Posts Tagged: austerity


The ECB began a programme of buying sovereign bonds, or quantitative easing, on Monday with a view to supporting growth and lifting euro zone inflation from below zero up towards its target of just under 2 percent. 

Bond yields in the currency bloc have collapsed, but record low interest rates so far have not spurred investments that would support growth in recession-hit countries like Italy or Spain. 

“QE is all around us and optimism is in the air,” Varoufakis told a business audience in Italy. “At the risk to sound the party pooper … I find it hard to understand how the broadening of the monetary base in our fragmented and fragmenting monetary union will transform itself into a substantial increase in productive investments. 

“The result of this is going to be an equity run boost that will prove unsustainable,” he said.  >> Read More


Leftist Prime Minister Alexis Tsipras on Saturday accused governments in Spain and Portugal of working with the conservative opposition at home in a bid to weaken, or even topple, his anti-austerity administration.

Addressing SYRIZA’s central committee on Saturday, Tsipras said that Madrid and Lisbon officials had sided against Athens during negotiations on February 20 that led to a four-month extension of the country’s loan deal.

“We were up against an axis of powers led by Spain and Portugal, which for obvious political reasons sought to lead the whole negotiation to the brink,” Tsipras said.

“Their plan was, and it remains, to wear down, topple or bring our government to unconditional surrender before our work starts to yield fruit and before the Greek example affects other countries,” he said. Both Mediterranean countries will hold elections this year. >> Read More


Greece has submitted the list of economic reforms demanded by its creditors to extend the country’s bailout programme by four months, a European source said Monday.

“The list has been received,” said the source close to the matter without giving any details..

However, the European Commission said no final list has yet been put forward as talks are continuing.

“We have not received any list from the Greek authorities. As you know the deadline is by the end of Monday,” spokeswoman Mina Andreeva said.

“Of course there are talks happening. We are in contact with the Greek authorities.

“I think it is normal that documents are circulating but any official transmission of the list … should happen by the end of the day and we are expecting it by the end of the day,” Andreeva said.

Officials are due to review the list of Greek reforms Monday and then onpass their findings to all 19 eurozone finance ministers for a decision Tuesday.

If judged acceptable, Greece and its creditors — the European Union, the European Central Bank and the International Monetary Fund — will then thrash out the exact terms for the four-month loan extension.

After last-chance talks on Friday, eurozone finance ministers gave the new left-wing Greek government until Monday to come up with reforms to the programme which expires Saturday.

Germany had opposed any change, insisting that Greece stick with the hugely unpopular austerity measures contained in two bailouts worth some 240 billion euros.

Greek Prime Minister Alexis Tsipras won power last month promising to ditch the programme on the grounds the austerity measures had wrecked the economy and had to be removed.

Friday’s compromise effectively gave Tsipras the chance to submit Athens’s own austerity commitments in exchange for the extension, keeping Greece in the eurozone for the moment.

“Europe has some breathing space, nothing more, and certainly not a resolution. Now it’s up to Athens,” Frank-Walter Steinmeier, foreign minister of eurozone powerhouse Germany, said in comments published Monday.

“The fundamentals — namely assistance in exchange for reform — must remain the same,” Steinmeier told the Bild daily.


Leaders of embattled mainstream European left parties met in Madrid on Saturday seeking to regain lost ground as they tried to strike a balance between “suicidal austerity” and financial “responsibility” at a time when debt-racked Greece is trying to renegotiate a bailout deal.

The heads of socialist and social democratic parties, threatened by extreme-right parties on the one hand and radical leftists like Syriza in Greece and Podemos in Spain on the other, tried to strike a tone of compromise particularly with relation to the economy in a bid to make gains in polls.

“We cannot afford to have public deficits and they have to be reduced because we are responsible for our future generations,” French Prime Minister Manuel Valls said on the sidelines of the meeting.

“We need to reduce sovereign debt but we cannot reduce the public debt without growth and employment,” said European Parliament President Martin Schulz, a German social democrat. >> Read More


The current stand-off between Greece and the eurozone could turn into a “full blown crisis” that would pose a serious risk to both Europe and the UK, according to British Chancellor George Osborne.

 As eurozone finance ministers set to continue negotiations with Greek officials in Brussels, Mr. Osborne has urged European leaders to come to an agreement with Athens, amid fears Greece could exit the single currency bloc, triggering another economic collapse. 

he Chancellor told Sky News: “What you see now in this stand-off between the eurozone and Greece is the risk of a full blown crisis which would do real damage to the European economy — and is a risk to Britain.

