Greece and the economic crisis

May 22, 2015

Merkel Warns 'Whole Lot Left' to Do on Greece Bailout Talks - USA Today

"With Greece facing a potential default in two weeks, German Chancellor Angela Merkel on Friday sought to add urgency to the talks between the country and its international creditors, warning that "very, very intensive work is still needed."

Merkel and French President Francois Hollande spoke for about two hours with their Greek counterpart, Alexis Tsipras, at a summit in Latvia in an effort to pave the way for a deal to get Greece more loans.

The "friendly and constructive exchange" came after a leading official from Tsipras' party warned that Greece will not be able to repay a loan to the International Monetary Fund on June 5 unless a deal is reached with its creditors to unblock bailout funds.

Tsipras said he was "optimistic that we can soon reach a stable long-term and sustainable solution, without the mistakes of the past."

Greece, creditors not in talks on extending bailout: Commission - Reuters

"Greece and its creditors are not in talks on extending the country's bailout until the autumn, with negotiations focused on meeting the program's conditions by the time it expires in June, a senior European Commission official said.

Greece and the European Commission, the European Central Bank and the International Monetary Fund -- the institutions representing the lenders -- are in intensive talks on what reforms Athens must implement to get the funds remaining under the current bailout deal.

The negotiators are running out of time to clinch a deal before Greece runs out of money next month and German newspaper Sueddeutsche Zeitung reported a senior EU official as saying euro zone countries were considering extending the bailout over the summer."

Greece, Spain lead Europe's jobless parade - mynorthwest


1. Greece, 25.7 percent.

2. Spain, 23.0 percent

3. Cyprus 16.0 percent

4. Portugal 13.5 percent

5. Italy 13.0 percent

May 21, 2015

Schäuble Doesn’t Rule Out Greek Default - WSJ

"In an interview in his spartan Berlin office on Tuesday, Mr. Schäuble, a key architect of Europe’s controversial austerity-driven response to the eurozone debt crisis, showed no willingness to compromise in the negotiations to unlock the final installment of Greece’s €245 billion ($272 billion) bailout. Without a deal, the program will expire in six weeks, leaving Greece with no option but to default on billions of euros in debt repayments coming due this summer.

...On the subject of Greece, Mr. Schäuble, who will lead a meeting of Group of Seven finance ministers and central bankers next week in Dresden, rebuffed most ideas from Brussels to carve a way out of the impasse in bailout negotiations.

He also cautioned the European Commission, which is seen in Berlin as too lenient with Athens, to keep to its role as one of the three monitors of the program’s implementation, alongside the International Monetary Fund and the European Central Bank. “Many people talk about things they either do not understand or are not responsible for,” he said. “The Commission plays its role as part of the three institutions. But it acts within the limits of this function.”

Mr. Schäuble is known for taking a hard line on Greece. However, Ms. Merkel has taken a somewhat more pragmatic view, and is eager to avoid a Greek bankruptcy or euro exit, according to officials in Berlin."

Germany, France and Greece to discuss bailout at EU summit - UK Guardian

"Germany’s finance minister has cautioned that a Greek breakthrough is not imminent.

In an interview just published with Reuters, Wolfgang Schäuble stuck to his position that progress between officials from Greece and its creditors remains slow.

Schäuble argued:

“What I know from discussions with the three institutions does not back up the optimism arising from announcements from Athens.

There is not yet any substance to the mere announcement that we are closer to an agreement. This is still within the realms of atmosphere.”

Varoufakis says 'respects' secrecy after taping claim - Economic Times

"Greek Finance Minister Yanis Varoufakis was forced to say he respected the confidentiality of debt talks with his European counterparts after a news report claimed he recorded an April meeting.

A lengthy New York Times profile of the outspoken minister published online Wednesday said: "He (Varoufakis) says he taped the meeting but cannot release the tape because of confidentiality rules."

Further coverage:

Varoufakis courts controversy anew with taping remark - Reuters

‘The Days of Yanis Varoufakis are Numbered’ - Greek Reporter

"The writer of the report argued that the relations between Varoufakis and his European Union colleagues are already at their worst state, and after his admission of the wire-tapping will become even worse. He also wondered if the Greek Finance Minister has secretly taped other Eurogroup meetings, while stressing that from now on it is very likely that European officials will be very cautious when speaking in front of Greeks.

On Thursday morning, Varoufakis denied that he secretly recorded the Finance Ministers meeting. While entering the Greek Finance Ministry, reporters asked him if his statement to the New York Times was true. To that, the Varoufakis replied, “Fairy tales, fairy tales, fairy tales.”

The Way Out for Greece - Bloomberg

"To begin, it is odd to claim that a crisis caused by a 10-year infusion of excessive cash can be cured by means of further stimulus. The theory that it can assumes that Greece lacks sufficient “effective demand,” or the capacity of consumers to purchase goods and services at current prices. Restore this and a virtuous circle of growth will follow.

A single statistic should suffice to cast doubt on this assumption. Greece's gross domestic product was similar in 2001 and 2014, measured in constant 2005 prices, meaning that “effective demand” in these two years before and after the debt crisis was approximately equal. And yet unemployment in 2014 was almost triple the 2001 level. The key to resolving Greece's economic woes must, therefore, lie in something other than demand.

