell at their fastest rate in nearly three years in December raising concerns that the eurozone debt crisis has damaged the powerhouse economy more than expected.

 

German exports topped €1trillion for the first time - at €1.06trillion - but fell sharply at the end of the year as the debt crisis worsened. Photo: AP

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CliveH - 2012-02-08 3:11 PM

 

Thank you Brian - I have plans to listen to all three programmes.

 

SWMBO suggests I get some blood pressure tablets first tho.

 

I suspect she is correct.

Having listened to both programmes so far, the thing that struck me was that the Euro, as envisaged, was well constructed, and had/was intended to have, generally good rules protecting it against nearly all the practises that have got it into so much trouble. But, this was the Euro as proposed by the technocrats in Brussels.

What then seems to have happened is that the politicians wouldn't accept rules they considered prejudicial to their sovereignty in some cases, and ignored the rules in others to carry favour with their home audiences.

My impression is that, had the logic of the rules been accepted, and the losses of sovereignty been accepted, none of the events now causing trouble could have arisen.

It is a fascinating, and deeply depressing, tale.

It emerges, to me, as a story of failure where political will has over-ridden economic sense. This seems to me to reflect pretty much what happened, albeit in a different way, in the UK under Blair/Brown, despite our non-membership of the Euro. What it paints, to me, is a picture of the failure of our political democracies where people (politicians) act for purely political advantage (that is to say, mainly to satisfy "their" tribe) and ignore the economic and social consequences of their actions despite clear advice to the contrary.

I'll be interested in your take! :-)

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A gentleman on the television tonight listed all of the reasons why the Greeks cannot leave the Euro.

As I saw it the main reason was the anticipated flight from the country of money, ie that held in Euro's.

This would leave the greek government without two halfpennies to rub together so he said.

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Brian Kirby - 2012-02-08 7:17 PM
(politicians) act for purely political advantage (that is to say, mainly to satisfy "their" tribe) and ignore the economic and social consequences of their actions despite clear advice to the contrary.I'll be interested in your take! :-)

 

IMO in 'recent' times politicians and in particular Labour have been doing exactly that.  Take for instance Brown selling off a large proportion of our gold reserves, and more recently in the 12 months prior to losing the last election (they must have known they were going to loose) it is reported they went on a 'spending spree' IMO purely designed to make life difficult for the incoming government.  Why else would they sign off on so many contracts that would be too costly to complete (3 aircraft carriers for example) and too costly to cancel.  There is nothing honourable these days relative to the 'honourable members' IMO it is all about themselves and their party staying 'in power'.  In 'days gone by'  they were 'in office'....a subtle difference which engenders a feeling of belonging in the public psyche rather than a feeling of being 'ruled'.  This attitude permeates all strata of government from the Houses of Parliament right down to local government and it is wrong!

 

It is no longer 'service'...it is 'power' .......'self serving divisive power' pure and simple.....an insidious disease that now afflicts the corridors of  government.

 

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Very much agree with you Roger re Brown selling the reserves. If we had some we could have weathered the storm far far better.

 

I will try to get to listen to the programmes Brian - but it can prove difficult to simply find time these days! I almost feel I have to plan a journey in the car so as to listen to a particular programme! (lol)

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Guest pelmetman
RogerC - 2012-02-09 12:23 PMIt is no longer 'service'...it is 'power' .......'self serving divisive power' pure and simple.....an insidious disease that now afflicts the corridors of  government.

Yep completely agree........................ ;-)
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pelmetman - 2012-02-09 12:40 PM
RogerC - 2012-02-09 12:23 PMIt is no longer 'service'...it is 'power' .......'self serving divisive power' pure and simple.....an insidious disease that now afflicts the corridors of  government.

Yep completely agree........................ ;-)
Ah, but what I think you are both saying is that the politicians should listen more to you - though you may say us. Follow the link if you haven't already heard the programmes, stick them on I-Player, and have a nice quiet listen. People complain when they think the politicians aren't doing what they want them to do. They say democracy requires that the politicians listen more to the public. However, to a great extent what politicians do is to listen, but to their public. They try to give their public, the public that supports them politically, their tribe, what they want. If they don't, they don't get elected. What Blair/Brown did, is broadly what labour supporters approved of. It is pointless expecting labour politicians to behave like conservative politicians, or US "tea party" supporters: different tribes.What the politicians seem to have done with the EU and the Euro, is received sound advice from those "faceless technocrats" in Brussels that everyone loves to hate, and then cherry picked what they thought their electorates, i.e. us, would accept - without chucking them out at the next election. So, "we" got what the "collective we" wanted, and it doesn't work, because we should instead have had what was proposed in full. It is a bit like the sick child who complains when their medicine tastes nasty. If the doctor (aka faceless technocrat) prevails, and it takes the medicine, all is well. If mum (aka the politician) says no need, all is not well.Look at the Greeks. Their politicians gave in to their demands for years. The people were happy, but the country couldn't afford what the politicians were handing out. To fill the gap, the politicians borrowed, and then entered into covert agreements with banks to conceal their debts so that they would get into the Euro. The cost of their debt fell, because Euro interest rates were lower than for the Drachma. So, they borrowed more, and again the people were happy. The debts grew. Then the international markets imploded, the banks got short of cash and began worrying over whether Greece could repay what they had borrowed. The banks began talking to each other, and slowly began to realise that Greece had been borrowing off them all, and they were all in the same boat, and when they added it all together (though arguably they have not yet quite finished that little sum!), they concluded Greece was, effectively, bankrupt, and was liable to take a few banks into bankruptcy with it. So the Greeks had austerity forced upon them, and the people, those same people who had thought their spendthrift governments so good, and who had enjoyed a standard of living far beyond what they were earning, who made an art of tax avoidance and evasion, whose money left their country in suitcases whenever possible: those people became angry and rioted. They now complain that they are being forced to do as the Germans and the Brussels technocrats demand, and they have no influence, no say, no democracy. Damn right! They had far too much influence in the past, that influence is what has landed them in the poo, and they are now, to coin a phrase, royally stuffed. That is exactly where democracy got them. Doctor, medicine, nasty taste! And remember, this is the Greeks, those credited with giving the world democracy.I am being forced to the conclusion that, where economic management is concerned, normal democracy of the "vote for me and I'll show you a good time" variety is completely and hopelessly inadequate. Brown was on the right track with the monetary policy committee, but it needs to be a body appointed on a cross-party basis, whose members hold office for a maximum period, maybe five years, staggered, who cannot be re-appointed during the following term, and who comprise only eminent economists. It should be responsible for the whole range of economic decision making, bank base rate, money supply, total permissible tax take, and total borrowing, however arranged. Their instructee should be the Chancellor, whose purpose would be to hold government to their budget from within the cabinet. The politicians, having been told how much is in the kitty, can then quarrel over how it is spent. Otherwise, the temptation to have a little spending spree around election time is just too much for the poor dears. They just go into "vote for me and I'll show you a good time" mode. At least I now understand what it was that worried me so much at the time about the millennium dome. Expensive, vacuous, and pointless, and a harbinger of what was to come! Don't gloat: Cameron is another, just a PR chameleon who will say, and do, whatever is popular with the masses (of conservatives, naturally!).
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