Rick Steves' Greece: Athens & the Peloponnese amazon.com
Bust: Greece, the Euro and the Sovereign Debt Crisis - By Matthew Lynn amazon.com
Greece's 'Odious' Debt: The Looting of the Hellenic Republic by the Euro, the Political Elite and the Investment Community - By Jason Manolopoulos amazon.com
Understanding the Crisis in Greece: From Boom to Bust - By Theodore Pelagidis amazon.com
The Imminent Crisis: Greek Debt and the Collapse of the European Monetary Union amazon.com
Eyewitness Greece - Athens and the Mainland - 352 Pages
Financial markets and economic growth in Greece, 1986-1999 [An article from: Journal of International Financial Markets, Institutions & Money]
Athens Demographics:
The population count for Athens was 10,964,020 in 2001. According to eurostat, in 2008 Greece had a total estimated population of 11,262,000. Of this, some 695,979 are estimated to be non-Greek.
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August 22, 2011
Finance Minister Evangelos Venizelos appeals to EU leaders to mediate deal with Finland
Many are worried about complications stopping the next €8 billion tranche payment scheduled to be paid to Greece next month, though Venizelos has stated the money will be provided regardless. With claims of dissension growing among some of the eurozone member countries over the special collateral deal Finland has required for its participation in further loans to Greece, it is expected that Germany will have the final say in creating a guarantee on the money flowing to Athens.
Wall Street Journal on the dilemma facing Athens, Berling and Helsinki:
"The letter was sent to Eurogroup Chairman Jean-Claude Juncker, European Monetary Affairs Commissioner Olli Rehn and European Central Bank President Jean-Claude Trichet.
It comes after the governments of Austria, the Netherlands, Slovakia, Slovenia and Estonia all expressed criticism of the deal.
Under its terms, Greece will deposit about EUR500 million in an escrow account with the Finnish state, as a precondition for Finland to release funds to the European Financial Stability Facility, Europe's temporary bailout fund, which is being used to finance fresh aid for Greece.
Last month, European leaders agreed on a fresh EUR109 billion assistance package for Greece, as well as a series of other measures aimed at stopping the Greek debt crisis from spreading to other euro-zone countries.
Finland had previously demanded collateral from Greece as a precondition for contributing to the bailout fund. During the July 21 Summit, European leaders directed Greece and Finland to work out a bilateral agreement to assuage Finnish concerns. "
August 21, 2011
Bank run prompts government action; eve of €10 billion withdrawal looms for major banks as Papandreou government prepares to make bond maturity payments
Proton Bank is facing liquidity collapse and the Greek government is capitalizing the wavering institution by backing a €50 million bond loan from four other Greek banks (National Bank of Greece, Alpha Bank, EFG Eurobank, and Piraeus Bank), and by an injection of €100 million directly, which is technically illegal under Greek law, a move that has prompted a rush of criticism at Greek finance minister Evangelos Venizelos.
"Greek banks no longer have sufficient high-quality collateral to seek funding from the European Central Bank after recent sovereign downgrades. But they are eligible for liquidity allocated by the Bank of Greece in agreement with the Frankfurt-based ECB and are expected to seek it this week.
All four big lenders – National Bank of Greece, Alpha Bank, EFG Eurobank and Piraeus Bank – face a looming liquidity crunch as about €10bn of government deposits are set to be withdrawn from local banks to pay off debt maturing in the next few weeks. "
Quotes (above) from Financial TImes article by Kerin Hope.
Fourth year of recession ahead, analysts begin to warn
Despite official predictions about an end to the economic downturn in Greece and finally a long expected growth trend, none of this is seen as coming to pass and instead new analysis is indicating another 2% contraction in 2012. The implication is that even further austerity may be pressed onto the Papandreou program and payments on the existing IMF/ECB/eurozone loans could be in jeopardy.
This is happening while German Chancellor Angela Merkel and French President Nicolas Sarkozy are proposing a 'eurozone financial economic government' to run the financial fortunes of the 17-member eurozone. The dilemma for the European Union is the collapsed fortunes of several member states, and the slowing, or nearly stand-still growth of the major European economies (such as Germany, France, Italy). With many EU banks hanging over an abyss of bad balance sheets and rough forecasts, this is seen as a bid to rescue failing institutions by forcing healthier bodies to essentially join in a coordinated rescue and austerity program.
August 12, 2011
Greece in "deep recession" GDP contraction of 6.9%
The country's statistics agency said the economy contracted by 6.9 percent in the second quarter of 2011 compared to the same period last year, down on the 8.1 percent recorded in the first quarter.
Unemployment moves up to 16.6%
Elstat has presented new statistical information:
| Consumer price index | July 2010-2011 | 2.4% |
| Harmonized Index Consumer Prices | July 2010-2011 | 2.1% |
| Gross Domestic Product (GDP) | 2nd Quarter 2011 | -6.9% |
| Unemployment rate | May 2011 | 16.6% |
| Industrial Production (non-construction) | June 2010-2011 | --13.1% |
| Turnover Retail Trade | May 2010-May 2011 | -8.8% |
| Producer Price Index Industry | May 2010-2011 | 6.6% |
| Building (volume) | April 2010-April 2011 | -32.3% |
| Population count 2001 | 10,964,020 | |
| (2008 Eurostat Estimate Population) | 11,262,000 |
See previous stats on the Greek Inflation page
August 10, 2011
Plan to extend bond swaps to 2024
In an effort to achieve a goal of €135 billion rollover, a plan put together by the Papandreou government (with assistance from the EU and the Washignton DC Institute of International Finance) is looking to gain private investor participation of an estimated 90% og bond holders. The plan goes four years beyond the original 2020 deadline for bond-swaps that came out of the July EU/IMF/ECB deal in July.
If the plan succeeds in being implemented, it will give Greece breathing space through 2024 by exchanging a mass of bonds for new ones worth less than the original values. Though certain to trigger a default rating from the credit rating agencies, so far this appears to be an agrred upon maneuver that should shortly thereafter allow Greece to be moved higher than the presently "junk level" of Ca.
Will the EU collapse?
With the American credit rating drop a few days ago, and the Italian crisis becoming sharper, speculation on a complete unraveling of the eurozone is becoming more common on the pages of the big newspapers of the world. For example Robert Samuelson at the Washington Post:
"This is the monster now stalking Europe. Last week, rates on 10-year Italian and Spanish bonds exceeded 6 percent, roughly four percentage points above rates on 10-year German bonds. Meanwhile, the outlook for economic growth is deteriorating without offsetting gains in the rest of the world that might boost Europe’s exports.
So Europe now faces a crisis that is at once financial, economic, diplomatic, political and social. The vaunted “European model” of generous welfare benefits is steadily reneging on its promises. Naturally, this is highly unpopular. Strains among countries are worsening as all seek to shift blame and costs to others.
Can Europe save itself? If not, will anyone? One suggestion is a common bond that would allow weak countries to share Germany’s credit rating; but this would have Germany guarantee other countries’ debts — a role Germans are likely to reject. There seem to be three other possibilities.
First, the European Central Bank — Europe’s Federal Reserve — tries to stabilize financial markets by buying the bonds of besieged debtor nations.
...Second, the International Monetary Fund organizes a global rescue package worth trillions of euros. Europe’s debtor nations could borrow at low rates with long maturities.
...Third, some European nations could negotiate write-downs on their debts or default on them. Superficially, this seems a solution. But it would create other problems. Defaults would inflict huge losses on banks, insurance companies and pensions. Many European banks might collapse unless rescued. "
August 2, 2011
Greece could leave eurozone "tackle problems" then return
An interview with Pacific Investment Management Company CEO Mohamed El-Erian at Barrons covered a variety of topics (such as whether the United States debt problem was bringing it toward the same situation as Greece). Mohamed El-Erian remarked that:
"Greece could be allowed to temporarily leave the euro zone, El-Erian suggested. The country would then need to tackle its debt, growth and competitiveness problems before it could rejoin the currency union, El-Erian said."
Greece in the midst of "silent bank run"
Despite the urging of new Greek finance minister Evangelos Venizelos for Greeks to bring back their money from offshore banks, money continues to vanish from the Greek banking system, with a count of €4.4 billion withdrawn in May 2011 alone. €21 billion was promised as a 'recapitalization' fund for Greek banks during the last round of bailout planning with the eurozone/ECB/IMF, which may be the only thing keeping doors open for banks as it is usually being stated that funds being withdrawn are actually coming from the European Central Bank, with actual Greek depositor funds long since gone (Greek banks hold some €48.4 billion of Greek national debt.)
"Greece could be allowed to temporarily leave the euro zone, El-Erian suggested. The country would then need to tackle its debt, growth and competitiveness problems before it could rejoin the currency union, El-Erian said."
Further reading:
UK Guardian "Greece in panic as it faces change of Homeric proportions" by Aditya Chakrabortty
"...The clerk leans over: "I've been working in a bank for 31 years, and I've never seen a panic like this."
Official figures back him up. In May alone, almost €5bn (£4.4bn) was pulled out of Greek deposits, as part of what analysts describe as a "silent bank run". This version is also disorderly and jittery, just not as obvious. Customers do not form long queues outside branches, they simply squirrel out as much as they can. Some of that money will have been used to pay debts or supplement incomes, of course, but bankers put the sheer volume of withdrawals down to a general fear about the outlook for Greece...."
The Euro is "structurally doomed"
An interview ("Europe at brink of a major financial crisis") at CNBC on Aug 2 had Scott Minerd, CIO of the fixed-income firm Guggenheim Partners, saying:
"They keep throwing more and more liquidity at it thinking it's going to get better and it's not," he added. Europe fails to recognize that it has a "structural problem, not a liquidity problem."
People will "flee the euro" unless they find a way to bifurcate the euro in some way where strong countries are in the euro only and the weak countries are out, Minerd explained, adding, "To be honest with you, I don't see the mechanism to do that."
Minerd goes to to say that compared with the euro, the USA debt problems are 'the least dirty shirt in the bag.'
Greek talent leaving the country
I saw this via Living in Greece, about the emigration that is apparently decimating the Greek pool of media talent (article at the UK Independent):
"...Now everybody is desperately looking for some perspective. It's not just our work that's at stake; it's our future, our lives. You have this sense of freefalling.
People are in distress. Parents are worrying they won't have any pension to support their unemployed children.
There is also a lot of discrepancy in the media. One newspaper may frame a news story in a certain way while the other publishes the opposite. Many Greeks don't understand what's going on. For the past year, almost every month, a big media outlet is firing people. If you don't lose your job, you're forced to accept salary cuts. Colleagues tell me there is exploitation.
I know personally seven people who are leaving Greece this September and 15 more who are planning to. "
Conflict between rival social groups equals government paralysis
The use of violence between competing groups to influence (or scare) government toward certain actions isn't civil war (which Greek history provides some rather daunting examples) but it does demonstrate the scale of disunion haunting the capital city. Article by Nikos Konstandarasat eKathimerini:
"How much lawlessness can a society tolerate before it falls apart? When do we cross the line where the majority can no longer accept the impunity of organized groups and take action? Unfortunately, in Greece we are in danger of testing these limits and of learning what happens when the balance between social groups is shaken. This is the balance on which civilization stands.
Such fears may seem an exaggeration in our European country, but who would have believed a few years ago that today we would be living with the consequences of economic collapse? This situation was caused chiefly by governments which did not dare stand up to the demands of organized groups."
Turkey's Military abdicates
Christopher Hitchens (who has focused on the Cypriot conflicts of Greece and Tyurkey many times, e.g., the books "Cyprus" 1984 and "Hostage to History" 1997) takes a look at the "the almost-overnight liquidation of the Ataturkist or secularist military caste" in an essay at Slate. He seems to be saying that Ataturk revolution has come to an ignoble end through international pressures and old-fashioned corruption, topped off with a rising islamic ferver in Turkey.
The issue for Greece (and in a milder way, Europe) is what sort of pressures the new situation will create with a list of long unsettled territory conflicts between Ankara and Athens dotted around the Aegean Sea.
Related reading: Strategypage web site covers the military ramifications of the change in Turkey.
For current news items, go to the home page
July 29, 2011
Turkey military leadership resigns
This is not exactly good news, Turkish military leadership resigns en masse (their words) or 'all retired' (official explanation from the Prime Minister Recep Tayyip Erdogan government). Either way the circumstances seem to signal further decay within the Turk military as a secular institution, and that Erdogan's apparent goal of Islamification of all aspects of Turkish civil life is leaping forward.
Reuters has a concise over view of the issue online here.
WSJ: EFSF may not be ready in time for September €8.5 billion loan
The European Financial Stability Facility is supposed to raise its lending monies through the financial markets, but with much of Europe on vacation through August and still in negotiations in several countries for participation in the program, the mid-September deadline date is starting to look shakey. With ratification of the program incomplete across the euro zone, EU leadership is already discussing how to meet the September payment to Greece. An ironic aspect is that Italy or Spanish banks may be putting forward loans to Greece as part of a plan in the absence of the EFSF, a situation simultaneous with those countries own debt dilemmas mounting.
Read the Wall Street Journal story online.
July 25, 2011
Moody's Investors Service lowers Greece rating three notches to Ca
Greek government long-term currency debt was downgraded by Moody's to Ca, their second to last rating. Basing the move on a reflection of the losses to be experienced by private creditors from the coming debt-exchange as part of the eurozone package of funds and debt-rollovers. In the exchange, banks are to write down Greek bonds by 21%, and the process will impact private holders of Greek debt, constituting default by standards used by Moody's.
The Standard & Poor's rating on Greece was recently moved to CCC (June 13), which is their lowest rating.
The Fitch Agency downgraded Greece to one notch above default on July 24.
After the exchange has completed, Greek ratings are expected to rise.
July 24, 2011
Greek finance minister Evangelos Venizelos urges return of Greek deposits
Venizelos (not related to the famous Eleftherios Venizelos) is trying to encourage Greeks who have moved their deposits out of the country to return them to the cash-starved Greek banking system. With the latest eurozone backed program of July 21, Greek bank liquidity is guaranteed through the European Central Bank. Beyond that, a recapitalization fund of €20 billion set aside for Greek banks is expected from the July 21 eurozone agreement.