....After the euro was introduced in 1999, Greece received more in credit than it needed every year, between 5 percent and 10 percent of gross domestic product. Populist politicians funneled this excess money to their political clients, explaining the windfall as a “development dividend” that resulted from “structural convergence” with the core euro area countries. This was a fantasy, because there was no such convergence. Yet, it was natural for the recipients of this largesse to see it as real and permanent income."

May 20, 2015

Greece can't repay IMF without deal, official says - Fox WBRC

"Greece will not be able to repay a loan to the International Monetary Fund early next month unless a deal is reached with its creditors to unblock bailout funds, the governing party's parliament spokesman said Wednesday. reached with lenders within a week - a prediction that eased market anxiety that had seen borrowing rates spike once more and the Athens stock market slide.

Tsipras has also faced dissent within his own party, with some members saying Tuesday that lenders were trying to force the government to abandon pre-election promises, and advocating the government make clear it intends to delay repayments."

A Finance Minister Fit for a Greek Tragedy? - NY Times

"Varoufakis has been Greece’s finance minister for only four months, but the story of how he has thrown Europe into turmoil is one many years in the making. After Greece joined the European Union’s monetary union in 2001, the tiny country of 10 million was flooded with money from elsewhere on the Continent. Over the course of the next decade, Greek leaders, whose sclerotic and corrupt economy had long been rife with patronage and tax evasion, borrowed billions from imprudent European banks and then lied to E.U. officials about its mounting debts. When the financial crisis finally rolled into Greece in 2009 and 2010, the country was an estimated $430 billion in debt, a staggering figure that imperiled the economic health of its near and distant neighbors — indeed, all of Europe. The European Commission, International Monetary Fund and the European Central Bank (often referred to as the troika) agreed to bail out the sinking economy by loaning it $146 billion. In return, as Athenians rioted in the streets in protest, the government promised the troika it would reduce state spending by slashing pensions and wages, eliminating jobs and raising taxes, an approach to debt reduction known as “austerity.”

That bailout, along with another, even larger rescue in 2012, temporarily buoyed Greece, but the spending cuts have produced what many Greeks consider to be a humanitarian crisis. Twenty-five percent of the country’s population is unemployed; Greece’s gross domestic product has shrunk by a quarter; suicides and homelessness have increased; hospitals, woefully underfunded, scrounge for medicines. Just this month, Varoufakis warned that the country could run out of money in weeks."

...“For the people who are now 15, 16, 17 years old, to have a chance by the time they are 20 — this is what matters,” he told me this month. “There’s no doubt that this economy now is far worse off in the last two months as a result of our hard bargaining.” He described that change as a trade-off, an investment in a better future. “And an investment always involves a short-term cost,” he said.

I asked him about that short-term cost. Is he worried about the Greek economy today?

“Terrified,” he said. “Terrified and aghast.”

Growing risk of capital controls, with IMF repayment in doubt

"Greece would enter a legal minefield if it were to default on its IMF repayments, as it is now threatening."

Greece Among 10 Countries Who Made It to Eurovision Final - Greek Reporter

"Maria Elena Kyriakou with her song “One Last Breath” sent Greece to the 2015 Eurovision Grand Final scheduled to take place this Saturday in Vienna, Austria."

Doubts over Greece add to euro's ECB-driven frailty - News Asia

"The euro fell as low as US$1.1065 early on Wednesday, off almost three cents since ECB Executive Board member Benoit Coeure said this week that the bank may "moderately" increase its bond-buying programme in May and June.

It was last down 0.3 percent on the day at US$1.1110.

The Greek government's parliamentary speaker said on Wednesday that Athens will not make a payment to the IMF that falls due on June 5 unless it has reached a deal with its creditors by then.

Euro zone government bond yields were also lower, widening the gap between benchmark U.S. and German yields further in favour of the dollar.

The 10-year yield spread moved out to around 169 basis points , marking an increase of almost 20 basis points in just two days."

Close to Grexit? - BBC

"How bare are Greece's coffers? Without an urgent cash-for-fiscal reforms deal, the left-led Syriza government will run out of cash. It's been said many times before, but now it really does appear to be true.

Somehow, the money was scraped together to survive €1bn in debt payments to the International Monetary Fund in May, but an expensive summer looms, with hefty bills due to the IMF and European Central Bank, and payments to holders of short-term treasury bills."

New VAT rates to increase revenue - New Kerala

"With this new tax scheme, replacing the current 23 percent, 13 percent and 6.5 percent rates, the government will increase revenues by at least 200 million euros ($223.6 million) per year, the minister said.

By encouraging card payments, the government also expects to reduce fraud in the collection of VAT, a significant headache for the government."

More May 2015 News

Greek words and phrases:

mi-la-ka-nis ang-glee-ka [Does anyone speak English?]

then mi-lo el-lee-ni-ka [I don't speak Greek]

The Socialists Revenge in Athens, Greece, 2004

Athens, Circa 1994

Greek War for Independence: How the Ottoman's empowered the Greek Revolution

Philoxenia, 1968 Greece

Greek identity after the War of Independence: Hellenic Place-names

Vote-Rigging and the quasi-feudal system in Greece: Patronage in Post-Independence Greece

Antoine Bon Thessaly
Photo of Thessaly Greece; Meteora mountains 1938. Click to view enlargement.
Rhodes Island Tile
Scan of Rhodes Island Souvenir tile, circa 1976. Click to view enlargement.