Re: New EC Thread

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Latvia's Prime Minister said his Country had a loan from the IMF 3 years ago , but after a lot of austerity the Loan has been repaid and Latvia hopes
to join the EU in 2017. His answer to the Greek problems is to suffer the austerity , there is no alternative.

(Latvia) wasn't in recession when he borrowed the money and owed far lwee than Greece I suspect)

Groendahl Norvea, Marketing Firm says Spanish and Portugese Banks are cause for concern.Sovereign Bonds are not risk free but Corporate Bonds are
safer at the moment .

The European debt is horrendous and growth is the only solution.

Another analyst pointed out the fact that Germany has a current account surplus and exports are improving rapidly because of the fall in the Euro.
Some Euro Members say Germany doesn't import much which makes trading uneven. It is thought that Germany will not help in any bail-out even though
G20 and IMF have stressed that the EURO Countries should do so, but Merkel might not be so inflexible recarding the 3% GDP when most of the World
is in recession.

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European voters revolt against austerity, cutsBy Tim Lister, CNN
May 8, 2012 -- Updated 0855 GMT (1655 HKT)
Nikolaos Michaloliakos, of Greece's far-right Golden Dawn party, celebrates wins in weekend parliamentary elections.STORY HIGHLIGHTS
Political leaders who supported austerity, cuts suffer election defeats across Europe
Anti-austerity votes seen in France, Greece, UK, Italy and even Germany
Far-right, far-left and protest groups do well
But whoever is in power austerity seems to remain the key economic policy
(CNN) -- Europeans are revolting -- against their leaders and established political parties, against an austerity plan 'made in Germany', and against a future that promises declining living standards and shriveling public services.

Within the past few days, Greeks have fled to opposite ends of the spectrum, with significant numbers voting for far-left and far-right parties that were but specks on the political landscape two years ago.

The French turfed out the president who wanted to make them more competitive and less indebted -- and voted for a candidate pledged to reversing the recent rise in the retirement age. Two million voters deliberately spoiled their ballot papers after the leader of the far-right National Front said that's what she would do.

In local elections in Britain both parties in the ruling coalition were rebuffed.

The left and protest groups did well in Italy's local elections Monday, with former Prime Minister Silvio Berlusconi's party taking a beating. Comedian Beppe Grillo, who wants Italy to default on its debt, took 21% of the vote in the city of Parma.

And in Germany Sunday, Chancellor Angela Merkel was snubbed in a state election -- voters apparently weary of Germany's hard-earned "fiscal rectitude" being tarnished by those spendthrift Mediterranean types.



Elections leave Greece in 'paralysis'

Merkel: EU fiscal pact not negotiable

France's economic envy Even if Europe is financially out of intensive care -- after a series of summits that basically endorsed Germany's blueprint for the future and sought to stabilize the banking system -- the economic and employment outlook remains grim.

In response to popular discontent, the rhetoric is changing: less stress on austerity, more on engineering growth.

Hence Merkel's olive branch to France's new Socialist President, Francois Hollande: "We are talking about two sides of the same coin -- progress is only achievable via solid finances plus growth."

But one Merkel ally -- Volker Kauder of the Christian Democrats -- was less tactful. "There will not be new public programs to boost activity, such as the (opposition) German Social Democrats and Francois Hollande are calling for," he told a German newspaper.

Hollande has vowed not to endorse the European Union's treaty on fiscal discipline without new growth initiatives.

If he means it, the markets won't like it. Chances are, according to Ian Bremmer of Eurasia Group, that it was fodder for the campaign trail. "His EU growth agenda means little in actual policy substance," Bremmer wrote Monday. "A shift in policy rhetoric, which German Chancellor Angela Merkel has already been tacking toward, should prove sufficient to keep relations on track."

So, discard a crisis in Franco-German relations, and look for a vague compromise instead -- plus a guerrilla war on whether the European Central Bank should be in the stimulus business.

Whatever government is formed in Greece, and it will likely be a makeshift coalition, it won't push Europe into diluting the medicine. The options for whoever takes office in Athens are stark: stay the internationally-prescribed course and receive further support; or go cold turkey and exit the eurozone.

The Greek electorate, after seeing their incomes fall (on average) by nearly one-third in three years, are in a foul and volatile mood. And next month, whoever is in power in Athens has to find another $15 billion in spending cuts to keep international creditors happy. This might politely be described as uncharted waters.

The old parties of center-left and center-right are short of a parliamentary majority even if they agree to combine, while Golden Dawn, replete with its neo-Nazi symbolism and threatening a war on immigrants, suddenly has 21 deputies. The headline in the Greek newspaper Ta Nea Monday, with no hint of hyperbole: "The Nightmare of Un-governability."

Essentially, the European politicians so reviled by the voters have little room to maneuver.

Neither Germany nor the financial markets will entertain increased borrowing or backsliding on targets to cut deficits.

German proposals for labor reforms to make Europe more competitive are a long-term enterprise. So is chipping away at public debt that has swollen over the past decade and more.

In Greece and across much of Europe, younger voters are suffering the highest rates of unemployment and are flocking to the political margins.

In the 17 countries of the eurozone more than one-tenth of the labor force is idle, according to the latest statistics from Eurostat. Fifty one percent of Spaniards under 25 are out of work while Italian unemployment hit a 12-year high in March.

Spain's new Conservative government has intensified spending cuts and is putting pressure on the spendthrift regional governments to get their budgets balanced.

In January, the central government had to step in to ensure the city of Valencia could repay a $160 million debt to Deutsche Bank, while Spanish banks have suffered a sharp rise in bad loans, and property prices continue to crumble.

Italy's situation is similarly parlous. Its technocratic government is trying to identify spending cuts to avert a rise in the top rate of sales tax (known as VAT) to 23%. The government expects the economy to contract 1.2% this year -- hardly the sort of performance that will get people back to work.

Writing in the Financial Times last October, former British Prime Minister John Major described a European scenario that seemed like the economic equivalent of Edward Munch's "The Scream."

The southern states "must devalue their living standards and promote reforms to enhance efficiency. This will take years. Meanwhile, wages must fall, unemployment will rise and social unrest will increase. The severity of this medicine may not be bearable in a liberal democracy."

And when Major was prime minister, he was never one to exaggerate.

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Greece

Who will restore order?


8 May 2012
Kathimerini Athens Comment4



Ilias Makris


The elections of May 6 have shaken the Greek political landscape to its core and a majority capable of governing cannot be reached. Yet, notes Kathimerini, the politicians discredited by the electorate and their European partners are supposed to find the path to recovery.

Alexis Papachelas

Will the resounding message from Sunday’s elections have an effect? The country does not have much time or room for manoeuvre. Some like to think that the outcome will scare Germany and France into easing their fiscal demands on Greece, and perhaps sending the country some generous aid package.

In other words, they hope that our foreign lenders will realize that Greece’s transformation into a Weimar-type republic is simply a foretaste of what will soon happen in Italy, Spain or even France.

If only things were that simple. Our partners are, of course, more prepared for a Greek “failure,” as it were, or even for a eurozone exit. An easing of fiscal demands will mean more money for Greece – something that would go down well with none of Europe’s parliaments.

Greece's untrustworthy politicians

But there is yet another problem. Our partners’ view of Greek politicians is not that different to our view: they don’t trust them, they think they are unreliable. However, they see little willingness among Greece’s mainstream parties to change, or any new reformist party in the offing.