"Greece is better off inside Europe than outside it" - Nation
Survey of the issues facing Greece in an article by Steven Hill at the Nation. The writer compares the United States and Greece as facing similar issues and makes a comparison between New Democracy/American Republicans and Papandreou and USA President Obama. Further, he makes a list of assets which greece possesses giving it a position in which to grow toward prosperity if forms of modernization and anti-corruption in government and unions can be combated.
Related:
- Howard Schneider "Greek contagion quarantined"at the Washington Post "...there are major open questions about whether, for example, the amount of money committed by euro-area governments so far is adequate to pay for the policies they have approved. "
- Robert Picard at Forbes on the dilemma of the invisible small business in Greece:
- "...Greece sometimes acts as if it small business does not exist and it is doing little to promote small enterprises in a time public agencies and large employers are laying off workers because of the economic crisis.
- This is hardly surprising because small and mid-sized enterprises (SMEs) have been continually overlooked in government policy...
- If you ask how many SMEs exist in Greece or how many people they employ, the government can’t tell you.
- If you inquire about startup and survival rates for SME in Greece, the government has no data.
- If you ask in what business sectors do SME play crucial economic roles, the government has no idea.
- It should be no surprise then that it is difficult to begin a small business in the country and that startup businesses and SME employment are unlikely to play a role in the nation’s recovery. The legal and regulatory processes alone for starting a business in Greece require 3 months to a year to be completed, depending upon the type of business...."
- Associated Press article at Washington Post "In Greece, a few entrepreneurs think positive in forbidding landscape of anger and entitlement"
July 23, 2011
€109 billion euro package for Greece
July 21, 2011
EU leaders still talking: spectators expecting some form of default
UPDATE: In a draft statement, the EU has agreed to extend the maturities of loans to Greece and to reduce their interest rate. Also a call has been made for the creation of an economic stimulus program for Greece.
Headline at CNBC: "New Greek Bailout Can't Rule Out Default: Juncker: "
"The draft statement allows for an expanded role for the European Financial Stability Facility, the euro zone's rescue fund, according to the Dow Jones source. This would include offering more flexible lines of credit as well as possibly being involved in the recapitalization of banks."
Early Thursday: Indecision thus far
The big three credit-reporting agencies are watching to see what will come out of the Thursday EU leadership meeting, but most people are expecting the German plan of involving private investors to be inside the final agreements. If so, this will happen despite both French President Nickolas Sarkozy and ECB President Jean-Claude Trichet originally opposing such a plan as it certainly will trigger temporary default and might set a precedent for the other countries in the queue for economic default (Spain, Portugal, Ireland and Italy).
July 20, 2011
Taxes, rollovers, 'selective default,' more money: EU summit
July 19, 2011
Let the Greeks have what they deserve/want: Communism
In a blog post at Forbes surely meant to offend (and draw site traffic) Bill Frezza admonishes the Greeks for laziness (and mentions that Greece got into the EU at the expense of the 'hard-working Turks'). Read the moved item article here.
July 18, 2011
Germany argues for private investor participation; ECB against
German Chancellor Angela Merkel's government is set to attend the Thursday (July 21) emergency meeting of eurozone leadership, but is threatening to not show up if concrete plans have not been formulated for the summit meeting. Read this moved article item here.
"Moment of destiny approaches for the Euro" - Kathimerini
Article about euro moved here.
Globe and Mail "The Two United States"
Drawing comparisons between the ongoing Greek crisis and the problematic numbers in the United States - item moved here
July 14, 2011
Fitch downgrades Greece to one step above defaultIndecision in European leadership aggravating crisis: Papandreou
With the unexpected downgrade by Fitch, Papandreou has begun to say the situation will turn for the worse if the EU leadership doesn't get a second bailout plan organized.
Papandreou comments from July 11 (via Bloomberg):
"I am now convinced, after 14 months, that no matter what Greece does -- and we have proven ready to live up to our responsibilities -- if Europe does not make the right, collective forceful decisions now, we risk new and possibly global market calamities due to a contagion of doubt,” Papandreou said. “Strong and visionary European leadership is needed.”
Bonds of debt-strapped countries plunged, the euro sank and stocks dropped amid concern that European governments are powerless to prevent the financial distress spreading from Greece. "
"Systematic Crisis"
Olli Rehn, speaking on the debt-problem plaguing Europe:
"The crisis is now systemic," said Olli Rehn, European Commissioner for Economic and Financial Affairs.
(Rehn made a similar statement in December 2010, that the problem was becoming systematic.)
German Finance Minister Wolfgang Schäuble has said they must now move quickly to build confidence in the eurozone. Schauble had been one of the voices pushing for private-investor involvement for the Greek bailout, but with the three credit-rating agencies repeatedly saying this qualifies as default, Schauble has said (July 14) that he "must yield to reality." (See this Der Spiegle article for sourcing.)
Greek Banks: If default happens, the European Central Bank then stops providing liquidity to Greek banks, many who have no reserves to depend upon for providing depositor funds, therefore when a customer in Athens withdraws funds from a Greek bank, that person is (often) receiving ECB money. With default, the Greek banking system will seize up.
From the Der Spiegel news item:
"Athens, meanwhile, is anxious for a rapid decision. In an interview with the Financial Times Deutschland published on Thursday, Greek Prime Minister Giorgios Papandreou said that "if we don't have a decision soon on a second program for Greece ... the program could collapse of its own accord." He added that "the current mood is not helping us pull ourselves out of the crisis."
Spanish Finance Minister Elena Salgado also urged a quick decision on the Greek aid package. Speaking to the Süddeutsche Zeitung, she said "we are no longer talking about the crisis of a certain country, but about a systemic crisis."
Italy
With the Fitch downgrade, Greece moves back onto the hotplate of debt worries in Europe, replacing Italy which had temporarily become the main focus because of its debt-to-GDP ratio of 119% and an increase of interest on Italian bonds (Italy had a successful bond sale of 5-year notes on July 14). Another Italian problem is a 2.5% growth rate measurable from the year 2000, which doesn't even track with the population growth: but still, this is better than the -3.8% contraction for 2011 Greece is dealing with. Another Greece/italy comparison, though, is the black market. Only Greece is ahead of Italy in how much business is performed "off the books" (the Wikipedia article on the Italian economy says this hidden portion of Italian GDP may be 30%).
Like Greece, italy is trying to implement an austerity plan, but in this case it is mostly a home-grown program to cut costs and to head off a sudden surge in cost of debt. With Greece as an example, Italy can see what will happen next. Likewise, the next fear is that Italians will begin a currency flight of bank deposits into other countries (as has happened in Greece)
July 9, 2011
IMF approves €3.2 billion tranche paymentJuly 7, 2011
Privatization Board to be presented Monday
Greek Finance Minister Evangelos Venizeloshas been busy meeting with Wolfgang Schauble (Federal Minister of Finance in Merkel's second cabinet), and Jean-Claude Trichet (European Central Bank president) this week, working out the details for the planned announcement on Monday (July 11) for the names of the people who will occupy the board of director seats for the coming Privatization Agency in Greece. Though privatization has always been a part of the austerity schemes Greece has agreed to since the IMF/Eurozone/ECB bailouts began in 2009, actual sales have not been occurring. Now both the IMF and and the EU has said there won't be additional money until public sector sell-offs have begun.
With a goal of €5 billion in sales by the end of 2011, and upwards of €50 billion in sell-offs by the end of the scheduled austerity plan in 2015, the Greek privatization Agency will have its hands full. Composed of five board members with two (non-voting) observers appointed by the eurozone, they will serve three-year terms.
Inflation stays at 3.3%: unemployment at 15.9%
How Greek disaster is seen as (political) victory
In eKathimerini, Nikos Konstandaras criticizes the built-in divisions of Greek public life ("The Rage of Achilles, Over and over") that makes reaching unity so difficult:
"...It is no coincidence that “The Iliad,” the mold from that which we now call Hellenism was shaped, focuses on the personal quarrel between Agamemnon and Achilles which jeopardizes their 10-year expedition against Troy. Our politicians in Parliament, the masked stone-throwers and the heavily armored riot police repeatedly relive this ritual, each seeing himself as a hero."
Konstandaras' piece describes a political system in which the warring twin parties each "own the truth" and cannot reach consensus because it goes against the nature of their aims, which is the defeat of the other side, a task completely obscuring the responsibility to manage Greece in an effective way: in fact, such a sense of direction seems to demand collapse and disaster so that one political party can win over the other.
July 3, 2011
Standard & Poor's says 'French Model" qualifies as default
Standard and Poor's has indicated that it would view the "French Model," (sometimes referred to as 'Plan B' in case of imminent default) which is a scheme by which private creditors will reinvest 70 percent of the receipts from maturing Greek bonds: 50 percent into new Greek bonds with 30-year maturities and the other 20 percent into bonds with no running interest payments. Second version of this plan entails the rollover of 90% of the bond maturity money into 5-year Greek bonds. Both versions are considered actual defaults by Standard and Poor's as each features financial loss on the part of the bond holders. The Monday announcement from Standard and Poor's effected a depreciation of the euro versus the U.S. dollar.
Standard and Poor's also questioned the ability of Greece to completely implement the complete austerity program that was agreed to last week. With many banks in europe ( for example, the ECB) already saying they will not accept the "renewal bonds" that would come from the 'French Model,' the pressure toward bankruptcy (and sticking to the official IMF/eurozone/ECB plan) seems to have been increased, particularly in the face that negotiations over a second bailout program is to begin soon between Greece and the eurozone/IMF/ECB. Probably the one positive aspect in this direction is that some 400 banks (according to the German Financial Times) are volunteering financial assistance to the Greeks.
Der Spiegel carried this item on the Standard and Poor's announcement:
"Allianz, Europe's biggest insurer, said it would contribute €300 million to the new Greek aid package. Allianz CEO Michael Diekmann said there was no alternative to supporting Greece. A Greek insolvency would have a bigger impact than the collapse of Lehman Brothers, he warned."
Led by the Germans, the eurozone is holding talks with the world's credit rating agencies to negotiate ways to extend or 'rollover' Greek bonds without triggering default status.
Berlin wants privatizations carried out before negotiating new bailout plan
German Finance Minister Wolfgang Schaeuble wants Greece to begin carrying out the agreed upon privatization agreements from the existing austerity plans before negotiating new bailout terms this autumn. Though Greece has agreed to privatization already in the past (see this June 2010 item for an early list, or this June 2011 list for details of the 'Troika' plan), very little has been carried out, and foot dragging is expected to continue unless pressure is brought to bear.
Three issues confront privatizations proponents:
- A touchy issue with Greeks is the prospect of public companies being sold into the controls of non-Greek companies. Continued strikes and demonstrations are sure to result.
- The agreed upon schedule for privatization seems to indicate a rate of one asset sold every ten days, which leads to the third problem:
- Rapid sell-offs will erode state company values, as scheduling will trump actual value assessments, buyers able to negotiate with a significant advantages over the seller who must operate with significant IMF/EU/ECB pressure at their shoulder along with the speed of the schedule.
Greece, the Treuhand experience in Germany & Foreign Investment
The "Treuhand privatization" experience in the integration of East Germany with West Germany has been held up as a model for Greece and the IMF/ECB/EU to follow for privatizing state companies. The Treuhand agency was created in the throes of the collapse of the Soviet Bloc, and was early-on estimated to clear profits of 270 billion Deutsche marks after selling off the properties and companies of the imploded communist government. Instead, in the end the Treuhand agency had run up 170 billion Deutsche mark deficits.
Despite this accounting, the Treuhand agency is still presented as a way forward because it was a process which produced a history that can be used to avoid the same problems being repeated in Greece, i.e.; relying upon the very bureaucracy that is being put out of business to contribute in a positive way to the process; using a set schedule to complete sell-offs which then damaged asset values during the negotiation to the advantage of the prospective buyers; to expect client companies that are included in the sell-off to continue as product buyers after the sale into third-party hands. What this meant in East Germany was a disaster for the industrial base that could no longer depend upon a clientele among the other collapsing Soviet Bloc countries it traded with.
In this sense, commentators are comparing the position Greece must now face with that of the Eastern European countries in the 1980s and 90s who were suddenly required to compete in a world-wide marketplace, or at least a European one, without Soviet sponsorship and controls. Socialism in Greece has never reached the extremes of those communist examples, but still the same dilemma of moving masses of state employees into a competitive private sector environment means upheaval and forced transformation of established union leadership.
The stated goals of the privatization plan is to enable Greece to pare down its debt by some €50 billion and to clear the way for major private investment into the country. With that EU-based vision in mind, it is with with the unions and Greek bureaucracy that the future is dependant: without reforms of red tape and the decrease of union power to disrupt and change government decisions, foreign investors simply will not risk risk coming to Greece. With the native financial resources over-extended and depositor flight having evaporated some 30-40% of private funds from the country, where does development money come from? Most of the bailout money is being used to repay European banks for the maturing Greek bonds they're holding. China is putting in €1 billion or more in port development, but that is not going to improve tourism and agriculture, two areas where Greece has always had advantages.
How the privatization goes forward may determine how the entire austerity program will end. If Greeks see a rapid sell-off of state assets realizing great benefits for foreign businesses but little result for Greece still mired in near-bankruptcy, it will be hard to not see the process as the dismemberment of the country. All of the accusations of ulterior motives on the part of the IMF/ECB/EU "partners" will then seem to be realized.
Further reading:
CNN "Greece sells up as country faces reality" by Jim Boulden: "Greece vows to sell many state-owned assets and catch up to what European countries started doing back in the 1980s. So, better late than never. But can Greece really sell £50bn worth of assets as promised?"
Wall Street Journal "A German Solution to a Greek Problem?" by Terence Roth: "Jean-Claude Junker, Luxembourg’s Prime Minister and President of the Euro Group, says the agency created in 1990 to sell off the state-owned assets of the defunct East German state might be just that."
San Francisco Chronicle "Greek Privatization Plan 'Not a Fire Sale,' Christodoulakis Says. ...Finance Minister Evangelos Venizelos told lawmakers today the asset sales comprised the "first pillar" in any new financing package for Greece. The privatizations will begin in the next couple of months once the agency responsible for them has been set up, government spokesman Elias Mossialos said in Athens."
Dusk on the Acropolis Athens Greece. Source: Big Stock Photo
June 30, 2011
"Troika" Austerity Plan #2 passes implementation vote
The successful vote on implementing the austerity package backed (vigorously, to say the least) by the 'Troika' of IMF/EU/ECB releases the next batch of eurozone/IMF money, a €12 billion installment that will help headoff what was a looming disaster as Greek bonds mature with values of nearly €12 billion in July and August (for a summary of what's coming due, see this June 27th item).
