Friday, May 27, 2016

Saturday Politics : Greece's Miseries May Never End

Saturday Politics updates Greece's miseries this week. Greece has agreed to a new bailout loan of €10.3 billion ($11.5 billion) from its creditors. More important, Eurozone finance ministers have agreed for the first time to offer Greece debt relief, extending the repayment period and capping interest rates. Greece needs the bailout to meet debt repayments due in July. But, the Greek government owes its creditors more than €300 billion -- 180% of its GDP -- and the International Monetary Fund (IMF) has argued with the Eurogroup for months over the issue of Greek debt relief. The IMF says debt relief is essential, but Germany in particular has opposed it. The IMF -- like most economists -- was so convinced of the importance of debt relief that it deferred participating in further bailouts, but now that debt relief has been agreed, the IMF will consider contributing to the bailout. ~~~~~ The 19 Eurozone ministers said the deal was made possible by Greek economic reforms, calling it a "breakthrough." The deal doesn't reduce the amount Greece will have to repay. Instead, debt relief will be phased in from 2018, after Germany's general election in late 2017. So, many see the deal as a compromise intended to buy time. Eurogroup President Jeroen Dijsselbloem told reporters : "We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance program." He said the package of debt measures would be "phased in progressively." ~~~~~ The bailout deal came two days after the Greek parliament approved another round of spending cuts and tax increases demanded by its creditors. Protesters demonstrated outside parliament as it approved the austerity budget and created a state privatization fund demanded by Eurozone finance ministers. Greek public debt is unsustainable at the current 180% of GDP. The IMF European Director said: "We welcome that it is recognised that Greece needs debt relief to make that debt sustainable and it can't do it on its own." ~~~~~ Germany and its Eurozone partners have forced on Greece human misery of monumental proportions. As the bailout has unfolded, Greece has had to take on more debt than it will EVER be able to repay. The debt has in essence been passed on to Eurozone taxpayers and governments that have their own serious economic problems. In addition to debt that puts Greece in eternal serfdom, Greek citizens have been reduced to abject poverty. As of July 2015, 25% of Greeks were out of work, with half under 25 having no job. In some areas of western Greece, youth joblessness is above 60%. Chronic unemployment means pension funds receive fewer worker contributions. So, as more Greeks are jobless, more pensioners have to support families on a reduced income. According to mid-2015 Greek government figures, 45% of pensioners receive monthly payments below the poverty line of €665. From 2008 to 2013, Greeks became on average 40% poorer, according to Greek government statistical data. In addition to job losses and wage cuts, the deep poverty can also be explained by steep cuts in social benefits demanded by the Eurozone. In 2014, disposable household income in Greece sunk to below 2003 levels. Add to this the Eurozone demand that Greece sell off public assets, reducing further Greek government income available for economic development and social relief. ~~~~~ Dear readers, can things get worse for Greece? Yes. The UN News Center reports the EU has largely ‘abandoned’ Greece to deal with the migrant crisis alone. UN Special Reporter on Migrant Human Rights, François Crépeau, says the suffering of migrants in Greece is the result of a complete absence of long-term vision and a clear lack of EU political will. Crepeau says : “This is not only a humanitarian crisis. This is more importantly a political crisis in which the EU and the overwhelming majority of EU member States have abandoned Greece -- a country that is fighting to implement austerity measures – leaving it to deal with an issue that requires efforts from all." Pray for Greece; the EU certainly isn't.

6 comments:

  1. There is a parallel here between what the EU may or may not do for Greece in the coming months and what the Federal Reserve may or may not do with the interest rates in June sometime. And that parallel is it’s … IMMATERIAL what either does because the outcome (not similar) is signed, sealed, and delivered.

    Ms. Yellen (Chairperson at the Federal Reserve) is like the EU Finance Ministers; both have no clue about what is happening. NO ONE on the Fed Board has any concern about the housing markets, the mortgage markets. Bothe the Fed and the EU Finance Ministers are deniers of the economic truth in the U.S. and about the unavoidable collapse of Greece in Europe. Neither group of “experts” has any history at predicting the future correctly. They simply throw more monies at the future, making the future someone else problem.