The Greek people have also made clear that they distrust anything to do with EU-IMF memoranda. And, as long as they do not see any other substantial movement for renewal, they will turn to parties of protest such as the one led by Mr Tsipras.

It is obvious that if the Germans do not shift from their position and if there are no convincing solutions in our country, yesterday’s vote will be the harbinger of the drachma. Some say that if the money for wages and pensions is cut, then people will realize what is going on. That may be how things work but it may be a boomerang that angers people even more.

A people maturing

No solution can be imposed from above. The arguments in favour of fighting for the euro have to be set out. It was made clear yesterday that the Athenian political and economic elite speaks a different language from the rest of the country.

We have some difficult days and months ahead. This is what always happens when a rotten system collapses without something replacing it. It is what always happens when a people matures suddenly after a few decades of the easy life. Yesterday, this people turned things upside down. It is now waiting to see if anyone can restore some order.

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8 May 2012 Last updated at 19:30 Share this pageEmail Print Share this page


The leader of Greece's left-wing Syriza bloc has said he will try to form a coalition based on tearing up the terms of the EU/IMF bailout deal.

Alexis Tsipras, whose bloc came second in Sunday's vote, said Greek voters had "clearly nullified the loan agreement".

He has three days to reach a coalition deal and has told the two major parties to end their support for the austerity terms if they want to take part.

The European Commission and Germany say countries must stick to budget cuts.

European Commission President Jose Manuel Barroso said on Tuesday: "What member states have to do is be consistent, implementing the policies that they have agreed."

But, after French voters chose a new president on Sunday in Francois Hollande who has advocated greater focus on growth, EU leaders are to gather on 23 May for an informal meeting at which his proposals will be discussed.

Continue reading the main story “
Start Quote
You have to say the chances of a messy Greek exit from the euro are higher than they were a few months ago. And, let's face it, they were pretty high then”
End Quote
Stephanie Flanders

Economics editor

--------------------------------------------------------------------------------
Read more from Stephanie

German Chancellor Angela Merkel has written to Mr Hollande, saying that it is "up to us... to prepare our societies for the future and protect and advance prosperity in a sustainable way".

The financial chaos has sparked huge social unrest in Greece and led to a deep mistrust of the parties considered to be the architects of austerity.

On Monday the leader of the centre-right New Democracy (ND) party, Antonis Samaras, abandoned attempts to form a coalition.

ND came first in the polls but, in common with the centre-left Pasok - the other traditional party of power - saw its share of the vote dramatically reduced.

In March, both parties backed the terms of the second EU/IMF deal agreed by technocrat Prime Minister Lucas Papademos.


In return for its two bailouts - worth a total of 240bn euros (£190bn; $310) - Greece agreed to make deep cuts to pensions and pay, raise taxes and slash thousands of public sector jobs.

Their votes drained away in Sunday's elections in favour of smaller parties on the left and right, with Syriza picking up almost 17% of the vote. But because ND came first, it was awarded a 50-seat bonus in parliament according to Greek rules, and was initially asked to form a government.

Twenty-four hours later it was Mr Tsipras who was given a mandate to form a coalition during a meeting with President Karolos Papoulias and immediately he began talks with prospective partners.

Greek voters worried about their political future
Greek media said he had enlisted the support of a smaller left-wing party, Democratic Left, but had failed to persuade the communist KKE to back him. He is likely to talk to all the party leaders, except the ultra-nationalist Golden Dawn.

If the 38-year-old Syriza leader hopes to obtain the 151 seats needed for a majority in parliament, it is already clear he will need the backing of at least one of the two major parties.

He told reporters "the pro-bailout parties no longer have a majority in parliament to vote in destructive measures for the Greek people" and urged them to write to the EU and IMF saying they were taking back earlier promises of co-operation made as a condition of the bailouts.

Mr Tsipras made his position clear to reporters in a five-point plan:

Cancelling the bailout terms, notably laws that further cut wages and pensions
Scrapping laws that abolish workers rights, particularly a law abolishing collective labour agreements due to come into effect on 15 May
Promoting changes to deepen democracy and social justice
Investigating Greece's banking system which received almost 200bn euros of public money
Setting up an international committee to find out the causes of Greece's public deficit and putting on hold all debt servicing
Under Greece's current bailout plan, billions of euros in further austerity cuts will have to be found in June - and the country is also counting on a 30bn euro (£24bn; $39bn) instalment in EU/IMF funds.

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On May 6, the Greeks heavily punished the two traditional parties, who implemented the austerity programme, and let the radical left and far-right parties come into force into the Parliament. This result could lead to a powerless government and even violence, fears a columnist.

Nikos Konstandaras

The Greeks voted with an eye on yesterday and they opened the door to tomorrow. Wishing to return to an ideal age – where they could escape from the demands of our partners and creditors – the voters destroyed the two-party political system, fragmented the centre and brought the extremes into the heart of developments. Last night's result did not leave much room for the formation of a coalition by any section of the new Parliament – neither by the parties who abide by the loan agreement nor by those who constitute the “no” front.

If new elections were called immediately it is not at all certain that New Democracy and Pasok would claw back any of their old power (up until 2009, they shared more than 80 percent of the vote, whereas yesterday they got barely 35 percent combined). With at least seven parties in Parliament and none gaining more than 20 percent, our politicians will have to face three major challenges: they must learn to cooperate on equal terms, without any one party forming a strong pole, without any one party trying to gain an advantage over another; they must deal with the neo-nazi Chrysi Avgi [Golden Dawn], which is now in Parliament; they must find a way to be credible partners in talks with our creditors, now that the Pasok-ND government under Lucas Papademos is gone.

Opening the door on tomorrow

Our society, which is also not in the habit of cooperating and compromising, will face strong challenges from the rise of Syriza and other leftist parties, and from Chrysi Avgi. Although they are at opposite ends of the political spectrum, both sides have something in common – a lack of respect for the establishment and deep hatred of each other.

If Syriza's rise leads to even greater interventions by the leftists in universities and other spheres of public life, then it is possible that the “troops” of leftists and anarchists will clash in the streets with the black shirts of Chrysi Avgi. Without a strong government to give them orders and support them, it is likely that the police will avoid getting involved in this rivalry, increasing citizens' insecurity further and perhaps leading to even greater political fragmentation.

It is not surprising that Pasok and, to a lesser extent, New Democracy paid the price for the austerity program, but such a large drop in their support was not expected. Now the time has come to test the theories of those who believe that Greece can set terms to our creditors and that we can make it on our own if our creditors pull out. This mindset has its roots in the behavior of Andreas Papandreou, who founded Pasok and dominated Greek politics in the 1980s. This populism has shaped our public debate since then. Now Pasok and New Democracy are its victims: although they exploited populism shamelessly, they were defenseless against it when others turned it on them.

Yesterday's elections destroyed the political system of the past 38 years. They opened the way for new forces and showed the need for cooperation, both before the elections and after. If our politicians and all those who are involved in public life did not learn their lesson yesterday, we will fall into a cycle of conflict that will only end in catastrophe.



The main news in the election is the collapse of support for the two traditional parties: the PASOK socialist movement and the right wing New Democracy, which between them only polled 32% of the vote. “The Greek people have never forgiven PASOK for the 2009 campaign slogan "There is money", remarks To Vima. And “they have not forgiven the tutelage of the country, or the about-turn performed by New Democracy and its leader Antonis Samaras’ obsession with becoming prime minister."

