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Europe
Angry Greeks condemn EU plot to control its finances
2012-01-30
Greece has reacted furiously to a German proposal that an EU budget commissioner with oversight of its economy be installed in Athens after mounting speculation that international lenders will have to stump up yet more money for the country.
Deadbeats usually do react strongly when it's pointed out openly that they are deadbeats...
Addicts don't take kindly to suggestions they have a problem, either.
The escalating row threatened to eclipse Monday's summit after Greece's finance minister, Evangelos Venizelos, issued a tart response to the suggestion, saying his compatriots were themselves capable of fulfilling the "historical obligation" to take the country out of crisis.

The proposal, in a leaked document, argued for the creation of a commissioner with veto powers over the Greek budget, saying Athens' inability to meet fiscal targets had made the post a precondition of further rescue funds from its "troika" of creditors: the EU, IMF and ECB.

"Budget consolidation has to be put under a strict steering and control system," noted the document. "Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time."

Under the plan, European institutions would have direct control over Greece's budget decisions in what would amount to an extraordinary depletion of a member state's independence in conducting its own affairs.

With the atmosphere among recession-hit Greeks becoming increasingly explosive three years into the crisis, the proposal was angrily denounced with one politician slamming it as the "product of a sick imagination".

"It's absolutely laughable," said a senior government source. "It's a draft paper that appears to have been deliberately leaked but we have no idea who the author is or where it's come from in the German government."

The spat erupted amid reports that the €130bn (£108bn) aid package, agreed as part of a second bailout for the country last October, would now not be enough.
Of course it isn't. The German and French banks are way over-exposed in southern Europe. The Greek citizens don't want to pay for their mistakes, don't see themselves as responsible for what their past governments have done, and don't want to be impoverished for the rest of their lives -- or their retirements at age 50, whichever comes first. And they're certainly not willing to pay back loans made by German bankers who were stupid enough to loan to the Greeks in the first place.
Citing Athens' worsening economic performance and prospects, the German news magazine Der Spiegel quoted a troika official as saying that Greece could need €145bn to be saved once and for all.
'Once and for all' means "about a month" in EU-speak...
Last week, the EU economic and monetary affairs commissioner, Olli Rehn, said a revised analysis had shown that more rescue loans would be needed to make up for a shortfall in the second aid package. The extra money, he said, was required to ensure that Greece's €350bn debt burden was reduced to 120% of GDP by 2020 -- a figure that is seen as manageable.
It used to be thought that a country's debt burden had to be less than 80% of GDP; above that default was inevitable. Then the barrier was said to be 100%. Now it's 120%.
To keep bankruptcy at bay Athens received €110bn from the EU and IMF in May 2010, the biggest bailout in western history. With European taxpayers already irate that Greece will need yet more funds to keep afloat, the €130bn financial support load had previously been seen as a red line across which no EU government was willing to step.

The spectre of the rescue programme being expanded appeared to be the biggest obstacle to a debt deal between Greece and its private sector creditors finally being concluded over the weekend.

Greek officials said while the contentious issue of interest rates on new bonds had been settled -- with one source describing the coupon as "a figure that has pleased everyone" -- the agreement would not be announced until there was consensus over the second bailout.
The same bankers who made the stupid loans in the first place get a cut of each restructuring. The new bonds have to be handled and marketed, after all, and someone has to be paid for that. There are all sorts of fees quietly tacked onto each new bailout. That's one way debtor nations get even more into debt.
The eurozone's first ever debt restructuring, the bond swap foresees banks and other private investors voluntarily accepting a 50% loss in the value of their holdings, a writedown that will slice about €100bn from the nation's debt pile.
I'll believe it when I see it. Did the 'private sector creditors' agree to so much as a single Euro's amount of a haircut in the past? But if they really do turn over 50% of the notes, it will just delay them from having to turn over the other 50% of the notes, which will come next year.
Private sector participation had been set as a prerequisite of further aid being given to Greece. "We are one step before [agreement] being reached," said Venizelos.

With Athens facing repayment of €14.5bn of debt on March 20 -- money it does not have -- time is of the essence in securing a deal.

But negotiations with international debt inspectors that have been conducted in tandem with talks between the government and private creditors have been vastly different in nature.

