Posts Tagged: austerity

 

European Central Bank (ECB) president Mario Draghi has warned the negotiations around Greece’s €240bn (£181bn) bailout program are  “urgent” and a default by the cash-strapped country would push the region into “uncharted territory”.

“Much more work is needed now, and it’s urgent,” he said at the International Monetary Fund – World Bank spring meeting in Washington. 

“We all want Greece to succeed. The answer is in the hands of the Greek government.” This echoes comments made earlier this week when he stressed that the ball remains in Greece’s court.

Prime Minister Alexis Tsipra’s government is trying to come up with a list of economic reforms acceptable to its creditors, in order to unlock a €7.2bn tranche of cash. But the clock is ticking – it’s due to pay €200m to the IMF on 1 May and then €770m on 12 May.

The Greek government has previously agreed to continue fiscal austerity, it does want to reduce the extent of it.

Draghi said, compared to the start of the sovereign debt crisis around five years ago, the euro area is better prepared for the financial turmoil that could ensue if the negotiations failed. 

Commentators have warned that if Greece is unable to secure funding, it could lead to capital controls – which would stop panicked investors pulling money out of the country – as well as an exit from the common currency.

Nonetheless, he said it’s still facing “uncharted territory”.

Meanwhile, In Greece — Live Feed

16 April 2015 - 22:00 pm
 

The honeymoon is officially over in Greece for the Syriza socialist saviors who, after a series of dramatic pledges to free Greeks from the bonds of austerity have been forced to abandon the very promises which got them elected as the “institutions” (no one is allowed to speak of the “troika” any longer) have refused to budge on demands that Athens institute serious fiscal reforms.

Now, with time running dangerously short, and with looming payments to the IMF and to public sector employees and pensioners, the people are restless…

Live feed…

 

With almost 70% of Europeans already believing that Greece is a drag on the EU economy, this morning’s statement by Greek Alternate Finance Minister Dimitris Mardas – coming just a week after the war-raparations committee was set-up, telling lawmakers in Parliament that he has calculated that Germany owes Greece EUR 278.7 billion in World War II reparations, will surely deepen the rift (at almost 40% of Germany’s EUR 735 billion GDP) whether right or wrong. 

As Bloomberg reports, 

Greece’s total war reparations claim amounts to EUR 278.7b, Greek Alternate Finance Minister Dimitris Mardas tells lawmakers in Parliament.

 

The claim was calculated by Greece’s General Accounting Office, which has collected archival material.

This includes a EU10.3b repayment of loan country was forced to make to Germany during Nazi occupation… >> Read More

 

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

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Baroda, India.