The weekly’s website notes that “the elections have boosted support for the leader of the left-wing Syriza alliance, Alexis Tsipras, Fotis Kouvelis of the Democratic Left, Panos Kamenos of the populist Independent Greeks, and Chryssi Avgi of Golden Dawn, which has won its first seats in parliament.”

Today, To Vima warns


Tsipras, Kouvelis and Kamenos have been granted responsibility. Until now, they were in opposition. Now they will have to take charge of a major responsibility, because the future of the country will depend on their choices. The game has changed.

die Mitgliedschaft Griechenlands im Euro weder für Griechenland noch für die anderen Mitglieder der Eurozone tragbar ist. [...] Den Trend, die EU für nationale Schwachstellen und Miseren verantwortlich zu machen, lehne ich ab.

What I am trying to say is that the creation of a new local currency in Greece could not be the end of all our concerns about the Greek situation. But I agree with you that each country should be responsible for the good or bad choices. I hope that these elections will be a start to get rid of the people that made the bad choices there.


"EXIT CLAUSE IS NEEDED NOW! When a Eurozone exit clause is put into effect, GREECE SHOULD LEAVE THE EUROZONE RIGHT AWAY! THE OTHER WEAKER EUROZONE MEMBERS SHOULD DO THE SAME AS WELL!

If it was for me i'd take Italy out of it without any clause. I'd just make sure to have a brand new generation of politicians in place. Europe for Italy, (except for the free movement of people and partly of goods and for the huge amount of funds they have transferred to the country) has only been a problem. Perhaps numbers on paper (those made for the lovers of charts, tables etc.), it's been a good thing. But for the average citizen who doesn't need to travel, or move goods, it's just been hell. Also, the Euro/European rules made Italy even less competitive than it used to be. I'd be glad to get back to where i was, starve for 10/15 years or so while i rebuilt my nation from scratch, and then try to make it thrive as a single country, without the need to be helped by Europe to hide the flaws of my own leaders, transferring responsibilities to the EU oligarchs simply because our own politicians are unable to implement any politics and make things right. But that's just my opinion."

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Chief Economist Weinberg says it is impossible to come to any positive planto change what is happening to Greece. this is because there is no cohesion of the 17 Euro Countries and with all these having to agree to any proposals, it slows everything down. A Credit crunch in Europe will hinder any progess.

Greece wants everyone to help them out of their troubles. Tsipras, who may be part of a coalition rejects the new bail-out and wants Europe to write of their debts.

Greece has to sack 150,000 Civil Servants as part of the deal . It is possible Greece will default on some private Loans and Bonds .

Tensions in Greece has affected stock Markets around the World and it is thought more left wing Politicians will be voted in in Italy. Most EURO
Countries are now questioning the austerity plan and it is possible Merkel will advocate a plan for growth.

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Banks confront the property bubble


9 May 2012

Presseurop
El País, ABC Comment2



The rescue of Spain's second largest savings bank Bankia, announced by Mariano Rajoy’s government on May 6, has sounded an alarm about the situation of Spanish banks: "20 billion euros of toxic assets do not come from the banks," calculated El País, which underlined that 85 billion euros worth of assets correspond to loans. According to the Madrid daily, these are-


the Achilles heel of Spanish banks. Toxic assets due to real estate continue to rise, and there are more and more buildings on banks' balance sheets that have been acquired as a result of unpaid loans.

"Is Germany to blame for the housing bubble in Spain?" in turn asks ABC. The newspaper quotes a report from a Japanese bank, Nomura, which states that German and French banks had a role in the current situation-


the policy of low interest rates that the European Central Bank (ECB) applied in the years preceding the crisis has helped the moribund German economy to recover, but it was also a decisive factor that caused housing bubbles in peripheral European countries, [...] exacerbated by capital flows from the German and French banks.

To address the risk of bankruptcy of banks exposed to toxic assets related to real estate, the government "requires [the banks] to put aside larger provisions" for such credits, concludes El País.

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From the monetary fortress of the European Central Bank to the pro-European duchy of Luxembourg, policy makers are beginning to air their doubts that Greece can stay in the euro.

Post-election tumult in Athens has put the once-taboo subject of an exit from the 17-country currency union on the agenda, lifting the veil on possible scenario planning afoot behind the scenes.









Alexis Tsipras, center, leader of Greece's radical left coalition SYRIZA, leaves Greek President Karolos Papoulias' office in Athens on May 8, 2012. Photograph: Kyodo/Landov





May 9 (Bloomberg) -- Robert Jukes, global strategist at Collins Stewart Wealth Management, discusses global investment strategy and controls against portfolio risk. He speaks with Linzie Janis and Mark Barton on Bloomberg Televisions's "Countdown." (Source: Bloomberg)











Wolfgang Schaeuble, Germany's finance minister. Photographer: Jock Fistick/Bloomberg
.
“If Greece decides not to stay in the euro zone, we cannot force Greece,” German Finance Minister Wolfgang Schaeuble said at a conference sponsored by German broadcaster WDR in Brussels today. “They will decide whether to stay in the euro zone or not.”

After 386 billion euros ($499 billion) in aid pledges for Greece, Ireland and Portugal, 214 billion euros in ECB bond purchases and another trillion euros in low-interest loans for banks, plus 17 high-level crisis summits, Greece’s political chaos thrust Europe into a perilous new phase.

The world is witnessing an “important moment in European Union history, a moment of crisis,” EU President Herman Van Rompuy said in Brussels on the 62nd anniversary of the declaration by Robert Schuman, then France’s foreign minister, that launched postwar European integration.

Euro’s Drop

The euro fell for the eighth day as it dawned on investors that Greek voters’ revolt against austerity, and not the victory of Socialist Francois Hollande in France, was the more significant of the two national elections in the EU on May 6.

Bonds of at-risk countries have suffered since the balloting. Spain’s extra 10-year yield over German levels widened to 458 basis points today from 415 at the end of last week. Italy’s widened to 412 basis points from 385 over the same timespan. The euro bought $1.2930 at 5 p.m. in Brussels, bringing its eight-day loss to 2.4 percent.

“Politically speaking, Greece is already out of the euro zone,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e-mailed note. “The only question is about the timing and disorderliness of its exit.

The Greek parties running on an austerity-for-rescue platform took one-third of the vote. Top vote getter Antonis Samaras failed to assemble a government, throwing in the towel after a few hours. Second-place finisher Alexis Tsipras of the Syriza party began coalition talks today, handing would-be partners an ultimatum to renounce support for the bailout.

‘Catastrophic Uncertainty’

The response outside Athens left little room for maneuver. Schaeuble said that fiddling with the bailout terms would unleash ‘‘catastrophic uncertainty’’ in financial markets, and the central bank’s verdict came from his former deputy, Joerg Asmussen.

‘‘Greece has to be aware that there is no alternative to the agreed consolidation program if it wants to remain a member of the euro zone,’’ Asmussen, who last year moved from the German Finance Ministry to the ECB board, told Handelsblatt in an interview published today.

With polls showing roughly the same proportion of Greeks wanting to stay in monetary union while opposing austerity, the haggling over the future government and possible elections next month put the country before two incompatible options.