Reuters reported that both the value of the euro and world stocks in general all surged to their highest showing in over a month on news of the successful vote success for austerity forces in Athens. Consequently US bonds dropped, values between the euro and dollar had been see-sawing for some time based upon news out of Athens.
Probably the big question now that Greece has been voted full-strength into the 'Troika' plan is how long until the same issues come back to haunt? Now fastened to a plan that will give back 100% to the bond holders but must be paid (with varying interest levels) by Greece both short-term and long, the amount of debt just keeps climbing. It would all seem tricky but manageable if Greece was experiencing growth, but instead the economic condition is one of continual contraction. Are the politicians(all across europe, not just in Greece) betting on a rejuvenated Greece once reforms have worked their way through the economy? Or is hanging on by the fingernails better than dropping into an unknown chasm of default?
"Secret wishes of international media"
I saw this at the LIving in Greece blog:
"... riots are caused by small groups of hooded youth hanging on the fringe of an otherwise peaceful protest. They come armed with sledgehammers, gas masks, Molotov cocktails and intent; and riot police lay in wait. These disturbances last only minutes, just long enough for international media to get the footage and photos they secretly wish for."
June 29, 2011
Of Violence and Petrol Bombs
The protest effort around Syntagma Square in the lead up to the vote on the "Troika" bailout plan in the Hellenic Parliament has become a series of international images of flames and tear gas attacks, punctuated with masked young men swinging makeshift clubs at Greek riot police. The headline " Violence mars protest" has become a cliche in the international press coverage of the Greek street actions around Syntagma Square.
Screenshot images above: The Washington Post, the UK Times, and Le Monde (France)
Chants of 'We don't owe! We don't sell! We don't pay!' from the Greek Civil Servant Trade Union was combined with various other organizations, along with the more violent efforts of anarchists.
"Midterm" Package passes in Hellenic Parliament: 155 votes to 138.
Approval on the plan for major cuts in public spending and the raising of taxes passed in voting on June 29, and on June 30 a vote is to be held to clear the way for legal implementation of the various sections of the "Troika" plan.
To see a breakdown list of elements of the plan, go here.
Summary and a question: Facing an exit from the eurozone and the inevitable devaluation of the country into whatever currency system that would have taken the place of the euro, a de-facto default looming as billions of euros were to be paid for maturing bonds, all coupled with intense pressures from France and Germany to please participate in the saving of Greek, French and Germany banks which were all going to face disaster if the Greeks said "oxi," the parliament voted 'yes,' by a small margin.
But how much of the plan will get implemented? Greece has been dragging its feet on privatization efforts all along since the original fiscal rescue plans were voted for in 2009 and 2010. Other elements have only been partially implemented. Saying "yes" and then not following through means a long sequence of pressures in the future, all of it accompanied by Greek citizens pushing their government to do something else, and if unions and various political groups can keep disrupting the everyday life of Greece, the whole process might simply grind to a snails pace, tying Greece up in a never-ending phantom economic depression until the political fallout creates an unpredictable result, which has happened in Greece many times in the past.
Christine Legarde is new IMF Chief
The 55 year old Legarde replaces Dominique Strauss-Kahn, who is under arrest for rape in New York City. She is French and so keeps leadership of the IMF in European hands (which has been the case for 55 years). The position empowers her to manage the 187-member organization, which manages a $326 billion fund. Her initial task will be to maneuver the IMF in negotiations with Greece. To take over the IMF, she is leaving her position as French Finance Minister.
Arriana Huffington: demonstrators are re-inventing democracy
A piece by Arriana Huffington about her visit last week to Greece, her observation of the protestors, and her dinner meeting with Papandreou to discuss the events swirling around the country. Much of what she says is applause for the protestors and a lament that western media focuses so easily on the minor violence that has occurred.
"What happens in Greece might very well tell us whether democracy will recover from the crisis of legitimacy exacerbated by the financial crisis or whether it will shrink -- undermined by the very forces that brought on the crisis in the first place."
June 28, 2011
EU's Olli Rehn "Approve the austerity plan or immediate default"
"No 'Plan B'"
With protests and pressure within Greece to block the "Troika Austerity Plan" building, the EU is adding pressure to the matter for their side, which is either approve it or face going over the cliff. With major spending cuts, privatizations of many large state-owned companies, and tax increases across the board, the plan is a tough sell to a country already reeling from the amount of austerity that has been executed, not to mention an economy that has slid into a phantom-depression. READ MORE HERESmashing Windows in Athens
Saw this on the twitter account for Carl Quintanilla, CNBC newsman:
"The kids in black smashing windows in Greece are largely anarchists, with little or no interest in sovereign debt issues."
June 27, 2011
"Moment of truth" approaching with June 29 austerity vote Almost €12 billion in Greek bonds coming dueEU has another card to play if Greek parliament says "No"
If the revised austerity plan gets stopped in the Hellenic parliament, the EU has a secret plan to get upwards of €12 billion in euro liquidity into Greece to prevent default.
With a "plan B" in the wings (if it truly is: many seem to doubt it is a legitimate alternative), maybe this takes some of the pressure off Papandreou temporarily, but a continuous bout of 'kicking the can' down the road can only go on for so long. But eurozone has a vested interest (to say the least) of keeping the problem of default in Greece, because it would quickly spread to Ireland, Spain and further once lender banks started to get smashed by a default.
Prime Minster of Britain David Cameron has already kept his country out of the austerity-loan program, and has followed up with the advice that european banks should prepare themselves for what happens next, implying a default has to be considered seriously.
"Greece must restore its international reputation"
An opinion piece by Kevin Featherstone at the New York TImes predicts Papandreou is going to pull enough of the Hellenic Parliament together to forestall disaster with expensive bond repayments looming over their heads, but Featherstone also says flatly that talk of default is not going away:
[A] parliamentary victory should be enough to abate the immediate crisis. But Greece’s vulnerability on the financial markets will continue and the talk of default will not go away. In the meantime, an uncertain, divided and weak country must implement the new austerity measures, undertake parallel institutional reforms and restore its international reputation. No euro zone or E.U. state has faced this kind of challenge in recent memory.
Featherstone ticks off the oft-repeated items on the list of Greek dysfunction: obsolete bureaucracies, political favors used to build up public payrolls with people not qualified for the technical work they're to perform, bloated this-and that. It could be a description of more governments than just the Greek, though, and the turmoil in Athens is a problem many other capitol cities fear.
Sarkozy holds up a 30-year bond rollover as part of Greek rescue
It is being called the "French Model" and no, it doesn't mean a gallic woman wearing haute couture. Rather, it is a combination of French banks rolling maturing Greek bonds into 30-year notes, European Rescue Fund (EFSF) money, and the cashing out of some principal. The breakdown is:
- 50% of maturing notes to roll into 30-year notes with a corresponding coupon rate equal to the eurozone lending rate to Athens.
- 20% of notes to be zero-coupon AAA bonds guaranteed by the EFSF (which pay approx. 3%)
- The remaining 30% would be cashed out.
According to Reuters, the Germans are looking at the "French Model" as a possible basis for what they might attempt with their mass of Greek bonds.
June 24, 2011
New Fiscal Plan to be voted on next week: A revision of the existing "5-year fiscal plan' has been agreed to by Greece and the EU/IMF/eurozone 'troika' to manage the ongoing Greek debt crisis and to avoid default.World Stocks rally over Greece
Article item is now moved here
Greek bankruptcy can be like "G.M.," instead of Lehman Brothers
Speculative article from NYT moved here.
Hurdles Greek private companies face inside and outside of Greece
Greek private sector dilemmas in Greece, item moved here.
June 21, 2011
CNBC: Greek Streets 'Explosive' as PM Faces Confidence VoteFitch Ratings: rollover of Greek bonds will constitute default
Brief article at eKathimerini (english language side of their web site):
"Fitch Ratings warned it would treat a voluntary rollover of Greece's sovereign bonds in any rescue package as a default and would cut the credit rating, keeping pressure on EU policymakers who intend to outline a new plan by mid July."
June 17, 2011
Papaconstantinou out; Venizelos takes Finance Minister hot seat
Also at the Financial Times, news of the announced Papandreou cabinet shuffle:
"George Papandreou, prime minister of Greece, has replaced his finance minister in a broad cabinet reshuffle to counter widespread anger over tough new austerity measures essential to prevent Greece from a disastrous default.
Former defence minister Evangelos Venizelos, who challenged Mr Papandreou for the party leadership four years ago, will become finance minister, replacing George Papaconstantinou, who takes over the energy portfolio.
Mr Papaconstantinou had become unpopular with the socialist party over his refusal to dilute EU-IMF mandated reforms and was seen by Greek voters as the harsh face of austerity."
Venizelos now Finance Minster: "The country must be saved"
Report at Reuters on the cabinet changes under Papandreou:
"The country must be saved and will be saved," Venizelos told reporters after he was appointed to replace outgoing Finance Minister George Papaconstantinou in a reshuffle.
He added that he had harboured doubts about taking the post.
"I did it with much thought and not without doubts. I did it because I consider it my patriotic duty," he said."
The new government list under Papandreou
Greenspan:"...chances of Greece not defaulting are very small"
"...a default by Greece is “almost certain” and could help drive the U.S. economy into recession. "
Germany touts 'voluntary' rollover on Greek government bonds
Article at the Financial Times by Quentin Peel in Berlin
The leaders of Germany and France have agreed that private creditors should participate in a new rescue programme for Greece by voluntarily agreeing to roll over their holdings of Greek government bonds.
Details of such an arrangement still have to be finalised by eurozone finance ministers, but the agreement in principle on a rollover – rather than a fully fledged bond exchange including longer maturities, favoured by Germany – was announced in Berlin on Friday by Angela Merkel, German chancellor, and President Nicolas Sarkozy of France.
It amounts to a retreat by the German government, in the face of fierce resistance by the European Central Bank, as well as the French government....Ms Merkel also stressed repeatedly that the deal should be “voluntary”, which has long been the official German position. However the financial market rating agencies have argued that a bond-exchange would contain clear elements of coercion, and therefore be classifiable as a default.
“The central principle is voluntary contribution,” she said. “That is an important message to the banks. There are concerns that we want to trigger a credit event. We do not want that. We cannot run such a risk.”
What if Greece decides to not be 'rescued'? Alen Mattich at the Wall Street Journal
If Greece goes, who's next?
Article at the Sydney Morning Herald by Michael Pascoe with a not-too hidden, and hopeless, contempt:
"Greece itself remains an insignificant, hopelessly corrupt and inefficient economy that shows no sign of changing any time soon.
...Including its bloated, overly-generous pension liabilities, the Greek government owes US$1.2 trillion ($1.14 trillion) – more than a quarter of a million dollars for every working Greek. No, it's not sustainable, there has to be a default, or a euphemistic “restructuring”. The bond market is already priced for it.
So why is there so much market excitement about an ending that is already known? Maybe the excitement is only in the parts of the market that hadn't read the synopsis before the play started.
The big fear, a fear that feeds upon itself, is that there could be a contagion effect. If Greece goes, then who's next. "
Pascoe quotes from the Michael Lewis October 2010 Vanity Fair magazine article on Greece for background.
Papandreou has "run out of road"
A defense of Papandreou from the editorial writers at the UK Guardian (the editorial is titled 'as petrol bombs fly' which underlines the menace western observers see in the massive Greek protests. Also, it sells better, presumptively, than any peaceful protest, which is day-to-day in modern Greece since the crisis began):
"That this meltdown should happen under the leadership of a decent man, a Swedish-style social democrat all too alive to the dangers of division and conflict, is perhaps the saddest accident of history. Mr Papandreou is no neoliberal. He does not light candles each night at the altar of the free market. He set out as a reformer of the very ills that contributed to this crisis, like the problems with tax collection and political patronage which successive governments failed to deal with. But things have now gone far beyond that. With unemployment at 16% and seven out of 10 pensioners living on €700 a month, any social pact is now in shreds. And Mr Papandreou is marooned on an island amid a shipwreck.
His is no longer the hand that can reach out to the "outraged" of Syntagma Square. If there was a peaceful insurrection in the central square of Athens, a few hundred yards away from the ancient agora where democracy was born, he would now be one of its targets. The man who tried to warn Greece about the dangers of corrupt political elites has become, in the eyes of his colleagues, a man of flip-flops, and in the eyes of the people he once felt comfortable among, one of the symbols of the elite.
...Even if he manages to stitch together a cabinet and win a vote of confidence from his party, Pasok, to force through a second austerity package to avoid default, prime minister George Papandreou has run out of road. "
For current news items, go to the home page
June 16, 2011
"Debt-laden Greece mired in anger and humiliation"
"The euro has proved a disaster for Greece."
Gavin Hewitt article at the BBC about the futility of the Greek protests as long as the eurozone/IMF bail out plan continues apace:
"The Greeks are being humiliated. Their frequent protests have an air of futility about them. Their fate is being decided elsewhere, by unelected officials from the EU or the IMF.
...The IMF and EU send in accountants and economists who occupy space in the finance ministry. When it comes to selling off state assets - intended to raise 50bn euros (£44bn; $72bn) - there is debate as to whether this should be overseen by a non-Greek body. It would have been the final humbling.
There were suggestions, too, that foreigners should run Greek tax collection. Those ideas may have been sidelined but the resentment has not gone away.
...The Greek Prime Minister, George Papandreou, flies off to meetings to learn the terms of his surrender. He had promised no more cuts, but in return for Greek Bail-out II he will have to take the axe to public sector jobs.
Further spending cuts of 6.4bn euros - that was the condition set by the EU and IMF in exchange for more aid.
State assets are being sold off. The crowds shout "we won't sell!" - but that's precisely what the government has been told to do.
...Default looms. Maybe not this year, but almost certainly in 2015. For European officials the hope is that by then the banks will be more resilient to take a hit. Certainly well-respected German economists don't expect to get their money back. "
Food products being purchased less
"Six in ten households reduced their consumption of beef, pork and fish, while 20% do not buy any meats "
Story at enet.gr (I saw this via the Living in Greece blog) about the big reductions in some food staples:
"According to the survey, consumers are looking for several products like the lowest price a fact 57% of households has reduced even the olive oil market, while 26% do not buy olives. For milk, cheese, pasta, fruit, bread, rice, ie food commodities, consumers are looking for similar products with lower price, turning more to private label products promoted by the major supermarket chains in order not to decrease the quantities purchased. It is worth noting that research conducted in the first months of implementation of the Memorandum.