    The Fed launched a trial balloon, they raise the possibility of a rate hike at the first of 2016, and they waited to see how the markets react. The markets went up (only to tumble since January 1, 2016), and the Fed had then the confidence to raise interest rates.

    The EU finance ministers agree to lend Greece monies, readjust payments, and capping Greece’s Interest rates. Sounds great except the 10.3 Billion Euros is not enough – not nearly enough they owe 300 Billion Euros (nearly 200% of their GDP) to various creditors.

    So the similarities is that the 30 some other EU countries Finance Ministers can go to bed and say …”we tried to help” – but did they really or was it an effort in stalling the inevitable for the EU’s benefit, not an end game plan to help Greece? And when the United States markets sink with an interest rate hike in June, when the price of Gold skyrockets in June, when the USD is hit with another sell off - both Greece and the United States financial health will be sorely shaken again with one difference.

    The United States will survive with Federal Reserve will start to retract the recent interest rate increase, fall back to 0% interest (or heaven forbid Negative Interest Rates) and start another round of never successful “Quantitative Easing.” And we all remember how QE 1,2,and 3 failed. The Fed will put a floor under the market by printing more “paper” money, but in the end the FED will sacrifice the Dollar, because we (USA) can repay it’s debt.

    But Greece has NO place to go. They will take the 10.3 Billion loans which is like robbing a child’s Piggy bank to meet the mortgage payment; thus putting off total collapse for a few weeks or months. Greece has been broke for years

    Puerto Rico is broke. We all know that. But it was broke two years ago. It was broke three years ago. Why didn’t anybody care? The creditors kept lending them money even though they were broke. Well, eventually people wake up and they realize the debtor is broke. America is more bankrupt than Puerto Rico – but the difference here also is that the United States can (at least to date) repay its debt.

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    1. Even if Greece stayed in the euro zone (and I don’t think they will), a Greek default on other European governments or the ECB would be one of the most hostile moments in the history of the European Union.

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  2. A Tool 4 FreedomMay 28, 2016 at 7:57 PM

    In respect to all the varied possibilities surrounding Greece's future, here are a couple to ponder:

    1. Can a country file Bankruptcy and escape any/all obligations?
    2. What would the world be like without the 'Birthplace of Democracy' and the 'City States'?

    Simple, but with some real implications to think about before we just bid a Fond Farewell to Greece and all she has given this world.

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  3. Greece should beware of the EU and their fine Financial Ministers and ECB folks because a great predictor of the future are the facts of yesterday.

    Who lent the Greek's while all long knowing that the problem was not really the Greek economy but the Greek Socialistic government.

    You get just what you paid for my fellow Greeks.

    if the promises sounded too good to be true - THEY WERE.

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  4. The “Greek crisis” makes no sense whatsoever. It is obvious that Greece cannot with its devastated economy repay the debts that Goldman Sachs hid and then capitalized on the inside information, helping to cause the crisis. If the solvency of the holders of the Greek debt, apparently the NY hedge funds and German and Dutch banks, depends on being repaid, the European Central Bank could just follow the example of the Federal Reserve and print the money to secure the Greek debt. The ECB is already printing 60 billion euros a month to save the European financial system, so why not include Greece?

    Obviously, the Western world doesn’t want to help Greece. The West wants to loot Greece. The deal is that Greece gets new loans with which to repay existing loans in exchange for selling municipal water companies to private investors (water rates will go up on the Greek people), for selling the state lottery to private investors (Greek government revenues drop, thus making debt repayment more difficult), and for other such “privatizations” such as selling the protected Greek islands to real estate developers.

    This is a good deal for everyone but Greece.

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  5. Concerned CitizenMay 29, 2016 at 4:15 PM

    What would Europe look like without Greece?

    The future in this matter can not be seen from the past.

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