‘Very Painful’

‘‘If 80 percent of Greeks want to stay in the euro, then I think they have to support parties that are in favor of this policy of staying in the euro,’’ Luxembourg Foreign Minister Jean Asselborn said at the Brussels conference. Otherwise ‘‘comes the point where Greece unfortunately has squandered the opportunity and that will be very, very painful for the people.’’

European treaties label the euro ‘‘irrevocable’’ and provide no legal procedure for a country to leave or be thrown out. A December 2009 study by the ECB’s legal department deemed an ouster or departure ‘‘so challenging, conceptually, legally and practically, that its likelihood is close to zero.’’

Europe’s crisis managers put the odds at zero until last November, when German Chancellor Angela Merkel and French President Nicolas Sarkozy turned a planned Greek referendum on austerity into an in-or-out vote on Greece’s euro future.

The referendum was dropped and the Greek leader who mooted it, George Papandreou, was out within days. A nonpartisan government led by former ECB Vice President Lucas Papademos took over. Unlike Italy, which got its own technocratic government at the same time, Greek politicians gambled on early elections.

Re-Vote

With the coalition talks in Athens at risk of stalemating, another vote may come as soon as next month.

Merkel’s first finance minister, Peer Steinbrueck, questioned whether a new election would yield a functioning Greek government with a broad-based mandate to deliver the additional savings demanded by international donors.

Greece may be mired in ‘‘a fragile, virtually paralyzed situation for months,” Steinbrueck, a potential challenger to Merkel in Germany’s 2013 election, said at the Brussels conference.

The next Greek ballot “will be a referendum on continued euro membership,” said John Stopford, co-head of fixed income and currency in London at Investec Asset Management, which oversees about $90 billion. “As last week’s election shows, it’s going to be a close-run thing.”

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Everyone knows there is no way Greece can stay in the Union and had the Country been allowed to have a referendum they would probably have opted
out. Now their debt is crushing the life out of the Population and Greece should be allowed to make an orderly exit . What kind of Treaty is the EU which
says the 17 Country Euro dominates the 27 Membership. The chances are Italy and Spain will reject this Austerity . The reason the German Economy is
so healthy is because German wages are about one third less that any Euro Country which is why they are doing so well.

[Badboy]

THERE IS GOING TO BE A PROGRAMME AT 2100/900 ON BBC2 ABOUT EUROCRISIS BY MICHAEL PORTILLO

[Panda]

THERE IS GOING TO BE A PROGRAMME AT 2100/900 ON BBC2 ABOUT EUROCRISIS BY MICHAEL PORTILLO

Thanks Badboy, I will watch it.....it is 90% certain that Greece will default. They should have done this 2 years ago instead of accumulating all this debt which has no chance of being repaid.

[Badboy]

I AM WONDERING IF THINGS MIGHT BE BETTER/WORKED OUT BETTER IF PEOPLE PLANNED AHEAD EG IN GREECE THEY HAVE PEOPLE SPONGING OFF THE STATE CLAIMING DISABILITY BENEFITS WHEN THEY ARE NOT DISABLED,PEOPLE NOT PAYING THEIR TAXES ETC

[Panda]

I AM WONDERING IF THINGS MIGHT BE BETTER/WORKED OUT BETTER IF PEOPLE PLANNED AHEAD EG IN GREECE THEY HAVE PEOPLE SPONGING OFF THE STATE CLAIMING DISABILITY BENEFITS WHEN THEY ARE NOT DISABLED,PEOPLE NOT PAYING THEIR TAXES ETC

Successive Greek Governments failed to bring any order to the way the Country was run, nobody wanted or bothered to pay their taxes, there was
extravagance in the way the Revenue was spent , yet even now, the population want to retain the Euro.

[Panda]

10 May 2012 Last updated at 05:03 Share this pageEmail Print Share this page

Pasok leader Evangelos Venizelos will make a third effort to form a coalition government in Greece amid political turmoil following Sunday's elections.

The talks follow failed bids by leaders of the centre-right New Democracy and radical left Syriza bloc.

Correspondents warn Pasok is tainted by its association with unpopular austerity cutbacks.

Sunday's elections revealed a country divided over plans to bring it out of its debt crisis.

Financial chaos has sparked huge social unrest in Greece and led to a deep mistrust of the once-dominant parties which backed austerity.

Under the bailout agreement, Athens is due to pass new austerity measures worth 14.5bn euros (£11.6bn; $18.8bn) next month - part of cuts required to qualify for bailouts worth a total of 240bn euros.

'Effort must continue'

After the first two parties failed to find coalition partners, former finance minister Mr Venizelos will now meet President Karolos Papoulias to receive the mandate to try to form a government.

"It was clear that in the current stage of this process we cannot reach a solution but that we must continue this effort," Mr Venizelos said, according to AP news agency.

"So the mandate I will receive tomorrow will have substance and importance."

But Pasok is now deeply unpopular, says the BBC's Mark Lowen in Athens - seen as the architects of austerity, and tainted with allegations of corruption.

It dominated Greek politics for most of the past four decades, but saw its support slashed on Sunday - coming third with just 41 seats, a quarter of its pre-bailout support.

Its attempt to form a government also appears likely to fail, our correspondent says, making fresh elections - and weeks of fresh instability across the eurozone - seem inevitable.

Austerity measures have sparked widespread protests
The eurozone's rescue fund on Wednesday decided to withhold 1bn euros of its latest instalment of its bailout to Greece pending a meeting of eurozone finance ministers on Monday.

But the fund said it would disburse 4.2bn euros of the 5.2bn euros due to the country on Thursday.

'Dream' dashed

The fresh coalition bid follows in the wake of a failed attempt by Alexis Tsipras, the leader of Greece's far-left Syriza bloc.

Mr Tsipras said he had failed to reach agreement with mainstream parties because of his insistence on rejecting austerity measures demanded by the EU and IMF as part of a bailout deal.

He made the announcement after failed talks with the Pasok and New Democracy parties, which support the bailout. Talks with the Communist KKE and smaller left-wing Democratic Left also failed.

He told Syriza MPs: "We cannot make true our dream of a left-wing government."

Earlier on Wednesday, New Democracy leader Antonis Samaras rejected Mr Tsipras's demand to tear up the bailout deal.

Mr Samaras told a party meeting that the proposal would "lead to immediate internal collapse and international bankruptcy, with the inevitable exit from Europe".

"[Amending] the loan deal is one thing, it is a completely different thing to unilaterally denounce it. The second option leads to catastrophe that is certain and immediate," he said.

If it rejects the deal with the IMF and EU, Athens will be unable to draw its international loan, meaning it would again face the prospect of bankruptcy and possible exit from the euro, our correspondent says.

Previous Greek governments agreed to make deep cuts to pensions and pay, raise taxes and slash thousands of public sector jobs in return for the bailouts.

Both Germany and the EU have made clear they expect Athens to honour its commitments.

German Foreign Minister Guido Westerwelle said on Wednesday: "Germany would like to keep Greece in the eurozone, but Greece's fate is now in its own hands."

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In Europe, a Marriage Shows Signs of Fraying

By FLOYD NORRIS

Published: April 26, 2012






If the European monetary union is something like a bad marriage, what can be done to avoid a messy and disastrous divorce?






Paul Krugman: Death of a Fairy Tale (April 27, 2012).