The greatest reduction in the purchase of products recorded in Karditsa and Trikala follow, while less affected than those two cities Volos and Larissa."
June 15, 2011
Violence at protest effort outside Syntagma Square
eKathimerini on the protests which have made world-wide news reports:
"Following three weeks of peaceful protests in the capital, Athenians on Wednesday witnessed the familiar scene of demonstrators clashing with police in Syntagma Square amid a major security operation to stop those who wanted to prevent MPs from entering Parliament.
Some 4,000 police officers lined the central square and the streets around it in an attempt to thwart protesters’ plans to form a human chain around Parliament. The so-called Indignant, who have been peacefully occupying the area in front of the House every evening for the last three weeks, had wanted to prevent MPs from entering Parliament to discuss the medium-term fiscal plan, which introduces new austerity measures.
The protest coincided with a general strike and rallies by the private and public sector unions GSEE and ADEDY. It also appeared to give license to more extreme anti-establishment elements, who have been absent from protests for the last few weeks, to join the crowds. This led to scuffles outside of Parliament, where police had erected a mobile fence to obstruct demonstrators, and at other points in the city center, including near the Finance Ministry.
... People aligned with the peaceful Indignant movement attempted to stop both extreme right- and left-wing groups from disrupting the demonstrations. This led to fighting between those taking part in the protest. Some also threw missiles at the police. "
World media presented the protests as containing violence without explanations that the Kathimerini newspaper provided. For example the Christian Science Monitor"
"Wave of anger blankets Athens as Greece weighs new austerity measures
Tens of thousands of protesters crossed police lines as Greece's parliament prepared to vote on new austerity measures to avoid what could be a devastating default. "
The CSC on the future of Greece under present circumstances:
“...The best scenario is you don’t talk about restructuring and you do it quickly over a weekend,” says Sony Kapoor, director of “Re-define,” a Brussels think tank. “The worst is you talk about restructuring a lot and then do nothing. That’s sort of where we are. For Greece, today, it cannot honor its obligations. Most of the damage has already been inflicted.”
Greece holds some $400 billion in bond debt. Of this, $123 billion matures and must be paid off by 2014."
The outcome this week has been positive across the Atlantic: a stronger dollar and more people buying into US treasuries (See Wall Street Journal article). President Obama has recently pledged to help the effort to keep Greece above water (and the European banks all tied up in loans to Greece) but this has hardly met with encouragement in the United States press:
"Why Should the U.S. Bail Out Greece? Another rescue package will only reward profligate spending and prop up a corrupt government." (Wall Street Journal)
World markets feel turmoil over downgrade effects
Reuters on the turmoil around the world all hinged upon the situation in Greece:
"World stocks and the euro slumped on Wednesday as upheaval in highly indebted Greece and indecision among Europe's leaders about helping the nation fed fears the euro zone member is edging closer to default.
The euro tumbled 2 percent against the dollar and government debt of the United States and Germany rallied on a safety bid after euro zone finance ministers failed to agree on how to involve private investors in a second financial rescue for Greece.
...Greece is seeking 120 billion euros in fresh aid.
The onus has now shifted to the leaders of Germany and France to forge a deal later this week.
Prime Minister George Papandreou offered to quit and make way for a national unity government.."
The Economic Times on the growing predicament in Athens:
"Greek prospects darkened as European bickering risked delaying the next rescue payment and defections from allies weakened Prime Minister George Papandreou.
An emergency session of euro-area finance chiefs in Brussels on Tuesday failed to break a deadlock on how to enrol investors in a second bailout without triggering a default, casting doubt on funds due from the International Monetary Fund next month.
...Europe's financial leaders must hammer out a revised Greek package to persuade the IMF to pay its share of the 12 billion-euro ($17.3 billion) tranche originally due in June. The IMF had indicated that it would withhold its 3.3 billion-euro piece unless the EU comes up with a plan to close Greece's funding gap for 2012."
Greek credit downgrade has implications beyond Greece
Forbes blog post by Steve Shaefer on the auxiliary results of the S&P downgrade that hit Greece on June 13, 2011:
"Ratings agency have been aggressively lowering Greece’s credit ratings of late, and on Wednesday Moody’s Investors Services took the first step in signaling the potential next domino to fall, putting the ratings of three French banks on review for possible downgrade."
The S & P downgrade is speeding up the whole process of whether Papandreou can keep Greece on the IMF/eurozone path, or if the process has been so suffocated by pressures from inside Greece (and outside, too: European banks refusing to consider restructuring, for example) there's no place to go for the official participants except into an unknown future. "Over-control" may lead to "no control" quite soon."
As Shaefer mentions, French banks may be first, but they won't be the last.
June 14, 2011
"World's Lowest Rating" Greek Credit plummetsJune 13, 2011
S&P Knocks Greek Rating again "restructuring more likely than not"Are Greek banks being emptied?
Papandreou planning cabinet changes
eKathirmerini (English language side) on the Greek Prime Minister's plans to make alterations in early July, with focus on Finance Minister Giorgos Papaconstantinou, who will likely be replaced.
"In an interview with Sunday’s To Vima newspaper, Papandreou said he was open to the idea of bringing people with “wide appeal” into the government, suggesting that he may look to recruit ministers from outside of his party. "
The (Greek language) To Vima paper is here.
Greece’s financial meltdown sounds all too familiar to Russia’s experience in 1998 - Comparison
June 9, 2011
Who is holding Greek debt?Organized protests in Athens may yield call for elections
Wall Street Journal: Dissent increasing throughout Greece while Papandreou readies new push for further austerity implementations:
"Greek Prime Minister George Papandreou will seek cabinet approval Thursday for a new austerity crackdown, despite increasing popular resistance and signs of wavering support inside his own party.
The new spending cuts and a planned acceleration in the sale of state assets, which could cost thousands more jobs, were set by the European Union and International Monetary Fund as a condition for more aid.
The latest moves are turning up the heat on Greece's politics as Athens complies with conditions set for a second bailout, set to include banks voluntarily offering to extend the maturities on the Greek bonds they own.
The specter of political risk amplifies concerns voiced by the European Central Bank, which warned that rescheduling Greek debt is fraught with danger and could cause investor flight that would shake the European banking system.
..."Faced with the country's big financial difficulties and these protests on the streets, many Socialists may not follow the party line, and that risk grows with every day that goes by," said George Kyrtsos, political commentator and editor of the City Press newspaper. "At some point, the government is going to call early elections."
June 7, 2011
"Greek crisis is first and foremost about the German and French banks"
From Forbes ["The Next Financial Crisis Will Be Hellish And It’s On Its Way" by Addison Wiggin] comes a prediction of even more trouble behind the next wave of bailout money:
"The Greek crisis is first and foremost about the German and French banks that were foolish enough to lend money to Greece in the first place. What sort of derivative contracts tied to Greek debt are they sitting on? What worldwide mayhem would ensue if Greece didn’t pay back 100 centimes on the euro?
That’s a rhetorical question, since the balance sheets of European banks are even more opaque than American ones. Whatever the actual answer, it’s scary enough that the European Central Bank has refused to entertain any talk about the holders of Greek sovereign debt taking a haircut, even in the form of Greece stretching out its payments.
That was the preferred solution among German leaders. But it seems the ECB is about to get its way. Greece will likely get another bailout – 30 billion euros on top of the 110 billion euro bailout it got a year ago.
It will accomplish nothing. Going deeper into hock is never a good way to get out of debt. And at some point, this exercise in kicking the can has to stop. When it does, you get your next financial crisis. "
The United States President Obama, commenting on the Greek crisis, had this to say (Washington Post article by Howard Schneider and Scott Wilson):
"We think that America’s economic growth depends on a sensible resolution of this issue. We think it would be disastrous for us to see an uncontrolled spiral and default in Europe, because that could trigger a whole range of other events,” Obama said.
A Greek default could undermine the health of the banks and other institutions that hold the country’s bonds — including some of Europe’s most important financial institutions and the European Central Bank itself. "
Meanwhile, at Wall Street Journal: "private-sector debt rollover as part of an agreement to provide financing to Greece would likely be considered a default by Moody's Investors Service..." THis is a about-face fromt he June 2010 opinion of Moody's which said 'default chance was small'
June 6, 2011
Referendum on austerity becoming likely
MSNBC has an Associated press piece saying Papandreou may be turning to a referendum vote to settle the matter over whether to continue with the IMF/eurozone/ECB plan, or to force some alternative (like a return to the drachma):
"[Papandreou] says he would consider holding a referendum on austerity measures essential for the country to continue drawing on funds from an international bailout.
...The prime minister has been facing dissent from within his own governing Socialist party over extra austerity measures that need to be taken.
Last week, debt monitors from the EU and IMF said Greece should receive the next euro12 billion installment of the bailout in early July — as long as additional austerity and privatization measures are deemed sufficient. A final decision is to be taken by the IMF board and the eurogroup in meetings later this month.
But the extra austerity — which includes euro 6.4 billion worth of remedial measures for this year and a midterm program that will run from 2012-2015, two years beyond the current government's mandate — has disgruntled even members of the governing PASOK party, which has a majority of six in the 300 member Parliament.
Last week, 16 PASOK deputies signed a letter demanding an extensive debate on the measures before they are ratified, while one of the signatories threatened not to vote for the reforms otherwise.
...The ever increasing cutbacks have also led to a public backlash, with tens of thousands of Greeks flooding into the main squares of cities across the country in a protest fueled by appeals on social media and now in its second week.
Sunday, the 12th straight day of protests modeled on similar demonstrations held in Spain last month, saw the largest gatherings so far. More than 60,000 people jammed the capital's main Syntagma Square, according to police estimates, although protesters claimed the numbers were much higher. "
"Greece mustn't waste its second chance" - Reuters
Commentary piece by Hugo Dixon at Reuters:
"Greece mustn't waste its second chance. Athens looks like it will receive enough bailout cash to see it through to end-2013. But if it veers off track again, as is all too possible, any third chance might come with such extreme conditions that a messy default and a humiliating exit from the euro wouldn't be far away.
...although George Papandreou is likeable and honest, the Greek prime minister hasn't yet put in place a team able to wrestle effectively with a monstrously inefficient public sector. He needs to do this immediately.
... The next instalment, equivalent to 2.8 percent of GDP, will be crammed into the second half of this year. That's 5.6 percent of GDP on an annualised basis. Exports are already picking up as unit labour costs fall; and there are high hopes for tourism, partly because people are being diverted by the Arab Spring from North Africa to the Mediterranean's other coast for their holidays.
...The governor of the Greek central bank, George Provopoulos, recently said that the government should over-deliver on its promises. Papandreou should heed his advice. If he falls behind the curve again, history will damn him."
For current news items, go to the home page
June 3, 2011
New bailout package would run until 2014: and new taxes on the way
The financial picture for Greece is that it has a € 340 billion euro debt load, a privatization program that hasn't raised any funds, and no path back to selling more bonds when both Standard and Poors and Moodys have downgraded the Greek credit rating (Moody's just moved Greece to just above Ecuador and even with Cuba. (Moody had previously viewed a Greek restructuring unlikely)
With the European Union in fear about a default (and possible domino effect into other countries) the 'troika' of the IMF, ECB (European Central Bank) and the EU itself is prepping a new bailout package to replace the incompleted original plan from May 2010.
Reuters report:
"Greece is set to impose a deeper bout of austerity on its struggling economy and promise to speed up a privatisation drive in return for a new international bailout to avoid a debt default.
Prime Minister George Papandreou on Friday will present his side of the deal, a medium-term budget plan, when he meets the chairman of euro zone finance ministers -- the people who must stump up much of the planned new funding along with the IMF.
Senior euro zone officials meeting in Vienna agreed in principle to a new three-year programme for Greece to run until mid-2014, a source close to the negotiations said.
This would effectively supersede a 110 billion euro rescue Greece agreed with the European Union and IMF a year ago."
The UK Independent reports that the final decision lies with the investors already holding Greek debt:
"Greece's international lenders will pass judgement today on the country's austerity measures in an attempt to avert a sovereign debt default that is now said to be a 50:50 possibility.
The Greek government is also set to present new budget proposals to the chairman of eurozone finance ministers, including more than £5bn of extra tax rises and cuts as well as faster privatisation measures."
Financial Times on the deliberations which have taken more time than previously thought possible:
"Greece has come under pressure to accept international involvement in both tax collection and privatisation of state assets – areas where it has failed to meet EU-IMF targets – in return for €60bn-€70bn of fresh financing over the next two and a half years.
“There is no problem with having more IMF tax experts to help boost revenues, but there is an issue of sovereignty on the privatisation proposal that has to be settled at the political level,” said a Greek economist who has been following the negotiations."
Dissenting PASOK deputies are trying to pressure Papandreou for more time to debate the evolving austerity plan. From eKathimerini:
"The rifts within the ruling PASOK party, caused by the government’s handling of the debt crisis, were laid bare on Thursday when 16 Socialist deputies sent a letter to Prime Minister George Papandreou demanding that Parliament be given time to properly debate the new set of austerity measures Greece is about to agree with the troika.
Papandreou looks set to reveal the measures on Friday, when he will meet with Eurogroup chief Jean Claude-Juncker, but the Socialist deputies expressed concern about the midterm fiscal package and the government’s privatization plan not being subject to the usual democratic process."
But it doesn't look like that extra time will be forthcoming: the ekathimerini report says the vote will likely be put to the Greek parliament in such a way that the entire program must be voted up or down without debate on individual aspects.
View of the University of Athens, Greece: View Enlargement
June 2, 2011
Optimism evaporates: tough decisions ahead
Writer Howard Schneider at the Washington Post on the changing fortunes of Greece slipping further into a wrestling match with the IMF/eurozone:
"There is no secret about the tab coming due — Greece will need more than $40 billion over the next year or so to keep itself afloat and avoid what European officials consider their nightmare scenario, a default by one of the countries that use the euro.
But deciding who will pay has left European, International Monetary Fund and Greek officials locked in another round of crisis talks as they try to figure out a series of tough issues.