In what officials have described as "tense discussions", Greek government ministers have argued fiercely with auditors over the need for further belt-tightening measures to plug a burgeoning budget black hole.
And over the desirability for an audit in the first place...
The atmosphere deteriorated last week after the troika urged the interim coalition government to make further savage spending cuts. The demands come amid growing criticism over the performance of Lucas Papademos, the technocrat economist placed at the helm of Athens's transitional government last November.

Highlighting the mounting frustration over Greece's failure to enact economic and structural reforms, the IMF's managing director, Christine Lagarde, said over the weekend: "We're not terribly positive about what has been done, but we want to put together a programme for the country. The country itself has to provide adjustment."

In a bid to rally support for the austerity Athens will inevitably have to impose, Papademos held urgent talks with the leaders of the three parties backing his coalition telling them that without further belt-tightening Greece will not be given the funds it needs to survive. He emerged saying there had been "a convergence of views".

But with general elections scheduled in the spring and no politician willing to be associated with policies that have brought Greeks to their knees it remains to be seen whether the country's political class will put national interests before party politics.
The Greeks aren't serious. They won't admit that their economy is ill. They won't take the medicine. Far better to boot them from the Euro-zone, let them devalue the new drachma, and find a way to fix the German and French banks that are exposed.
Posted by:Steve White

#8  See also DEFENCE.PK/FORUMS > THE NEXT GREECE: PORTUGAL BORROWING [public debt] COSTS HIT NEW RECORD [20.27%] | {REUTERS] INVESTORS CUE PORTUGAL AS THE NEXT GREECE.

and

* SAME > [WSJ.com] JAPAN'S DEBT PILE STARTS TO GRAB INVESTORS' ATTENTION.

Nippon may only have a couple of years grace, instead of several, until the country's prohibitive debt burden begins to affect its Govt. + quality-of-life, etc.
Posted by: JosephMendiola   2012-01-30 20:17  

#7  Well If the Germans or the Greeks won't the market will.
Posted by: Bright Pebbles   2012-01-30 14:42  

#6  Computers have served to hide the true conditions. Cause no one actually sees the money anymore.

What are needed are pictures of people with wheelbarrows full of bank notes going to buy a loaf of bread or some other vivid picture of the problem.

This is, currently, just spin and smoke and mirrors to the plebs.
Posted by: AlanC   2012-01-30 09:02  

#5  no mo uro,
Default, followed by bankruptcy, followed by pain, followed by restructuring, followed by healthier practices by all concerned.

Capitalism is a bit*h, but it works.
Posted by: Mike Ramsey   2012-01-30 08:23  

#4  "The Greeks aren't serious. They won't admit that their economy is ill. They won't take the medicine. Far better to boot them from the Euro-zone, let them devalue the new drachma, and find a way to fix the German and French banks that are exposed."

Steve, many of them do know. It's not an issue of ignorance, it's a matter of not caring. It's a matter of them being the end product of the Gramscian termite, of believing that it is the responsibility of a force (in this case government) outside themselves having the responsibility to take wealth from neighbors and strangers - by force - to make sure that there is no interruption in their own income stream. It's a matter of believing that if there is someone, somewhere, who has two cents more than you do, that cosmically speaking the right thing to do is take one of those cents from that person and give it to you so that everyone ends up the same at the end of the day.

Without shame, or guilt, or loss of autonomy.

In this regard, they aren't a lot different from huge swaths of the rest of Euroland, or the U.S., either.
Posted by: no mo uro   2012-01-30 05:57  

#3  Do not feed the trolls, Raj.
Posted by: gromky   2012-01-30 05:27  

#2  Aris, you're cool with this, right?
Posted by: Raj   2012-01-30 01:11  

#1  See also WAFF > IMF, EU, + ECB [aka the "Troika] ASK GREECE TO DISBAND MILITARY + LAYOFF 150,000 JOBS | GREECE SHOULD STOP SPENDING ON DEFENSE, HEALTH: TROIKA DRAFT SAYS, in order to meet the anti-Deficit conditions of proposed 2012 Bailout Package.

Greece, etal. = at least 10 US States = USA vee Rising China???

Boy o boy, HUGO "THE US HAS [Land/Islands-destroying, sinking] EARTHQUAKE BOMBS" CHAVEZ is on a roll today.
Posted by: JosephMendiola   2012-01-30 00:34  

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