Broadly speaking, there are now two prescriptions. One calls for sacrifices and compromises from all sides. The other, echoing the law that used to exist in many societies, is simple: the husband — Germany — should rule. Did not the wife promise to obey? It is too late to try to get out of that agreement.

At the heart of the euro system problem now is that most of the rest of the countries are no longer competitive with Germany. They are running large current-account deficits, and the existence of the euro means they cannot devalue their currencies to make their exports cheaper and their companies more competitive.

With no currency adjustment possible, a German central banker, Andreas Dombret, explained this week in a speech in Berlin, “other things must therefore give instead: prices, wages, employment and output.”

The question now, said Dr. Dombret, a member of the executive board of the Bundesbank, “is which countries have to shoulder the adjustment burden.”

Dr. Dombret’s answer is blunt: Not Germany.

“The deficit countries must adjust,” he said. “They must address their structural problems, reduce domestic demand, become more competitive and increase their exports.”

Suggestions that “surplus countries should shoulder at least part of the burden,” he said, simply miss the point. No one can expect Germany to do anything that might affect its competitive position relative to the United States or China, as could happen if German inflation were allowed to rise.

Until now, Germany has seemed to more or less get its way, albeit at the cost of having to put up money to avert disaster. The other Golden Rule — he who has the gold rules — has applied. Faced with German anger, and pressure from financial markets, both Greece and Italy jettisoned elected governments in favor of governments that would be run by “technocrats” who would do the right thing, as seen from Berlin. “Merkozy,” the combination of Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France, dominated European summit meetings.

But now the European political winds seem to be moving against Germany. The Dutch government, which had been Germany’s staunchest ally in demanding more and more austerity from the so-called peripheral countries, found it could not get that prescription through its own Parliament. Elections are expected later this year.

More ominously from a German point of view, Mr. Sarkozy’s own future seems to be tenuous. On Sunday, he finished second in his bid for a second term, behind François Hollande, the Socialist candidate who has been calling for less austerity and more efforts to stimulate economic growth. The runoff vote will be held May 6.

Given the fact that France has its own problems, Ms. Merkel might be tempted to go it alone in ruling Europe. But as one German official told me a few months ago, France is an essential partner because of Germany’s “special history.” German domination of Europe has an unfortunate precedent.

The day after the French voted, I listened to Jens Weidmann, the president of the Bundesbank and formerly a top adviser to Ms. Merkel, speak to the Economic Club of New York and throw down the gauntlet.

Departing from his prepared text, he warned that agreements previously made must be respected, adding that the necessary fiscal union meant that some “national sovereignty” would have to be sacrificed. Mr. Hollande talks about amending Europe’s fiscal treaty mandating austerity; Dr. Weidmann views it as sacred.

The European Central Bank’s sole mandate under the law is to preserve price stability for the euro area as a whole, defined as keeping inflation under 2 percent. At the moment, with Germany doing well and much of Europe in or entering recession — and Spain being closer to a depression — there is no such thing as the euro area as a whole in any reasonable sense. But a central bank trying to live up to its mandate might focus on rampant deflation in countries being forced to slash wages and spending and decide that a little inflation elsewhere — such as in Germany — makes perfect sense.

The Germans are having none of that. “Let us say that monetary policy becomes too expansionary for Germany,” Dr. Weidmann told the Economic Club, making it clear that it is not German national sovereignty that needs to be sacrificed. “If this happens,” he said, “Germany has to deal with this using other, national instruments.” He did not specify what those instruments would be.

The idea that Germany knows best — that what is best for it is best for the euro zone as a whole — is growing less and less popular in the rest of Europe. In northern Italy, some companies are muttering about a German conspiracy to devastate the Italian economy, to enhance the prospects for German companies.

It may be significant that in the first round of the French election, extremist parties of the right and left garnered more than 30 percent of the votes, up from about 18 percent five years ago. The biggest surprise was the strength of the anti-immigrant National Front Party, which received nearly 18 percent of the votes. Both Mr. Sarkozy and Mr. Hollande wasted no time in trying to appeal to those voters. In the Netherlands, it was the defection of a right-wing, anti-immigrant party that led to the government’s collapse.

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Floyd Norris comments on finance and the economy at nytimes.com/economix.

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Bankia's chairman Rodrigo Rato resigned on Monday
11:01am UK, Thursday May 10, 2012

One of Spain's largest banks has been part-nationalised as lenders continue to reel from the bursting of the property market bubble.
The state will take a 45% stake in Bankia, a lender which has the industry's largest exposure to toxic property assets.

The bank - Spain's fourth largest - was created only two years ago from a merger of seven struggling savings banks.



It will have a 4.47bn euro (£3.59bn) loan by the Spanish bailout fund converted into shares, owned by the state.

Bankia holds 32bn euros (£25.7bn) in distressed property assets. On Monday, the bank's executive chairman, Rodrigo Rato, resigned.

"It is a necessary first step to ensure solvency, the tranquility of the depositors and to dispel the doubts of the markets on the capital needs of the entity," Spain's finance ministry said.

Earlier, prime minister Mariano Rajoy failed to answer questions about nationalisation but said a slew of banking reforms later this week would "help solve a lot of Spain's problems".

His words came as jitters about banks drove the Madrid stock market to an eight-year low.

The nationalisation comes as Spain is seen as a big worry in the troubled eurozone.

The country has suffered a second recession in three years and 24% unemployment.

:: Meanwhile, Ladbrokes have suspended betting on Greece, the eurozone's most crisis-hit country, making an exit from the euro.

While all signs point to debt-laden Greece returning to the polls after a mainstream party failed to win an outright majority at the weekend's elections, the bookmaker has temporarily suspended all bets on a return to the Drachma this year.

Just before suspension, the odds of a Greek eurozone exit were slashed to 1/3.

Alex Donohue of Ladbrokes said: "The book remains closed while discussions continue.

"We'd slashed the odds repeatedly until then as punters continue to bank on a Greek exit."

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The euro membership of Greece, the ancient home of democracy, is in doubt following the weekend elections
5:36pm UK, Tuesday May 08, 2012

Ed Conway, economics editor

The euro is incompatible with democracy. It is a notion that probably does not seem all that surprising after the events of the past six months.
First, we saw unelected leaders being imposed on Greece and Italy.

Now, in the elections of the past weekend, voters were finally given an opportunity to react, and they have wholeheartedly voted against the austerity measures designed to safeguard the single currency.

The rebellion was not merely isolated to Greece and France: in the Italian local elections a party run by comedian Beppe Grillo, one of whose main policies is to return to the lira, won 20% of the vote in Parma and 15% in Genoa.

It seems increasingly clear that what we are witnessing is a widespread rejection of the austerity policies associated with euro membership.

Was all of this inevitable? Well, as it happens, yes.

For this cycle - voter repression followed by electoral backlash - is precisely what happens when you try to impose an economic system like the euro.

There is a simple truth in economics that in recent centuries governments have typically striven for three things: nation statehood, democracy and deep global economic integration (globalisation, to give it another name).



Recent local elections showed some Italians would like to return to the lira

The problem is that, as research from Harvard economist Dani Rodrik has shown, it is simply impossible to have all three at any one point.

So if you are intent on maintaining your national independence and want to have democratic politics, you will have to say goodbye to full-blown globalisation.

If you want democracy and globalisation you need to bid farewell to your nation statehood and embrace global federalism.