...In a presentation at the IMF last week, Mark Cliffe, chief economist for the ING Group, outlined the stakes if Greece were forced to leave the 17-member euro currency union. He projected a quick loss of about 10 percent of the country’s economic output and a broad shock to the financial system that would leave the rest of the euro area and the United States in a new recession.”
Moody's downgrades Greece to Caa
Moody's downgraded Greece's credit from B1 to Caa on Wednesday, and are basically saying the odds are 50/50 that Greece will default (see Bloomberg for the whole report). With Greek debt expected to hit 157% of GDP in 2011, they've got a point - - the EU is traveling into an area they've never been in before, and Greek resistance to increased austerity measures has been stiffening.
The IMF is saying they'll not let the next $4.5 billion still planned for Greece to even arrive unless additional budget cuts and asset sales occur. The IMF (which led off the bailout with an original stack of $40 billion in 2010) want current bondholders of Greek debt to absorb some of the pain, too. This is a tough sell when many who bought into newer Greek bonds based the decision upon the assurances that the IMF/eurozone bailout would travel all the way to the end of the proposed $150 billion bailout plan.
With pressure on Greece to allow international involvement in tax collection and asset sales, the opposition forces in the Greek political body have fresh ammunition to combat Papandreou who is supposed to somehow keep the whole master-plan together, even though very little seems to be working out they way it was intended by all the powers involved.
The eKathimerini news site has been long on the side of straightening out Greece's fortunes with whatever international help was necessary, and their writer Alexis Papachelas asked some obvious questions in a recent commentary:
"Greece is sinking because its politicians demolished the state so that they could govern as they willed and with impunity, together with the labor union leaders, party officials and entangled businessmen. It suited them that tax offices didn’t work because that allowed them to erase fines, order audits and enjoy a perfect relationship with the deep party- and union-driven state.
The absence of structure and professionalism shielded all the shenanigans and jobberies. So, who and what exactly is threatened by the arrival of technocrats from abroad whose task will be to help rebuild these state services? What large and small interests are so concerned about our sovereignty? Or do they want to keep doing business as they always had done in the future as well?"
In June 2010, Moody had previously viewed a Greek restructuring unlikely.
Meanwhile, Globe and Mail "EU kicking Greece while it’s down"
Writer Eric Reguly is basically saying the Europeans are too frightened to restructure on Greek debt. Obviously, this may end up with them getting exactly what they didn't want and with terms they cannot control (UK Globe and Mail news site):
"While the budget deficit is coming down a bit, the national debt load is rising relentlessly and will reach an astounding 150 per cent, or more, of gross domestic product this year. (Germany’s will be about 80 per cent, Spain’s even less.) Greece is still in deep recession – Deutsche Bank predicts a 2.9 per cent contraction this year – and everything from household consumption to industrial production is on the wane. With Greece unable to devalue its currency and business confidence shattered, the export-led recovery and private investment boom that was supposed to drag the country out of the economic quicksand has been a non-starter.
The jobs picture is dire. The Organization for Economic Co-operation and Development predicted that the unemployment rate would reach 12.1 per cent in 2010. It was off by a wide margin. The official Hellenic Statistical Authority put the figure at 14.2 per cent in the last quarter of 2010...
...What Greece needs is big, fat debt reduction. But the ECB, Germany and other countries that are footing the Greek bill refuse to consider a debt restructuring, for fear that it would trigger a fresh banking crisis with attendant financial and economic horrors. A variation on the theme would be the extension of debt maturities and lower interest rates."
"Military coup possible" in Greece if government collapses
It sounds crazy, but familiar: from the Turkish Hurriyet English daily:
"The U.S. Central Intelligence Agency warned in a report that the tough austerity measures and the dire situation could escalate and even lead to a military coup, according to a report by Germany’s popular daily Bild.
According to the CIA report, ongoing street protests in crisis-hit Greece could turn into escalated violence and a rebellion and the Greek government could lose control, said Bild. The newspaper said the CIA report talks of a possible military coup if the situation becomes more serious and uncontrolled."
With the traditions that have grown up around the rule of the military junta of 1967-1974, it is hard to not imagine a great deal of bloodshed following a military coup in Greece, as memories of the distaste for that era would be reignited. But, it is worth remembering that in the early days of the colonels there was popular support from sections of Greek society who saw the 1967 coup d'etat as a reaction to government corruption, not as a annulment of democracy (that clarity came later!)
May 31, 2011
Optimism on Greek bailout sends dollar down and euro up
The gloomy predictions of earlier last week have given way to happier ideas about the euro and Greece, the health of each now tied together even more than before in the minds of financial traders, stock buyers and experts. Reuters report at New York Times:
"Europe stepped up efforts to draft a second bailout package for Greece, with private sector participation still an option to help relieve the country of its huge debt burden.
Rising expectations of a second aid package for Greece sent crude oil 1.9 percent to $102.48 a barrel in the United States. Exxon Mobil added 1 percent to $83.49, and Chevron gained 1.7 percent to $104.95.
The firming of the euro supported metals prices, with copper rising to a four-week high. The mining company Freeport-McMoRan Copper & Gold rose as much as 1.7 percent to $52.63.
“The news out of Europe is propelling the market higher in pretrading, following the rest of the global markets. News regarding a Greece bailout is basically fueling the optimism,” said Peter Cardillo, chief market economist at Avalon Partners in New York.
“It is causing the dollar to go back down, strengthening the euro, so that is inviting risk back into the marketplace.”
For a consideration of what it means with the dollar versus Greek bailout, look at this brief report at CMXForex: "The Aegean nation is perfectly capable of fully honoring its debt and will not need to restructure it, according to George Provopoulos, member of the European Central Bank Governing Council."
Crime rise casting "long shadow over Athens"
Writer Anthee Carassava at the Los Angeles Times reports on the explosion of crime in Athens coinciding with the financial implosion in the Greek economy:
"Armed robberies were at historic lows in the capital in 2007, but the figure had more than doubled in 2009, the onset of the financial crisis, according to police data. Thefts and break-ins jumped from 26,872 recorded cases in 2007 to 47,607 two years later; homicides likewise nearly doubled in the period.
Final statistics for 2010 are not yet available, but news reports and anecdotal evidence suggest that violent crime is gaining dangerous momentum.
"Greek society as a whole is at a breaking point," criminologist Angelos Tsigris said. "Things are going from bad to worse, and crime, which mirrors the state of a society at a given time and moment, will naturally follow that course."
Athens, home to nearly half the country's population of 11 million, is reeling. Although still benefiting from European Union investment infrastructure and its Olympic glow — it hosted the 2004 Summer Games — the once-glamorous capital is fading into money-strapped dishevelment.
Rising tides of illegal immigration are adding to Athenians' sense of malaise. A fairly homogeneous society, Greece has seen its ethnic makeup change dramatically in the last decade. Immigrants, legal and not, now account for as much as 15% of the population, and most of the new arrivals have settled in Athens.
Residents fear the disorder and lawlessness gripping the capital will hamper desperately needed recovery or, worse, incite further violence, including police brutality and vigilantism.
"I'm losing my city," Athens Mayor Giorgos Kaminis said. "Something has to happen fast.
"It's starting to look like Beirut in the 1970s," he said, referring to a rash of killings in the Lebanese capital that preceded that country's civil war.
A recent wave of public-safety budget cuts hasn't helped.
"Only a third of the 500 motorcycles and police cars are in operation for patrols," said Makris, the police union president. "The rest are in the pits because there's no money to service them. From boots to bulletproof vests, police resources are ailing in Athens."
Privatization effort in transition while questions about "Troika" power lingers
This week an agreement is expected on on privatization (aka "The Medium Term Financial Strategy Framework") that will oversee the selling of various state assets and businesses to the private sector. With a € 12 billion euro installment hanging over the proceedings, it is a question of how much the Greek negotiators will give up in order to close the deal with the visiting IMF/eurozone officials now in Athens. Report on the english language side of eKathimerini newspaper online:
"The Greek government and the representatives of the European Commission, European Central Bank and the International Monetary Fund, collectively known as the troika, are nearing agreement on the details of the midterm fiscal plan and privatization program but several key stumbling blocks remain, sources told Kathimerini.
Among the issues still to be resolved is whether representatives of the troika will have seats on the independent committee that will oversee the sell-off of state assets and whether these places will come with veto powers."
Meanwhile, other people (Olli Rehn, the economic and monetary affairs commissioner in the European Union's executive Commission) are saying that Greece cannot possibly hit the € 50 billion euro privatization target set for 2011(At Reuters):
"We estimate that Greece cannot meaningfully privatize 50 billion euros worth of its assets in the course of the coming year, which represents more than 20 percent of its GDP..."
...He added that Greece had not made sufficient progress with its budget steps to allow it to return to the markets for financing in early 2012."
For current news items, go to the home page
The Acropolis in Athens, Greece. Source: Big Stock Photo
May 27, 2011
G8: "Greece must do more" "May not see latest bailout payment"
Writer Leigh Phillips at the EU Observer has a breakdown of the points made by the G8 leaders concerning the Greek financial crisis:
"... the leaders of the G8 countries put the Greek situation and the eurozone crisis under the microscope, according to the Japanese delegation, worried that the ongoing problems in Europe are hitting the world's economic recovery.
...Speaking to reporters at the meeting, EU Council President Herman van Rompuy said that Europe would "not let the euro fall".
"Regarding a possible restructuring of the Greek debt, we will do our utmost not to face a default, not to face a credit event," he said. "We will do everything we can to maintain financial stability of Eurozone."
"We trust Greece will take all necessary measures and all necessary reforms to reach the fiscal goals that have been decided upon," he continued.
...Without Washington's support, the IMF could not involve itself in a second rescue of Greece, a position that may be in doubt.
Already on Thursday, the chair of the eurogroup of nations, Jean-Claude Juncker, hinted that Greece may not see delivery of its latest tranche of bail-out cash if the latest review by inspectors of its budgeting does not deliver a passing grade."
The "Group of Eight" consists of: France, Germany, Italy, Japan, the United Kingdom,United States and Russia.
Pressures between IMF/eurozone demands (with threat of no more money) and Greek demands (and threat of default) has become a bluff game to see who is more serious.
This report by Niki Kitsantonis at the New York Times reflects the tensions:
"Prime Minister George Papandreou failed to find common ground with opposition leaders in individual meetings on Tuesday, and is hoping that the joint session, convened by President Karolos Papoulias, might achieve some kind of cross-party agreement on measures that are sure to be unpopular.
The aim is to convince officials of the European Union and International Monetary Fund that Greece has the political will to impose more tax hikes and spending cuts on a Greek public already weary after a year of belt-tightening.
...This week the Greek media has been dominated by speculation about snap elections or the possibility of a return to the drachma. The European Marine Affairs Commissioner Maria Damanaki, who is a Greek Socialist, added fuel to the fire when she suggested on Wednesday that talks are already taking place about Greece’s possible exit from the euro zone.
“The scenario of Greece distancing itself from the euro is on the table. We either agree with our creditors on a program of tough sacrifices that brings results, and assume the responsibilities for our past, or we return to the drachma,” she said. "
May 26, 2011
"Skeptics are saying that Greece, facing loans of more than 150 percent of gross domestic product, will eventually have to restructure its debt — paying back less than face value."
The New York Times assembled a group of seven experts to discuss the Greek financial future. The participants on the "Is there any hope for Greece?" panel were:
- The Euro Zone's Structural Problem by Simon Johnson
- Dump the Euro by Desmond Lachman
- Beyond Austerity Plans by Barry Eichengreen
- It's About Political Will by Edward Harrison
- How Banks Fueled the Crisis by Anat R. Admati
- Expect More Bailouts by Veronique de Rugy
- It Could Have Been Worse by Vanessa Rossi
As an example, here's what De Rugy said:
"The Greek debt crisis didn’t materialize overnight. It is the product of decades of mismanagement of the country’s finances, overspending, unrealistic promises to every possible interest group and an unwillingness to address issues before it was too late. Now Greece has to act to try to prevent being crushed by its mounting debt. What should Greece do?
Short of declaring bankruptcy, Greece should cut its spending and reform its entitlement programs.
In the 1980s, Ireland successfully restructured its debt by, among other things, devaluating its currency. This remedy is now being tossed about for Greece, but there are crucial differences.
First, even if Greece exited the euro zone, the Greek debt (public and private alike) would remain in euros. As the George Mason economist Garett Jones explains: “This was tried before in Asia in 1997. Devaluation when you owe money in a hard currency creates as many problems as it solves.”
Second, while there is little doubt that a weaker currency than the euro would be more appropriate for a relatively poor country like Greece, richer nations in Europe, like Germany, won’t accept such a move. They fear a bank run on other weakened countries like Portugal and Spain would follow. As a result, there are likely more bailouts in Greece’s future rather than a devaluation. The question, of course, is how long will the German people be willing to pay for the fiscally irresponsible behaviors of their neighbors.
Short of declaring bankruptcy, Greece should cut its spending and mainly reform its entitlement programs."
May 24, 2011
"International creditors ...will ultimately decide whether Greece becomes the first country in euro zone history to go bankrupt" - WSJ
An interesting consideration in this Wall Street Journal report by Alkman Granitsasis that a 'snap' election would result in a hung Greek parliament, split so evenly on what to do about the crisis that nothing could get decided or done, and the infighting going on now would only be amplified into complete paralysis. And then the article describes the current situation as Papandreou's government tries to shoulder both the demands of the various creditors pressuring Greece and also the Greek citizen demands, too: that description looks a lot like near paralysis already. With a slight majority hold in parliament, Papandreou can hammer through some of the demands he needs to convince Greece to accept (for example, more taxes and privatization), but all of this will surely lead to even bigger public protests, shut-downs and strikes.
"But by all accounts, the government is more deeply divided than ever over those new measures with at least one cabinet member suggesting that the government is close to exhausting its popular mandate. There are worries that when the measures go to parliament, not all of the Socialist deputies will show up to vote. The opposition New Democracy party, in a statement Tuesday, flatly rejected the latest government measures.
Once again, there are rumblings of early elections in the offing.
That would be an unmitigated disaster. According to most public opinion polls, elections now would lead to a hung parliament with neither of the two major parties—the Socialists or the center-right New Democracy party—able to form a majority government."
The difference between that possible result and the present conditions seems to be narrowing by the day.
Referendum on austerity plan coming?