“We need the eurozone to find a common solution and here at home we need to go on working through our economic plan which has kept us safe.” >> Read More

5 Things To Ponder: Greek Dressing

14 February 2015 - 10:15 am

Greece has once again taken center stage as the recent elections put a pro-Greek/anti-austerity party in charge of the country’s future. The good news for the Greek population is that the government will raise minimum wages, increase government spending and cut taxes. The bad news is that Greece is broke.

The worse news is that, for the Eurozone, the risk of a Greek debt default has risen sharply.


“So, let them default, it just Greece. Better yet, just kick them out of the Eurozone entirely.”

Simply put, neither of these options are palatable. If Greece defaults, considering that banks and hedge funds have loaded up on Greek debt assuming Central Banks will always bail them out, it would lead to a potential credit crisis on the magnitude of the 2008 event. 

Secondly, if Greece is allowed to exit from the Eurozone, which means they go back to printing the Drachma, they can deflate their debt by printing currency. The risk is that France, Italy, Spain and every other country in the Eurozone realizes that being a sovereign currency issuer is a way out of their debt problems without changing their spending habits. The end of the ECB and the Eurozone “dream” would shortly follow with those in positions of power would be quickly dethroned. >> Read More


Greece said on Saturday it had no short-term cash problem and that it will hand its European Union partners a comprehensive plan next week for managing the transition to a new debt deal.

The EU has warned time is running out to avoid a financing crisis in Greece.

The new left-wing government in Athens has rejected the austerity that was forced upon the country by an EU/International Monetary Fund bailout and instead says it wants a “bridge agreement” until it has negotiated a new deal.

“We will present a comprehensive proposal on Wednesday,” Finance Minister Yanis Varoufakis said, referring to a meeting of euro zone finance ministers in Brussels on that day.

Varoufakis was attending a cabinet meeting called to prepare the government’s overall policy programme, which Prime Minister Alexis Tsipras will present to parliament on Sunday. >> Read More

IMF says not in debt talks with Greece

05 February 2015 - 6:00 am

 The International Monetary Fund said Wednesday it was not in debt talks with the new anti-austerity Greek government, which wants to renegotiate its bailout from the IMF and European Union.

“There is an agreed framework for dealing with debt in the current program. There has been no discussion with the authorities on a change in this framework,” the IMF said in a brief statement.

The IMF’s European department chief, Poul Thomsen, who is charge of the IMF program with Greece, had met with Greek Finance Minister Yanis Varoufakis over the weekend “to get acquainted and to discuss the challenges facing Greece,” Fund spokeswoman Angela Gaviria said in an email to AFP.

She did not provide further details. >> Read More


Greece sought to reassure international investors on Monday that it was not in a Wild West-style standoff with European partners over a new debt agreement, although sparring partner Germany gave no ground after a tough first week.

Spurning neckties, new Prime Minister Alexis Tsipras and his pugnacious finance minister Yanis Varoufakis are touring European capitals in a diplomatic offensive to replace Greece’s bailout accord with the European Union, European Central Bank (ECB) and International Monetary Fund, known as the “troika”.

Varoufakis said he was confident he could reach a negotiated settlement soon, telling Britain’s Channel 4 news it was time to stop Greece being a “festering wound” on Europe and dismissing a suggestion the ECB could block a new deal.

After a tumultuous first week during which the new left-leaning government made clear it intends to keep campaign promises to ditch the tough austerity conditions imposed under its existing bailout, the emphasis this week appears to be on maintaining that a new deal is still possible. >> Read More


People wave Republican and Podemos party flags during a Podemos party march in Madrid, Spain, Saturday, Jan. 31, 2015

Thousands of people gathered in Madrid on Saturday in an anti-governmental rally organized by the Spanish anti-austerity left-wing party Podemos, following the recent victory of the eurosceptic Syriza party in Greece’s parliamentary elections.

 “Thousands of people have already filled up Cibeles [a square in Madrid], have come to tell the government of Rajoy [Mariano Rajoy, Prime Minister of Spain] that they will not continue tolerating the plundering to which we are subjected to, that we will chuck them out,” Podemos wrote on its Facebook page.

More than 260 buses with more than 10,000 people from all over the country came to Madrid ahead of the rally, local media reported. Around 100 people have volunteered to carpool.

According to the party’s leader, Pablo Iglesias, the march’s aim is not to protest or ask the government for anything, but to mark the beginning of change.

Following the victory of radical left-wing Syriza party, Iglesias told Rajoy to “begin the backwards countdown,” according to media reports.
“Today Greece said that yes it is possible. It is the same as we shall say in Madrid on the 31: we can build a fairer country,” Podemos said.
The eurosceptic Syriza party won in Greek parliamentary elections on January 25. The anti-austerity party received 36.34 percent of votes.
The Syriza party aims to renegotiate the austerity measures imposed by the European Union and International Monetary Fund (IMF) creditors, worth about $268 billion.

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Baroda, India.