If you want to maintain your national identity and yet benefit from unrestricted financial and economic markets between your fellow states, which is the precise point of the euro project, you cannot have democratic politics.

If you paid any attention to this 'trilemma', as Rodrik calls it, the weekend's electoral scrapes ought not to have come as a surprise.

Indeed, a similar thing happened before.

A system of tied-up currencies, national statehood and free capital markets... and frequent bouts of austerity necessary every now and then.

It may sound like the euro to you, but it was also precisely what was attempted with the Gold Standard - the international monetary system that linked nations in the late Victorian era.

It worked pretty well when the vote was limited to only landowners or nobility, but as soon as the public was able to have its say, they voted in their droves against the austerity that underpinned the system.


The result was the break-up of the Gold Standard, which contributed to decades of misery for those who tried to cling desperately on.

So what are the lessons for European policymakers today?

The first and most obvious one is that, given democracy is not likely to go anywhere, the only prospects for survival for the euro are alternatively:

1. Full-scale abandonment of nation statehood. Not merely that Germany would have to espouse Eurobonds, but that it must accept the end of Germany as a separate state if the currency is to survive.

2. Dismantling the common market, so that there is no longer free movement of capital between euro members. Which seems unlikely given that is the very foundation of the European Union.

There are no other options, aside from leaving the euro.

And from that perspective, the lesson from history is that the earliest to leave usually get back to normality and prosperity the soonest.

:: Read more on the eurozone crisis on our dedicated page

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Euro Global Poll Shows More Than 50% Predicting an Exit

By Simon Kennedy - May 10, 2012 1:00 AM GMT+0100
...
The 17-nation euro area is on the verge of losing one of its members, with more than 50 percent of investors predicting an exit this year as Greece’s election impasse threatens to push the debt crisis to new depths, according to the Bloomberg Global Poll.

As Greece faces political paralysis and voters balk at austerity, 57 percent of the 1,253 investors, analysts and traders who are Bloomberg subscribers said at least one country will abandon the euro by year-end and 80 percent expected more pain for Europe’s bond markets. With a majority identifying a deterioration in Europe as a large threat to the world economy, respondents to the May 8 survey were increasingly worried Spain will default and less willing to buy French debt as Francois Hollande takes power.










Newly-minted 2 cent euro coins at the Bank of Greece's Printing Works Department and Mint in Athens. Photographer: Simon Dawson/Bloomberg




May 10 (Bloomberg) -- Stephen Roach, a professor at Yale University and former non-executive chairman for Morgan Stanley in Asia, talks about the global economy and Europe's sovereign debt crisis. He speaks from Connecticut with Susan Li on Bloomberg television's "First Up." (Source: Bloomberg)






May 10 (Bloomberg) -- Eric Stein, a portfolio manager at Eaton Vance Management, talks about his investment strategy for Europe's sovereign debt. Stein speaks with Erik Schatzker, Stephanie Ruhle and Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)








May (Bloomberg) -- Jens Nordvig, a managing director of currency research at Nomura Holdings Inc., talks about the possibility Greece will exit the euro zone and the outlook for the euro versus the dollar. He speaks with Scarlet Fu on Bloomberg Television's "InBusiness." (Source: Bloomberg)




Europe’s financial turmoil is reigniting on the second anniversary of policy makers’ first attempt to prevent Greece’s fiscal woes from turning toxic. That raises fresh doubt over the crisis-fighting strategy just as Greece’s inconclusive election spurs concern that the country may not meet the terms of its international rescues and will seek a solution outside the euro.

“Certainly from a financial perspective the crisis can only intensify,” said Michael Derks, a poll respondent and chief strategist at FXPro Financial Services Ltd in London. “We’re likely to get more debt restructurings and it would be remarkable if Greece didn’t leave the euro within a year.”

Crisis ‘Flare-Up’

European stocks slid this week and Spanish default risk climbed to a record as Greece struggled to form a government after voters swung behind anti-bailout parties. France elected its first Socialist premier since 1981 in the latest ballot-box rejection of the budget cuts governments had believed were the best cure for their debt troubles.

“Another flare-up of the crisis is likely,” said Alessandro Mercuri, an interest-rate strategist at Lloyds Banking Group Plc in London who responded to the poll. “The key variable for Europe is domestic politics.”

About 386 billion euros ($501 billion) in aid commitments for Greece, Ireland and Portugal, the establishing of a larger rescue fund as well as 214 billion euros in bond purchases and more than 1 trillion euros in cheap bank loans from the European Central Bank have failed to placate investors.

More Bearish

The number of poll participants who predicted a smaller euro area within a year ballooned to 57 percent from 11 percent in January 2011. The 80 percent saying evidence Europe is stabilizing is temporary and that the market will be roiled again also marks a jump from about two-thirds who held that position at the start of this year.

The 55 percent who said backsliding by Europe posed a high risk to the world economy was more than double the number which said the same of a hard landing by China’s economy or gridlock among U.S. politicians.

Even policy makers have begun to quiz whether Greece can stay in the euro, reviving the once taboo debate of if the single currency is for life and establishing a likely new round of elections as a referendum on membership.

“If Greece decides not to stay in the euro zone, we cannot force Greece,” German Finance Minister Wolfgang Schaeuble said yesterday. “They will decide whether to stay in the euro zone or not.”

With recession beckoning, 84 percent said the euro-area economy is worsening. The same amount said they expect social unrest including riots, a worry that has progressively increased from 56 percent in September.

Cuts Versus Stimulus

Mirroring the irritation of voters, only a third of those questioned backed budget cuts as the most effective medicine for weak economies; 53 percent advocated fiscal stimulus.

Greece, where stocks this week fell to their lowest level in about two decades, remains the focal point of the crisis. Ninety-four percent of poll respondents said it will default on its debt, the most since the survey began. The country has already restructured what it owes private bondholders.

Economists at Citigroup Inc. were among those to say this week that the fragmented election result that left no party with a mandate had increased the chance of Greece quitting the single currency.

Hollande Victory

In a sign of contagion, 47 percent said Spain is likely to default, the most since the survey started measuring this in June 2010 and almost double the tally of four months ago, as investors question whether Prime Minister Mariano Rajoy can tackle both climbing debt and the region’s highest jobless rate. Sixty-three percent bet Portugal will fail to pay its bills, although only about a quarter anticipated the same fate for Italy and Ireland. Just one percent said Germany will go bankrupt.

While 90 percent expected France to pay its way, Hollande’s victory was greeted with disappointment among those polled as 71 percent said it makes them less willing to buy French bonds. Sixty percent regarded Hollande unfavorably and 71 percent viewed his policies with pessimism, about the same as predecessor Nicolas Sarkozy.

Reflecting the confusion of policy makers, investors split over the biggest threat to the euro zone. Thirty-five percent cited the lack of political cooperation among European Union leaders, edging out the 30 percent who pointed to anemic economic growth and 28 percent who blamed excessive debt.

There is some room for comfort. Eighty-three percent said the euro zone won’t collapse this year and 66 percent bet against a financial meltdown in the region’s banking sector. Eighty percent said Europe’s travails won’t prompt a global economic slump in 2012.

Two-thirds were favorable of ECB President Mario Draghi and sixty percent said they had a positive opinion of International Monetary Fund managing Director Christine Lagarde. Fifty-six percent were optimistic about the policies of German Chancellor Angela Merkel, the most since January 2011, while the actions of U.K. Prime Minister David Cameron were praised by 49 percent.