Opposition among the political groups in Athens preventing any government-wide unity on following the austerity plan requirements (which seems to emphasize all major political parties must support the IMF/eurozone authored restructuring plan). THis may result in the most simple, but problematic, of solutions: making the average Greek citizen to vote on it:
"The Greek government is considering organizing a referendum on additional austerity measures after it failed to reach consensus with the opposition, local newspapers reported on Wednesday.
Opposition leaders rejected on Tuesday belt-tightening measures aimed at averting default as lenders piled pressure on Athens for action and for reaching a broad political consensus before considering any extra help."
The IMF/eurozone is only a quasi-democratic device. It serves to preserve stability, encourage growth, and to maintain the dominance of the deeply entrenched financial system that has pervaded europe since the second world war. To stay in the EU, Greece needs the IMF/eurozone plan; but to keep a flotilla of ECB banks from waking up to a mountain of worthless bond paper, the IMF/eurozone needs Greece. Squashed somewhere in between is the Greek citizen.
Boston Globe: "Consensus on debt plan eludes Greece"
Opposition among the political groups in Athens preventing any solidarity on following austerity plan requirements (which seems to emphasize all major political parties must support the IMF/eurozone authored restructuring plan):
"...Greece, which is struggling to meet the terms of a $154 billion bailout and could require more help, needs all of its political parties to back the debt-cutting plans to ensure they can be implemented. They have not said outright that receiving the next installment of the bailout, due in June, depends on such agreement, but they have stressed the importance of opposition support.
...Antonis Samaras, head of the main opposition conservative party, earlier this month called for a renegotiation of the bailout deal. He argued the government’s overall direction in dealing with the crisis was wrong.
Samaras has in the past backed certain measures, such as privatizations, but said ever-increasing taxes serve only to push the country deeper into recession. He underlined his party’s proposal for reducing taxes to jump-start the economy.
“The government lacks the courage to restart the economy and is not considering a renegotiation. It is repeating the same mistake, and exceeding the limits of the Greek economy and of our people,’’ Samaras said."
Quote above via the USA Boston Globe.
Taxation seems to be a critical crossroads, since it is the implementing factor most likely to raise the revenue the IMF plan requires to succeed, but opposition experts claim it is the principal source of the pall cast over the Greek economy. Differences in economic philosophy is just the starting point of the fight over taxation, it is also an overlapping factor into most other spheres, because the taxation system has been radically overhauled to remove the last vestiges of Ottoman-style methods.
Lament for the Greek stereotype
Article by Nick Malkoutzis at eKathimerini about the ongoing evolution of the Greek stereotype in Europe, particularly with the Germans:
"Greeks who work hard, who spend wisely, who abide by the law and who pay their taxes -- yes, such people do exist -- have had to endure months of generalizations and stereotyping. They have had to develop thick skins as a growing number of comments indiscriminately refer to all Greeks as feckless, lazy and corrupt. In some cases these epithets are deserved, but in many cases they are a complete distortion of reality, bordering on racism.
The image of the undisciplined Greek loafer who fritters away the day doing nothing is proving useful for a number of European politicians, not just Merkel, but it is difficult to criticize them when the government in Athens is doing nothing to combat this image. If anything, it is allowing it to be cultivated -- perhaps because Greece’s politicians feel that this way they have an alibi when they are unable to meet the targets set by the EU and the IMF. It is easier to blame economic and political shortcomings on social inadequacies or cultural traits rather than accept your own failure.
If the last year has taught us anything, it is that millions of Greeks, who want to be part of a modern, efficient country and a progressive EU, are trapped. "
View of the Odeon of Herodes Atticus amphitheater on the southern slop of the Acropolis View Enlargement
May 12, 2011
Inflation in Greece - May 2011 Chart and Statistics via ElstatWages falling in Greece at up to 15% in 2011
Enet.gr has a breakdown of wage erosion in Greece under the debt crisis and IMF/eurozone austerity arrangements. For example, an incredible wage drop of nearly 35% is estimated for hotel wokers within the article, along with a declaration of a 15.7% unemployment rate overall.
"In real terms (i.e., taking into account inflation), the average gross wage in the whole economy fell by 9.3% in 2010 (against an increase of 3.3% in 2009) and is expected to further reduce by 5% - 5.8% in 2011. Overall, that is, over 15%.
The average gross nominal earnings in 2010 decreased by 2.9% in non-bank private sector (compared with an increase of 2.8% in 2009), by 1.8% on banks (compared with an increase of 3.7% in 2009) and 5.5% in utilities (7.7% increase over 2009). In 2011 a further reduction of 1.7% in the non-bank private sector banks 3.3% and 6.2% in utilities. "
Drachma = Suicide
Writer Alexis Papachelas at Kathimerini:
"A country can’t just sit by doing nothing except reaching out to Europe every year or so for help, using its own bankruptcy as a lever.
On the other hand, we could always listen to those insane, dangerous and already bankrupt businesses that want Greece to return to the “good old drachma,” in which case we will become the first country in the world to opt for a spectacular suicide when everyone else was trying to save it."
May 11, 2011
General Strike underway across countryMay 9, 2011
"Technical Default" up ahead Standard and Poor's downgrade Greece further
New eurozone idea: Demand for Collateral
May 6, 2011
Is Greece planning a new drachma and an exit from the EU? "Dire consequences if Athens were to drop the euro"May 5, 2011
Civil servant work week going to full 40-hours
May 1, 2011
Sovereign default predictions again on the rise
For current news items, go to the home page
View of monastery at Meteora mountains in Thesselly View Enlargement
March 25, 2011
Independence Day in Greece 2011Theodore Colocontranes 1770-1843
For an interesting look at one part of the Greek war of independence from the Ottomans, read this brief biographical portrait about Greek rebel leader Theodore Colocontranes online.
Papaconstantinou "There is no class war in Greece"
Permanent bailout fund on the way for Europe - ESM European Stability Mechanism
March 24, 2011
Unemployment in Greece could go to 16.5% in 2011Anniversary of 1822 war of independence
President Karalos Papoulias statement addressing the anniversary of the war of independence from the Ottoman Empire:
"President of the Republic Karalos Papoulias called for the unity of Hellenism to overcome today's challenges and for Greece to succeed in overcoming the economic crisis, in a message to Greeks abroad issued on Tuesday for Friday's March 25 national holiday."
President Obama signs proclamation recognizing Greek Independence Day Anniversary
The statement of proclamation is available to be read at whitehouse.gov
Greek cooperation with the American effort in the Libyan / NATO fight
From the opinion piece by Nick Larigakis, President of the American Hellenic Institute:
"With respect to the revolt in Libya, Greece is aiding with the evacuation of Egyptians stranded at the Tunisian-Libyan border and has helped more than 13,000 Chinese nationals evacuate to Crete. Of significance to the United States, the Associated Press reported on March 3 that approximately 400 U.S. Marines arrived at the naval base at Souda Bay, Crete. They were joined the following day by two U.S. Navy amphibious assault ships, the USS Kearsarge and the USS Ponce. Together, the two ships carry 4,000 personnel, including 1,300 Marines. According to Greek news sources, the USS Kearsage is expected to lead the naval forces in case of military operations against Libya. "
Childhood obesity in Greece has ballooned alarmingly
From news article at Kathimerini (in Greek here) about research study by researchers at Harokopio University.
From a sample of 867,000 students from all over Greece tracked for a period of 13 years, four in ten children of primary school age are obese, An estimated half exercised very little or none at all. Some of the statistics:
- The percentage of overweight children in the last 13 years increased approximately 30% (19.5% in 1997 - 26% in 2009) in urban and rural areas.
- The percentage of obese children has increased more than 50% across the country (7.7% in 1997 - 11.8% in 2009) and is among the highest in Europe.
- The aerobic fitness of schoolchildren in the last decade has fallen more than 5%. (This reductionof 5% increases the risk of developing cardiovascular disease by 150%).
- Rise in obesity is directly linked to lack of exercise and poor diet. As seen from the survey many children in Greece fall into severe sedentary habits even before entering puberty.
- Only 45% of the children played outside the house, defined as even a minimal amount of activity (this was linked to 90% being active at watching television each day during the week.)
- Only 72% of boys and 56% of girls meet international recommendations for physical activity, whichis 60 minutes daily.
March 21, 2011
Greece participating in efforts to combat Qaddafi regime
Despite a sometimes closer association with Qaddafi in the past (specifically Greece under Andreas Papandreou who allowed Libyan agents in the 1980s to hunt for anti-Qaddafi Libyan dissidents in Athens) that cooperation is has entirely changed (source: Expatica.com):
"Greece will open its airspace to warplanes operating from the French aircraft carrier Charles de Gaulle, enabling them to join the international campaign in Libya, a Greek military source said Tuesday.
The French carrier is expected at the island of Crete by Wednesday and will position itself in international waters, the general staff source told AFP.
"Greece will give the green light to French fighters operating from the aircraft carrier on this date," the source said.
The island of Crete is a strategic springboard for operations in Libya."
76% Drop in profitability declared by Alpha Bank
The number-three lending institution in Greece, Alpha Bank has declared a 76% drop in profits, indicators of the recession level that has truncated the Greek economy since the beginning of the economic crisis (source: Reuters):
"Alpha Bank (ACBr.AT), Greece's third-biggest lender, is expected to report a 76 percent drop in full-year 2010 net profit, as a deep recession at home curbed loan growth and led to higher loan-loss provisions."
Portugal debt crisis may bring government collapse
Often lumped in with Greece (along with Ireland), Portugal's debt crisis is on the verge of bringing down the current standing government under Prime Minister Jose Socrates Carvalho Pinto de Sousa, who is facing a wall of opposition from all of Portugal's political groups for trying to implement austerity measures in order to avoid a eurozone, Greece-style bailout. See yahoo news for more info.
Privatization program will yield income this summer, says Papaconstantinou
Report by Costas Paris and Alkman Granitsas at the Dow Jone News Service on the privatizing of various public businesses in Greece:
"Greece hopes to raise its first revenue from its ambitious EUR50 billion privatization program by this summer, Finance Minister George Papaconstantinou said Tuesday, and will announce the appointment of its first advisors as early as Wednesday.
"We may have the first income from privatizations in the summer," Papaconstantinou said, adding that the first phase of the program calls for EUR15 billion from privatizations in the next three years...
He said that by the last quarter of the year, Greece will have appointed all of its outside advisors for its privatization program.
...Among the first moves to be considered by the government's privatization committee Wednesday, are steps to privatize the national lottery; extend the privately-managed concession for the Athens International Airport; and sell-off the government's stake in Greece's natural gas monopoly DEPA.
Over the next three years, the government is also aiming to privatize a range of assets from the national railroad company, to regional airports and water companies, as well as better exploiting its vast land holdings--which has an estimated value of close to EUR300 billion."
March 20, 2011
Historical image: The Corinth Canal 1974
Note the large Phoenix and Soldier emblem on the Corinth Bridge: The Colonels who seized power in 1967 used the image (which dates to 1822 as an emblem of Greece, though sans the soldier silhouette) extensively during their 6 year reign. Click to view a larger version of the photograph
Sunset over Corfu View Enlargement
March 9, 2011
Unemployment goes to 14.8%; predictions of 20% raisedHunger Strike Ends for Illegal Immigrant Group in Athens
New page about the Greek statistical authorities ELSTAT and GSS online here.
March 8, 2011
"Banks that brought down Greece"March 7, 2011
Greece credit rating gets downgraded by MoodysTalk of default / Drachma rebirth heats back upFebruary 22, 2011
The "I won't pay" movement in Greece
MSNBC report from AP reporter Elena Becatoros about the efforts of a variety of Greek professionals and workers trying to derail the official Greek government austerity measures by simply not requiring payment for services:
"They blockade highway toll booths to give drivers free passage. They cover subway ticket machines with plastic bags so commuters can't pay. Even doctors are joining in, preventing patients from paying fees at state hospitals. Some call it civil disobedience. Others a freeloading spirit. Either way, Greece's "I Won't Pay" movement has sparked heated debate in a nation reeling from a debt crisis that's forced the government to take drastic austerity measures — including higher taxes, wage and pension cuts, and price spikes in public services. "
January 18, 2011
Lawlessness and the road to bankruptcy
On the subject of defying the economic order, Alexis Papachelas at Kathimerini on "Dealing with Lawlessness:"
"...In the case of tollbooth jumping, for example, there are groups of citizens who are right to protest additional tolls without secondary roads and without signs of progress in the construction and maintenance of the national highway network. But if they take their protests too far and too many others join in without real cause, Greece will find itself in a position where it will no longer be able to borrow for large-scale infrastructure projects. And, whether we like it or not, state money simply won’t exist anymore. If we adopt the stance of the left-wing parties, who urge citizens not to pay their telephone and electricity bills, to drive through tollbooths and to skip bank loan payments, the road to bankruptcy will become steep and short. "
What follows bankruptcy would be a handful of options, mostly unpleasant if not potentially bloody. The outside view of the Greek conundrum is that the Hellenic society simply refuses to pay for what it uses, or is so paralyzed by internal debate it cannot muster the strength to face the accumulated obligation. Through the mechanism of debt deferment, Greek governments have created such a massive amount of public spending there's hardly any way out from under it except by slashing public services and payrolls, and then also increasing the cost on everything else to bring in more revenue.
But on the inside of Greece is a debate on whether the situation can be handled by other means: going back to the Drachma (which is the least favorite option, almost guaranteeing a slide back toward third world economics); or by a massive taxation of private wealth (a point already long noted since the crisis began, hence the capitol that's left for non-Greek banks); and finally through a revolutionary reordering of society along whichever political entity can grab enough power. All of these solutions seemed to be determined to thumb a nose at the IMF/eurozone bailout structure which would collapse immediately, effectively sealing Greece off from outside financial help for an unknown period of time.
Many countries have successfully negotiated their way through sovereign debt default (Brazil) or have failed at it so badly (Argentina) they remain in a financial quarantine for the for seeable future. How many more options could Greece have?
View of The outdoor theatre Odeon of Herodes at the Parthenon, the Acropolis, Athens Greece View Enlargement
January 13, 2011
Greek Unemployment Hits 13.5%
The Financial Times carries the story by Dimitris Kontogiannis reporting on the historic high of recorded unemployment in Greece, and for the percentage of unemployed to rise further toward a peak 15% rate expected in 2012:
"In a sign that the recession in Greece is taking its toll, unemployment surged to a multi-year high in October and is forecast to go higher this year, raising fears that it could fuel social tensions.
More than 56.000 people joined the ranks of the unemployed in October compared to a month earlier, an increase of about 193,000 on October 2009. This took the unemployment rate to 13.5 per cent, from 12.6 per cent in September, according to the Hellenic Statistics Authority.
...The 12.2 per cent average unemployment rate forecast for 2010 is expected to rise to 14.3 per cent in 2011, before peaking at 15 per cent in 2012, according to the updated memorandum agreed to with the EC, the ECB and the IMF.
The economy is expected to contract by 3 per cent in 2011 for an unprecedented third year in a row from an estimated 4.2 per cent in 2010. "
The Financial Times article covers a lot more ground, speculating on what parts of the unemployment figures reflect actual job losses and what part is the result of restructuring to eliminate duplication and various inefficiencies in the Greek Public Sector.
Greece planning to leave bond market alone in 2011
Wall Street Journal has the story that senior Greek officials are saying that the high interest on bond sales means Greece will shy away from any further attempt to put government bonds on the market:
"Facing prohibitively high borrowing costs, Greece is highly unlikely to tap the bond market this year, two senior government officials said Thursday, unless the European Union takes convincing steps to stem the debt crisis engulfing the euro zone.
...Earlier this month, the spread between 10-year Greek government bonds and their benchmark German counterparts--a measure of credit risk--reached a record high, with the yield on the 10-year Greek bond rising to 12.55%, compared with 2.82% for the 10-year bund.
...Earlier this week, Finance Minister George Papaconstantinou blamed the ongoing turbulence in European bond markets for Greece's still-high spreads, saying they reflected broader unease about the euro zone as a whole rather than just Greece.
Speaking in an interview, he said that "a major decision that will once and for all settle the issue of the sustainability of debt in the euro zone" would be reached by European leaders in the next two months. "
Greek Public Transportation System facing major overhaul
Kathimerini reports on the new plans being made in the Papandreou government for changing the money-draining public transportation system in Greece:
"Hundreds of employees are to be transferred, ticket prices will be increased and strict spending guidelines will be introduced, according to a plan for the overhaul of the public transport system approved by the Cabinet yesterday.
Urban transportation companies in Athens, which are all publicly owned, lose a total of about 600 million euros a year and are seen as a huge drain on state funds at a time when the government is trying to slash the budget deficit."
Greece and Israel joining forces for "disaster force"
The Jewish news Agency JTA reports that Greek and Israeli officials are creating an anti-disaster response plan to deal with natural and man-made disasters:
"...Greece said it would organize the regional force and has invited the Palestinian Authority and other countries in the region such as Turkey, Egypt and Jordan to join the effort, the Israeli daily Haaretz reported. The force comes on the heels of the Carmel Forest fire in northern Israel last December; Greece was among the countries to assist in quelling the blaze.
...[Greece/Israel] reportedly also discussed the Exclusive Economic Zone with Cyprus and how Greece can participate in the Leviathan natural gas reserve."
The Leviathan discovery is considered one of the largest natural gas beds ever found, and could be worth upwards of $5 billion USD a year.
Credit Ratings Redux: USA facing possible downgrade
Wall Street Journal reports on the tough spot the United States Federal Government finances will be facing soon:
"Moody’s said the U.S., Germany, France and the U.K. still have debt metrics, including the debt affordability, compatible with their triple-A ratings at Moody’s. But all four countries must bring the future costs arising from pension and healthcare subsidies under control if they “are to maintain long-term stability in their debt burden credit metrics,” Moody’s said in its regular triple-A Sovereign Monitor report.
Moody’s noted that measures were recommended by the U.S. National Commission on Fiscal Responsibility and Reform, appointed by President Obama, to achieve a balanced primary budget by 2015, but that there was insufficient support to trigger consideration of those recommendations by the full Congress."
Unlike Greece within the EU, there's no federation of countries large enough to bail-out the United States, and the repercussions for the world financial system (which is doing everything it can to keep itself intact and unaltered) could be devastating.
January 10, 2011
Bad News: Greek Bond Yield Sets New Record
Canadian Business Online reports (via the AP) on the surge in costs for debt Greece is facing on latest bond sale:
"Greek bond yields hit another record high Monday amid a broader flare-up in Europe's debt crisis and despite better than expected deficit reduction figures.
The 10-year bond yield exceeded the equivalent German yield by 10 percentage points for the first time, only a day before a $1.96 billion auction of six-month treasury bills — considered an important test of market sentiment.
Greece has launched a major effort to cut borrowing costs in exchange for bailout loans worth €110 billion from the IMF and other countries using the euro. The government says it wants to return to long-term bond markets sometime this year.
But the interest gap, or spread, on 10-year bonds compared with the German issue reached a worrying 1,001.1 basis points amid renewed worries about some EU nations' fight to handle heavy debt loads."
Qualified Good News: Greece’s 2010 Deficit Shrinks 36.5%
A report at Bloomberg by Marcus Bensasson on Greece exceeding the target for spending reductions for the 2010 year:
" Greece’s central budget deficit contracted more than expected in 2010 as spending cuts made up for a shortfall in revenue growth, according to preliminary data released by the Finance Ministry.
The gap, which doesn’t include spending by state-owned institutions and companies, shrank 36.5 percent to 19.6 billion euros ($25.3 billion) from 30.8 billion euros in 2009, the ministry said in an e-mailed statement today from Athens. The contraction beat a goal to cut the deficit by 33.2 percent, the ministry said. "
"Euro is Dead"
People are still using the currency everyday. of course (China, for example has $2.65 trillion - $3.4 trillion USD - of foreign exchange reserves in the euro), but Washington Post Foreign Policy has an article in which Charles Calomiris claims "The Euro is Dead," and then recommends how it could survive when certain member states (Greece, Ireland, Portugal) are forced to exit:
"European leaders tell us that this is impossible. There is no legal mechanism, they say, for exiting the euro. But the collapse of the euro is simple arithmetic: Once a country's debt-to-GDP ratio gets high enough, it becomes impossible for it to generate enough future taxes to repay its existing debt and interest costs. This week, Portugal became the latest country to threaten the integrity of the eurozone when it saw the yield on its Treasury bills soar, based on investors' fears that it would be unable to pay its debt.
The only way out of this conundrum is for countries with insurmountable debt burdens to default on their euro-denominated debts and exit the eurozone so that they can finance their continuing fiscal deficits by printing their own currency.
... Greece is at the top of that list. The country will soon have a sovereign debt-to GDP ratio of more than 150 percent and an economy that contracted approximately 4 percent in the past year. It has long suffered from the worst corruption and largest shadow economy in Europe, while also possessing some of the lowest labor participation rates, most generous pension systems, and highest consumption rates among its European peers. It is true that the Greeks have made heroic efforts in the past six months to cut spending and raise taxes, but it won't be enough to reverse the explosive costs of covering its debts. And yet, the story goes, Greece will somehow repay what it owes. "
Related: Interview at Kathimerini with EU Commissioner Olli Rehn who discusses the relationship between Greece and the EU while the restructuring is occurring, and how it started "You were living beyond your means."
Educated Young Greeks leaving
The blog Living in Greece had a link to this article at the Qatar Peninsular about educated young people of Greece (and other mediterranean countries) searching abroad for jobs as their home countries continue to economically contract.
"In Spain, Portugal, Italy and Greece, the overeducated but underemployed young are a worrying new demographic. Many live with their parents, unable to afford their own accommodation. Their dilemma is whether to stay in the bosom of their family, with the risk of a miserable future, or strike out in search of a better life elsewhere.
...Experts warn that the brain drain could have disastrous consequences: intelligent young professionals are what countries will need to emerge from the crisis with bright prospects."
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January 4, 2011
Wall to block illegal immigrants going up on Greece/Turkey Border
UK Daily Mail on the wall being put up to stop illegal immigration from the Turkey side of the border:
"The Greek government has unveiled plans to construct a wall along its 128-mile land border with Turkey in order to tackle the influx of illegal immigrants.
Interior minister Christian Papoutsis said the wall was a necessary measure after more than 100,000 people illegally entered the Mediterranean nation last year.
But the plans - which have compared with the 650-mile barrier along sections of the border between the U.S. and Mexico - have been criticised by the European Commission as a 'short-term measure' that does not deal with the root of the problem."
Kathimerini on the fence:
" In a statement on his website, Papoutsis yesterday clarified that the fence he is proposing would be erected along the 12.5-kilometer section of Greece’s land border with Turkey that does not run along the Evros River. Papoutsis insisted that the government is “extremely sensitive to the human rights of migrants.” But he added that the government’s “ultimate duty is to protect the rights of Greek citizens and those living legally in Greece.”
Sources at the ministry yesterday heralded the immediate launch of feasibility studies for the fence which is to be made of reinforced barbed wire set in a concrete base."
CNN Online news also has more about the reactions in Europe about the prospect of a fence going up that might stop legitimate asylum seekers.
Closed Greek professional trades to be opened
Kathimerini story on opening up Greek professions:
"A law to open up dozens of closed professions will be passed through Parliament by the end of this months, according to plans agreed on yesterday by Prime Minister George Papandreou and members of his Cabinet.
...Papandreou emphasized to his ministers that in the current climate, when pensions are being cut and jobs are being lost, some professions cannot justify maintaining unrealistic privileges and barriers to entry that have the end result of pushing up prices for consumers.
Greece, as well as the EU and the IMF, hope that the opening up of more than 100 closed professions will bring prices down, make the economy more competitive and stimulate growth."
On the short list of demands from the IMF/eurozone (particularly the European Central banks) is the end of Greek union domination over so many key professions in Greece. Greek unions are of course fighting this every inch of the way, as lucrative and protected industries are being forced into competition and the inevitable price adjustments that would follow. The benefit for average Greeks is the reduction in costs for many services and goods, and a (theoretical) improvement in choices for consumers.
For more overview on this, see the Wall Street Journal interview with European Central Bank board member Jurgen Stark from December 2010.
Turkey negotiating return of Greek, Christian and Jewish properties
The Athens News on the labors of the Turkish government under pressure for EU candidacy:
"Turkey for decades has ignored demands of the Patriarchate due to mistrust stemming from rivalry with Greece. But deputy Prime Minister Bulent Arinc's visit coincided with government promises to consider reopening a seminary that trained generations of Ecumenical Patriarchs and returning properties confiscated by the state to Christian and Jewish minority foundations.
Turkey, a predominantly Muslim country, is striving to join the European Union, but faces criticism that it discriminates against non-Muslim citizens and Alevis, a Muslim minority sect. "
Some over view of the dilemma facing Turkey about past actions against Greek, Jewish and other minority groups, see wikipedia. Also see the Hagia Sophia subject for an even broader view.
December 31, 2010
Bomb blasts in Ambelokipi, and Athens night club
Kathimerini on the bombing which took place at an Athens area court building:
"The bomb exploded at 8.20 a.m. after anonymous warnings were telephoned in to the private television channel Alter and the Eleftherotypia daily. In each case, the caller said that a bomb strapped to a motorcycle would explode outside the Athens Court of First Instance in 40 minutes and gave details of the bike’s registration number. The media organizations briefed the police, who evacuated the court building and cordoned off the area.
The blast damaged at least 10 parked cars and the facade of the court building as well as blowing the windows out of nearby apartment blocks.
...Visiting the scene of the blast, Justice Minister Haris Kastanidis said authorities “would not be intimidated by terrorist acts.” Government spokes-man Giorgos Petalotis stated that authorities “strongly condemn any action that, without moral or popular legitimacy, attempts to undermine our democracy and terrorize its citizens."
The bombing follows a recent series of letter bomb attacks against foreign embassy's in Athens, and also a molotov firebombing at the Greek Embassy in Buenos Aires which took place within hours of the Ambelokipi attack.
Bombing at Athens night club
The Australia Herald Sun on the bombing trend in Athens ahead of terrorist trials for anarchists:
"There is a dangerous under-current as there are various groups in Europe who are opposed to democracy and who express solidarity when their respective members are jailed," said political scientist Mairi Bossi.
Police in Greece insist there is no solid evidence showing actual cooperation between the Greek and Italian groups, though the issue has been raised during joint European police meetings.
..."We see a mobilisation by extremist groups in view of this trial," police spokesman Thanassis Kokkalakis said. Over a dozen suspects will be tried on January 17 for alleged involvement in Conspiracy of Fire Nuclei, a radical anarchist group that in November sent 14 parcel bombs to embassies in Athens and European government leaders.
Last week, a similar bombing campaign in Rome injured two people at the embassies of Switzerland and Chile and also targeted the Greek embassy."
Public sector government staffing to shrink by a third
An unprecedented staffing reduction is due to take place throughout the Greek public sector. Story at Kathimerini:
" The civil service will be reduced by about a third over the months to come, according to the government’s plans for streamlining the public sector as part of its efforts to cut spending, sources told Sunday’s Kathimerini.
The government has already conducted a census of civil servants and Interior Minister Yiannis Ragousis has asked each department to evaluate its personnel but the merger of various bodies and the transfer of staff is expected to have an immediate impact on the size of the public sector. Ultimately, staff numbers will drop by 30 percent, the government believes."
Greek majority against leaving euro
A series of public opinion polls conducted by the Kapa Research Firm had results published at the Athens News:
"...58.2 percent of respondents agreed with the statement that Greece has avoided bankruptcy, with 33.5 percent opting for the opposite opinion. Finally, 60.3 percent of respondents are against Greece's exit from the EU and 61 percent are against a possible return to the drachma. "
[Note, simultaneous with the closing down of the Athens Plus publishing venture, the perennial English-language newspaper Athens News has recently overhauled its web site introducing a much better-looking, and easier to use interface.]
December 9, 2010
IMF may add 4.5 years to repayment schedule: new loan "not needed"English language Athens Plus shutting down
December 2, 2010
Loan extensions may help Greek interest rates on debtGreece and Israel increase ties
U.S. Federal Reserve sent $3.300bn to European banks
December 1, 2010
The challenge for Greece to meet bailout goals
Vigilante attacks on non-Greeks increasing
Public Sector: "Domain of incompetence"
Violence in Europe over spreading economic problems
November 26, 2010
Wages and Bonuses to be tracked in central database
Comparison: The Irish and Greek financial meltdowns
November 19, 2010
New cuts coming for Greece: 5 billion euros targeted for 2011
View of Blue Grotto caves at Marathonisi, Greece: View Enlargement
November 16, 2010
Greece to hit 144% of GDP: blames Germans for intensifying interest on debt
Wall Street Journal on Papandreau 'lashing out' at the German positions:
"Greece's prime minister lashed out Monday at Germany—its chief euro-zone benefactor—for tough talk on government-debt defaults, making clear the widening strains inside the 16-member euro-zone as the currency bloc wrestles with a teeming sovereign-debt crisis.