The survey was conducted by West Des Moines, Iowa-based Selzer & Co. and had a margin of error of plus or minus 2.8 percentage points

[Badboy]

I WAS READING IN THE GUARDIAN TODAY ABOUT GREECE'S OLYMPIC VILLAGE,BASICALLY FALLING APART.
IT IS ONE REASON THEY ARE IN DEBT,THE OLYMPIC VILLAGE;COST 10BILLION EUROS.
POTENTIAL OLYMPIC ATHLETES CAN'T GET THE MONEY AND EQUIPMENT.

[Panda]

(CNN)-- Greece may have given us the word democracy and many of the principles of civil society. But now it is "the sick man of Europe," and the people of other European democracies are asking whether it's worth saving with billions more dollars of their money. Put crudely, their argument is this: So what if Greece slides ignominiously out of the eurozone?

Goodbye Greece...

In continental terms, Greece is peripheral. It doesn't sit on reservoirs of oil, and it relies on agriculture and tourism as money-earners. It accounts for just 5% of the European Union's economic output. With the Cold War long over, its strategic position on the edge of the Balkans is not as important as it was.

Second, critics question whether Greece has the will or capacity to stay within the eurozone. In last Sunday's elections, the main Greek parties -- those that had promised to swallow the medicine doled out by the European Union and International Monetary Fund -- were trounced at the polls. Thursday, a third political leader was invited to try to form a government. Greek commentators predict no stable coalition is likely -- and new elections probable, just as a further $15 billion of austerity measures are due.

Two weeks ago, the governor of Greece's Central Bank, George Provopoulos, warned that unless the country stayed the course, there could be "a disorderly regression, taking the country back several decades and eventually driving it out of the euro area and the European Union."



CNN Explains: Austerity vs. Stimulus

Markets spooked by Greek political limbo

What's next for Greek voters?

'Old way of life in Greece is over' A majority of Greek -- some 70% -- tell pollsters they want the country to remain in the eurozone. But a substantial minority have just voted for parties that oppose what they see as austerity imposed by Berlin. They believe the medicine is actually making the situation worse. This year, the Central Bank forecasts the economy will shrink by 5%, after a 7% contraction last year. That means fewer jobs, less tax revenue and more difficulty meeting debt obligations.

Third, is the endless bailout smart economics? Or does it just perpetuate the crisis as new debt replaces old? A confidential analysis by the IMF, European Central Bank and European Commission in February projected that Greek debt would still amount to 129% of GDP in 2020 and could be as high as 160%. The analysis, obtained by Reuters in February, estimated Greece would need some $175 billion in financing over the next two years.

Some argue that so long as Greece uses the euro as its currency, it will never become competitive. Research by investment bank Goldman Sachs concluded Greece needed a real depreciation in its exchange rate of a whopping 30% to restore competitiveness. Compare its situation to that of Iceland, which after a financial meltdown in 2008 thanks to its over-stretched banking sector, went cold turkey with a 40% devaluation of its currency and let bank creditors whistle in the wind. Now it's started growing again, albeit modestly.

U.S. economist Kenneth Rogoff has argued that Athens should be granted a sabbatical from the eurozone while remaining in the European Union, allowing it reintroduce the drachma at a deep discount to the euro, and making its tourism industry wildly popular.

Hans-Werner Sim, head of German think tank Ifo, agrees. The money being showered on Greece to keep it in the eurozone would be better spent lubricating its departure, he says.

"The drachma will immediately depreciate, and the situation will stabilize very quickly. After a short thunderstorm, the sun will shine again," he told German magazine der Spiegel.

Fourth, beyond the discouraging arithmetic, some argue that the Greek state is too dysfunctional to cope with its massive obligations. Greece has a tax system that barely works, recalcitrant labor unions and extensive graft. The latest corruption league table from Transparency International ranks Greece as 80th - along with El Salvador.

"For decades the political elite, mired in corruption and rent-seeking, has followed the path of wasteful spending and patronage," wrote Kostas Bakoyannis, the mayor of Karpenisi, in the Wall Street Journal last month.

Greece hasn't privatized a single, state-owned industry despite repeated promises to do so. Its social fabric is fraying and it has a growing problem with political violence. Add to that, now, an unstable political order.

And finally, if Greece is unable to get its house in order and uncertainty persists, the dreaded contagion effect will rear its head again. It's a truism that markets hate uncertainty, and for the last year Greece has delivered it in weekly installments.

The never-ending melodrama could worsen the psychological climate for other "olive-belt" members of the eurozone. Negotiations on restructuring Greek sovereign debt have already left international investors wary of buying other south European debt. According to the Financial Times last month, investors have withdrawn $130 billion from Europe's sovereign bond markets over the past two years.

On the other hand...

The opposing argument is that a "disorderly default" or even a managed exit by Greece would have far-reaching consequences for Europe -- none of them good -- and misreads the Greek mood.

Pierpaolo Barbieri, Ernest May Fellow at the Harvard Kennedy School's Belfer Center, has written extensively about Europe's financial crisis.

"Greek voters have turned against the old duopoly of PASOK and New Democracy," he says, referring to the dominant parties of the past 30 years.

"They are tired of crisis. That doesn't mean they are against being part of the eurozone. They realize their savings would be wiped out if a devalued drachma took the place of the euro and that Greek banks would collapse. So it's important to separate the weakness of the existing political parties from the issue of the bailouts and the eurozone."

Second, there is no playbook for leaving the single currency, no rules governing expulsion. It was just never envisaged. A new Greek government, by persistently defaulting on debt repayments, might effectively vote itself out of the eurozone, but the process would be messy. Greek companies that take advantage of the single market would be badly affected.

"Any announcement of Greece's departure would wreck havoc in the markets. If Greeks elected someone who wanted to pursue this path, it would be impossible to get back in at a later date," Barbieri told CNN.

In addition, he says, there is no guarantee that excising Greece from the eurozone will relieve pressure on other members. It might simply refocus anxiety on the next most vulnerable state.

"If Greece were to fall out, what would that say to Portugal, Italy, Spain and Ireland? There would be a danger to the whole European construction, including the single market. The Germans often say "If the euro fails then Europe fails" -- and project Europe has been at the core of German foreign policy for half a century."

Italy, Spain and Portugal are in the middle of painful restructuring; just this week the Spanish government announced it would have to step in to rescue the country's third largest bank.

The worst-case scenario: that the whole concept of an "ever-closer union" toward which Europe has been striving will unwind, one state at a time.

"Europe will have difficulty forming a federation if its first action is to jettison countries that are unable to make ends meet," wrote commentator Barbara Spinelli in the Italian newspaper la Repubblica.

Let them eat carrots

Is there a way to muddle through? Maybe. But it will require a tilt from 'austerity' toward 'growth' to persuade the Greeks that their suffering will not be endless.

The basic choice may remain bailout or bankruptcy, but the bailout can be sweetened, as a spokesman for EU Economics Commissioner Olli Rehn hinted Tuesday.

"We can do lots to assist Greece, and we are doing so. Our member states, our taxpayers in other European member states of the euro area, are providing this solidarity," he said.

Concrete action must follow, says Barbieri.

"Europe needs to show the Greeks that they have reason to hope by staying the course, that it won't just be pain and more pain. There have to be measures to help growth, such as European investment projects in infrastructure and help for small and medium businesses starved for funding, which can be achieved through the European Investment Bank. The ECB should continue to help Greek banks, so as to start lending again."