Greek Prime Minister George Papandreou said the spiral of higher interest rates could 'force economies toward bankruptcy.'
Addressing reporters in Paris, George Papandreou said the Germans' view—long-held, but recently reiterated—that private bondholders could suffer losses as part of a future bailout was intensifying government-debt woes.
The German position "created a spiral of higher interest rates for countries that seemed to be in a difficult position, such as Ireland or Portugal," Mr. Papandreou said. He added that the spiral could "break backs" and "force economies toward bankruptcy.
...Greece said Monday it would miss a target to reduce its government deficit to 8.1% of gross domestic product this year, which was set after Greece took a €110 billion ($150 billion) bailout from euro-zone countries and the International Monetary Fund. (Germany put up €22 billion of that total.)
As recently as last month, Greece said it would beat its target and report a deficit of 7.8%. Instead, it now says the deficit is likely to be 9.4% this year, and that government debt would total 144% of GDP at the end of 2010.
Citigroup economist Giada Giani said Greece's debt could reach 165% of GDP in 2013. At the time of the bailout, Greece agreed that its 2010 debt would be 133%, rising to 150% in 2013."
New Austerity Cuts
Kathimerini has a brief on the new austery plan cuts to be made public on Thursday
The government is about to announce new austerity measures totaling about 13 billion euros for next year, following the meeting that Greece’s creditors had with Finance Minister Giorgos Papaconstantinou yesterday in Athens.
The measures will become public on Thursday, when the government tables the 2011 budget in Parliament, but their format has not yet been completed, according to sources.
...The target for an additional 13 billion euros for 2011 is based on Athens attaining the 9.4 percent budget deficit that Eurostat expects for 2010, though with a 2-billion-euro lag in state revenues in the first 10 months of the year this appears rather unlikely. The deficit at the end of the year may well exceed 10 percent, calling for even more additional revenues in 2011. Papaconstantinou will update his European counterparts today and tomorrow at the Eurogroup and Ecofin meetings.
November 15, 2010
Greece admits breach of bailout rules
Agence France-Presse via the Google news site:
"Greece admitted on Monday that it is in breach of conditions for a new instalment of its 110-billion-euro bailout as the IMF and European Union begin an audit of its austerity cuts.
The EU's statistical agency Eurostat issued its final revision of Greece's accounts for the past four years, triggering a new forecast by Athens that its public deficit this year would reach 9.4 percent of output, breaching a 8.1-percent target.
...The Greek economy shrank by 4.5 percent in the last 12 months, official data showed on Friday. Gross domestic product contracted by 1.1 percent in the third quarter.
...However Papandreou's government won a solid endorsement from voters in local elections over the weekend, which he had explicitly turned into a referendum on the austerity programme in its first test at the ballot box since the painful reforms began."
PASOK wins majorities in governorship races
Voter abstention estimated at 55%.
"PASOK looked set to win the majority of regional governorships following the second round of local elections yesterday, which proved memorable for the unexpected victory of independent candidate Giorgos Kaminis in the City of Athens and the extremely low turnout, as less than one in two Greeks cast their ballot.
With the majority of votes counted late last night, PASOK or PASOK-backed independent candidates led in six of the 11 newly created regions being contested."
Eurostat revises Greek 2010 deficit at 9.4%
Greece After The Fall
Though containing observations about the economic situation in Greece vis-a-vis after the crash, this is also a general travel article as the writer moves from Athens out to the islands. At forbes by Akhil Sharma:
"Has the near financial collapse changed the country?
...The goal of my trip was to memorialize what Greece to outsiders looked like; to me it seemed there were already enough experts. When I went for long walks in the neighborhood, what I saw over and over again was an ease, a relaxed attitude which might be sensible, but might also explain some of the problems that Greece is running into. Often I saw shop workers, young women in elegant jackets who stood outside their shops smoking while the occasional customer wandered around unattended inside. Athens was the first city on my trip and I didn't want to extrapolate too broadly. "
October 22, 2010
Greece and it's legendary powers of tax evasion - Vanity Fair article by Michael Lewis
August 18, 2010
West Nile outbreak kills 3, infects 47+
AFP News via the Google news site:
"Greece's health ministry said Tuesday it was stepping up the fight against West Nile virus which has killed three people since the beginning of the month.
Some 47 people were diagnosed with the virus on Monday including 11 new cases discovered over the weekend, according to a statement from the Centre for the Control and Prevention of Diseases (KEELPNO).
Of this total, 45 patients have been diagnosed with encephalitis -- an inflammation of the brain caused by the virus -- of whom three elderly patients, also suffering from unrelated diseases, died. According to KEELPO, seven of the 28 people hospitalised on Monday are in intensive care. "
Dimitrios Ioannidis has died
Netanyahu and Papandreou to meet
UPI News on the meeting between the Israeli premier and Papandreou:
"The two leaders spoke of enhancing cooperation between their countries on matters including security, tourism, agriculture and energy, The Jerusalem Post reported.
Natanyahu was scheduled to meet Tuesday with Greek Defense Minister Evangelos Venizelos on an Israeli ship that was purchased by Greece, the Post said.
"I know that many Israeli tourists will come to Greece," Netanyahu said following his talk with Papandreou. "It is a challenging, interesting and beautiful country. We spoke of the possibility of bringing hundreds of thousands of tourists from around the world for a joint visit to Athens and Jerusalem, two cornerstones of the western cultures."
More coverage of this meeting is on the English language side of Kathimerini newspaper site.
August 9, 2010
Another €2 billion in cuts coming
Kathimerini on coming round of government reductions:
"Although Greece has secured the next installment of the 110-billion euro emergency loan from the European Union and the International Monetary Fund (IMF), Kathimerini understands that the Finance Ministry is looking to cut another 2 billion euros from public spending to make up for a shortfall in revenues, as the head of the IMF mission in the country warns that the government cannot let up in its efforts to restore fiscal stability.
Officials from the European Central Bank, the European Commission and the IMF have warned the ministry that the government’s revenues are likely to be 2 billion euros lower than planned at the end of the year. Revenues would have to increase by more than 20 percent in the second half of the year for Greece to hit its targets.
...An EU-IMF team is due back in Greece in September to check on how the government is progressing with its deficit-slashing and structural reforms"
Greek cash deficit shrinks 32% in 7 months
George Georgiopoulos at Reuters with a brief that is to the point:
"...The Bank of Greece said the central government's cash deficit fell to 14.47 billion euros ($19.2 billion) from 21.47 billion in the same period a year earlier.
It said the budget's primary deficit, which excludes debt servicing costs, also narrowed to 5.23 billion euros from 12.34 billion in Jan-July 2009, based on provisional data."
Greece getting thumbs up from Orphanides
"Pessimism in Greece in misplaced " - Paul Thomsen
August 4, 2010
IMF / eurozone committee declares Greek efforts a success
Donkeys disappearing in Greece?
July 31, 2010
MIlitary delivering fuel, leapfrogging the trucking strikeJuly 30, 2010
'Corporatism' and the fight to open the Greek economy
Tax enforcement destroying the "shadow economy"
768,009 Workers On Public PayrollThe struggle to clean up Athens historic center area
Amnesty attacks Greek detention of migrant children
July 27, 2010
Poison medicine and Super BanksJewish Museum in Athens vandalized
July 26, 2010
Visiting delegation to investigate future of €110 billion bailout
July 20, 2010
Greek journalist Sokratis Giolias murdered by Rebel Sect
"Railroaded" Hellenic Railways hides $13 billion in debts
This week: Greece set to auction 13-week bonds to the amount of 1.5 billion euros - Reuters brief note
July 19, 2010
Some optimism amid the caution at Greek Bond AuctionJuly 16, 2010
13-week bills next for Greece on July 20Bank mergers on the horizon the coming wave of buyouts, sellouts and mergers in the banking sphere:
July 15, 2010
July 13th Bond Auction a successStrikes on July 15 bring air traffic to a stop
July 14, 2010
Greece is a "Basket Case:" But a great place for brass music players 60,000 businesses in Greece expected to shut doors by end of 2010
View of the island of Hydra, Greece. Source: Big Stock Photo
July 12, 2010
Consumer spending in Greece drops
Kathimerini: 7 out of 10 Greeks "dissatisfied" and 35% would cast blank ballots
July 10, 2010
Protests on July 8 were unusually small, but marked by violenceJuly 8, 2010
Pension reform passes Greek parliament
Strikes shut down country early Thursday
Protesters losing support
Default needed for Greece (and European Banks): Globe & Mail
View of the island of Kos and Pserimos, Greece. Source: Big Stock Photo
July 7, 2010
Kathimerini continues hammering Greek unions
Unemployment in Greece to go to 14.3% in 2011: OECD
"Not too late for Greece"
Wall Street Journal: "Not too late for Greece"
EU Report: Greece "on track"
"Greece Unbound"
July 2, 2010
Greeks pay average of €1,671 per bribe for public services: costs nation €800 million a year
More strikes set for July 8
More about sovereign debt default
Charts of Doom
"Protect tourism"
July 1, 2010
Pension reform plan heads for the courts
New head of Greek statistical agency from IMF
June 29, 2010
New strikes block tourists at PiraeusNifada screen shot of Athens Greece June 29, 2010
June 28, 2010
Greek default contracts hit high of 1,125 on June 25
Greece to issue T-Bills mid-July
Market test: could be a "good idea" or could "end in disaster"
"Kleftes"
Read more article by Joanna Kakissis on the shifting fortunes of Greece's old-lion political families.
June 27, 2010
Papandreou: Vote for the pension reform or I will call for a general election
IMF: Greek Austerity plan will succeed
Meteora in Thessely, in Greece. Source: Big Stock Photo
June 25, 2010
Government: rumor of islands for sale not true
European bank bailout needs €2 Trillion Euros?
Capital to asset reporting 'deeply unreliable'
Talks of Greek default refuse to go away
Bomb kills one at minister of public order in Athens
June 23, 2010
Pension plans and holiday pay back under the knife
Athens trying to stabilize tourism drop to single digits
How to rescue Greece: return to 1897
June 22, 2010
Moody: Chance of Greek debt restructure "small"400 million euro write-down from Emporiki
New police effort to quell rising crime wave in Athens' historic central area
June 21, 2010
Unions to shut down Pireas on Wed June 23
Migrants leaving Greece, work 'dried up'
Kathimerini noting the departure of foreign labor from around Athens:
"Most of the migrants leaving Greece are Albanians, with smaller numbers from Bulgaria and the countries of the former Soviet bloc."
Provopoulos: Markets need convincing"
Natalie Weeks and Christos Ziotis at Bloomberg reports on European Central Bank finance minster Provopoulos stating the obvious
Euro to drop 9% value against dollar on a Greek default: Bloomberg
Yuan peg to dollar ending after two years
Greenspan sees "analogies to Greece" for USA
June 20, 2010
Chinese spending in Greece: bargains a plentyRussia to Greece: Go ahead and do a 'mini-default'
"Confusion" reigns over effect of Moody downgrade on Greek bonds
June 19, 2010
Trouble brewing as Papandreou begins push on pension reform
Rhodes island beach cove, Aegean Sea in Greece. Source: Big Stock Photo
June 15, 2010
Ouch: Moody downgrades Greek debt to junk status
No Default in Greece, says European Central Bank
The generational divide: old and new Greece can't agree
June 14, 2010
Kathimerini evaluates the government effortKaramalis government warned about economy says IMF
June 13, 2010
Greek tourism taking a beating: New York TimesJune 10, 2010
Numbers continue to crumble on Greek economy: China may bring in $1 billion in investments
Will Greece slide into economic depression?
China may put $1 billion or more into Piraeus upgrades
New Greek National Tourism Advertisement: Kalimera
Greek soccer / football team in South Africa robbed
June 9, 2010
"...they will chase all of us away with stones" - Papandreou on the results if Greek politicians do not cooperate" First goals for debt reduction being met in AthensConfidence continues to turn negative with investors
Various updates:
Kathimerini: Inflation in Greece rises to 5.4% in May - - was rated at 1.8% in March of 2010, and .8% in May of 2009
Kathimerini continues pummeling union boss behavior in Greece, particularly the PNO Greek sailor union "Egotists dressed in union colors"
Papandreou tells the squabbling politicians of PASOK and New Democracy that “If we do not put the country in order, if we do not create a sense of justice, if there is no respect for the law, they will chase all of us away with stones, and rightly so,” he told Parliament. Article at the New York based Greek News
Tension between the Turk and Greek military continues: Turkish military jets have flown dangerously low over a Greek frigate in international waters in the eastern Aegean Sea
June 7, 2010
Greece moves toward major changes
"The great loneliness" of the predicament in Greece
Kathimerini takes another swipe at union behavior
June 6, 2010
Where's the Greek debt hiding?
Greek privatization "Fire Sale" shopping list
The "new breed" of unionist
Kathimerini continues to hammer at the leadership of Greek unions who seem blind to current economic realities:
"...many of these “professional” unionists have blatantly flouted the right of workers to choose whether or not they will participate in strikes over issues that may or may not have any direct impact on them. They have also insisted on taking an extreme position on outlandish demands that can only ensure more problems for businesses and, by extension, further cutbacks in staff."
Can the Drachma save Greece?
June 5, 2010
Greek military spending to haltJune 4, 2010
Greek sailor union to press forward with blocking Piraeus tour ships
Young Greeks edging toward emigration
EU bailout plan under investigation
Strikes continue: Hungary looking like the "next Greece"
Roubini: Greece must restructure
June 3, 2010
Olympics in Athens the surge point toward Greek insolvency?June 2, 2010
More bad news
June 1, 2010
Learning the lessons about sovereign debtARCHIVE PAGE - MAY 19 TO MAY 31 2010
ARCHIVE PAGE - MAY 1 TO MAY 18 2010
ARCHIVE PAGE - DEC 2009 - MARCH 2010
May 27, 2010
Flaws in euro being exposed by crisis
Below: Two images from the live cam at pireas.org
Below: Image from the nifada.org live cam of Athens
For current news items, go to the home page