Next year, Angela Merkel will be seeking a third term as German chancellor. If she gets one, analysts say, she may have greater freedom to tilt toward growth.

"It would be a positive development if Francois Hollande [the newly elected French President] could hasten this development and create 'rewards' for reforming countries, so as to remind European electorates the monetary union is not a 'suicide pact,' says Barbieri.

It may be that even with a rancorous political atmosphere, mass unemployment and street protests, Greece is actually making progress. If (yes, it's a large if) the next round of public spending cuts goes through Greece get close to achieving what's called a primary balance, its revenue will pay for its spending. According to the Central Bank, the economy may finally stop shrinking in 2013.

But 2013 seems a long way off, and these are the first tentative steps toward convalescence. Anyone who has seen the movie "Monty Python and the Holy Grail" will recall what happened to the man who insisted he wasn't dead yet.

[Panda]

PoliticsMember States


Germany

Will Angela Merkel know when to go?


10 May 2012






Die Zeit, 10 May 2012

“How much longer?” wonders the Die Zeit headline over a picture of Angela Merkel, who no longer has many friends in Europe at a time when she is about to undergo a fresh electoral setback in 13-May regional elections in North-Rhine Westphalia. Arguing that virtually all of Germany’s chancellors have clung on for too long, Die Zeit editor Bernd Ulrich insists that now is the time for a look back over the Merkel years.

Simple and without any experience of speech making, the Protestant pastor’s daughter, who was born in East Germany, succeeded in establishing a rapport with the entire nation, and especially with West Germans whom she judged to be “spoiled, as well as a little cowardly, and lazy”. As for the West Germans themselves, they were soon to be “merkelised” – caught up in cult that worshiped her supposed weaknesses of sobriety and a lack of glamour. And it was the euro crisis that marked the high point of this transformation. As Ulrich points out-


In 2005, Merkel felt she had to give Germans a boost. Today she has to convince her voters to help others, to keep a clear head, and most importantly, to continue their wise and zealous consumption. Her policy has been completely reversed. The question is: has she completed her mission in Germany? Has she migrated to Europe? [...] Were it not for German normality, and the fact that it is protected by an ultra-normal chancellor, Europe would have been plunged into chaos ages ago.

Far from imagining an imminent end to the Chancellor’s career, Ulrich concludes-


It may be that the German Merkel is now in decline, while the European Merkel is still at the height of her powers. Perhaps we no longer need her here, but rather in Europe. [...] She is only 57 years old, and is thus a woman politician with a future. However, where exactly that future lies remains to be seen.

[Badboy]

THERE WILL BE A PROGRAMME CALLED THE GREAT EUROPE/EURO? CRASH ON TUESDAY(JUST SAW A TRAILER ON BBC 1)PRESUMELY ABOUT THE EURO CRISIS.

SEPARETLY I SAW IN GUARDIAN THAT YOUTH UNEMPLOYMENT IN GREECE IS NOW 54%,UNEMPLOYEMENT HAS INCREASED TO 22%

[Panda]

THERE WILL BE A PROGRAMME CALLED THE GREAT EUROPE/EURO? CRASH ON TUESDAY(JUST SAW A TRAILER ON BBC 1)PRESUMELY ABOUT THE EURO CRISIS.

SEPARETLY I SAW IN GUARDIAN THAT YOUTH UNEMPLOYMENT IN GREECE IS NOW 54%,UNEMPLOYEMENT HAS INCREASED TO 22%

Badboy, I think most Analysts accept that Greece will default within the next few months. Another danger is Spain. the Banks are holding
Mortgages on Houses built in the Boom years that can't be sold, so the Spanish Government are lending to some Banks . Spanish Bond Sales have also
risen.

As one Economics adviser said, this problem will be going on for months and Investors are avoiding Bond buying and investing in Greece.

[Panda]

11 May 2012 Last updated at 16:26 Share this pageEmail Print Share this page



The eurozone economy is forecast to shrink this year as its debt crisis continues to bite.

The European Commission's spring forecastconfirmed its prediction of a 0.3% contraction in 2012 in the economies of the 17 countries that use the euro.

It predicted growth of 1.0% for the eurozone in 2013.

European Commissioner for Economic and Monetary Affairs Olli Rehn said "a recovery is in sight" for the eurozone.

But he added: "The economic situation remains fragile, with still large disparities across member states."

For all 27 countries in the EU, the Commission is predicting zero growth for 2012, with 1.3% growth next year.

Growth figures for the first quarter of 2012 will be released by the European statistics agency Eurostat on Tuesday 15 May.

"Economic activity in the EU contracted in the last quarter of 2011 and is estimated to have also done so in the first quarter of 2012," the Commission said in its statement.

Two consecutive quarters of economic contraction are generally taken to indicate a recession is underway.

But the Commission believes that a gradual recovery will start in the second half of the year.

'Longing for the turnaround'

Among the individual member states, the only one predicted to see an economic contraction in 2013 is Spain, which is forecast to decline by 0.3%.

The Commission predicts Spanish unemployment will continue to be the highest in the EU, with the jobless rate hitting 24.4% this year and 25.1% in 2013.

The unemployment rate in the eurozone is forecast to be 11% this year and in 2013, and 10.3% in the EU for both years.

The Commission describes Greece as "an economy longing for the turnaround".

It predicts a contraction in the Greek economy of 4.7% this year and zero growth for 2013, with unemployment at 19.7% in 2012 and 19.6% the following year.

"The recovery, which was previously expected for this year, will be further delayed with, at best, an insignificant improvement in activity in 2013," the Commission said.

Credit ratings agency Fitch warned that if Greece left the eurozone it was "likely" to put the sovereign credit ratings of all euro member states on negative ratings watch.

Cyprus, France, the Republic of Ireland, Italy, Portugal, Spain, Slovenia and Belgium are already on negative ratings watch and are most at risk of a Fitch credit downgrade if Greece exited the euro.

[Panda]

Mr Tsipras says the terms of Greece's international bailout agreement are too harsh
9:17pm UK, Friday May 11, 2012

Greek politicians have failed in their latest attempt to form a coalition government to deal with the country's economic crisis.
Alexis Tsipras, the leader of Greece's anti-bailout Left Coalition (Syriza) party, has said he will not join a national unity government with socialist leader Evangelos Venizelos.

"It is not the Left Coalition that has refused this proposal, but the Greek people who did so with their vote on Sunday," Mr Tsipras said.



He added he would not join any government that intended to continue implementing the terms of Greece's international bailout agreement, which he says is too harsh.

Mr Venizelos, who was the last of three party leaders to try to reach an agreement, has said he will hand the mandate back to the country's president on Saturday.

The failure to reach an agreement means that another round of elections may have to take place.

The country's international creditors have warned that whoever emerges to lead the country will be bound by its existing commitments.

Greece's debt crisis has raised the possibility it could default on its debt and be forced out of the eurozone.

Greek journalist Anthee Carassava told Sky News: "Effectively this now goes to the president who steps in and calls in all the political leaders to his office and makes a final attempt to mediate a power sharing deal.

"However, after the emphatic no that we heard from Alexis Tsipras the radical left Syriza party leader, we are seeing Greece bracing for yet another trip to the ballot box."

She added that this could take place on June 17.

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