Greece and the economic crisis 2015

NEWS ARCHIVE - July 11 - July 15

July 15, 2015

"Greek lawmakers voted overwhelmingly early Thursday to approve a harsh austerity bill demanded by bailout creditors, despite significant dissent from members of Prime Minister Alexis Tsipras' left-wing party.

...High-ranking dissenters included Alternate Finance Minister Nadia Valavani, who resigned from her post earlier Wednesday, saying she could not vote in favor of the bill.

In a letter sent to Tsipras on Monday and released by the finance ministry Wednesday, Valavani said she believed "dominant circles in Germany" were intent on "the full humiliation of the government and the country."

The economy ministry's secretary general, Manos Manousakis, also resigned over the measures.

Parliament speaker Zoe Konstantopoulou, a prominent Syriza member, slammed the deal as a product of blackmail, calling it a "crime against humanity" and "social genocide."

"Moody's Investors Service has today downgraded Greece's government bond rating to Caa3 from Caa2 and placed the rating on review for further downgrade. The short-term rating is unaffected by this rating action and remains Not Prime (NP). Moody's government bond rating applies to privately-held debt only.

...Concurrently, Moody's has lowered the country's local- and foreign-currency bond ceilings to Caa2 from B3, which reflects the increased probability that the outcome of the referendum leads not just to Greece defaulting on its official and privately held debt, but also exiting the euro area."

"Greece's parliament formally approved the following measures:

-- Reform the tax code to raise additional revenue for the government. This will include raising sales taxes on restaurant meals and other items to 23% and eliminating tax discounts on popular Greek islands.

-- Overhaul the pension system, which will include setting the standard retirement age at 67 to discourage people from retiring early.

-- Safeguard the independence of the nation's statistics agency, the institution responsible for data tracking the nation's debt and economic growth.

--Implement rules to meet budget targets, which could require additional spending cuts"

Greek parliament to vote on painful new austerity bill - MSN

"The bill is expected to pass with votes in favor by pro-European opposition parties.

The government, a coalition between Syriza and the small right-wing Independent Greeks, holds 162 seats in Greece's 300-member Parliament. More than 30 of Syriza's own lawmakers have publicly voiced objections.

Tsipras has acknowledged the measures he agreed to after a marathon summit with eurozone leaders on Monday go against his election pledges to make life easier for Greeks, and described them in a Tuesday night television interview as "irrational."

But he said he had no option if he was to prevent Greece's financial collapse."

"After a stunning win in a referendum earlier this month that rejected calls for more austerity, Tsipras remained in a bind this week as he reached a deal with creditors: Greece's cash-starved banks would likely have collapsed, sending the country spiraling out of the euro, Europe's joint currency. So after a marathon eurozone summit, Tsipras agreed to tough new measures that mean economically-battered Greeks will pay more for most goods and services by the end of the week.

The bill is expected to pass with votes from opposition parties. But the Tsipras government's political survival could be in danger if large numbers of its own lawmakers resign their seats or openly vote against the bill. Many in Tsipras' party have indicated they will refuse to vote for the deal because it goes back on election pledges to repeal austerity measures that have been imposed on Greece for years."

Tower on the island of Hydra

July 14, 2015

"European creditors agreed to rescue Greece from the brink of financial ruin early Monday, after the Greek government capitulated to the most onerous terms yet as the steep price for remaining in the 19-nation eurozone.

The complex agreement, reached after 17 hours of negotiations, requires Greece to quickly adopt dramatic pension cuts and tax increases, and plan to sell off virtually all of its assets to help reduce its enormous debts. It also offers no debt relief that Greece had hoped to receive."

"If the Greek government were a football team, then it just threw a Hail Mary pass to pull out a squeaker, reaching a third bailout deal with eurozone leaders to rescue the country from an all-out economic disaster.

But as they say on the gridiron, time out – as in big time out. If Greece and the European economy at large face uncertainty as they move forward, the last-minute deal poses an equally large quandary for investors, who have little if any precedent for interpreting a situation this dire.

Nor is the deal set in stone, at least yet. The Greek government now must convince lawmakers in Athens to approve tax increases and other unpopular measures by Wednesday or the deal could fall apart.

"By no means are the problems in Europe over, so investors have to be very cautious in how they invest," says Jeffrey Sica, president, CEO and chief investment officer of Circle Squared Alternative Investments in Morristown, New Jersey. "They shouldn't have an overwhelming amount of confidence just because there seems to be a solution to the Greek crisis – in reality, there is no quick fix."

"In talks over the weekend, Greek Prime Minister Alexis Tsipras faced an awful choice: Either abandon the euro currency and watch Greece's economy collapse, or accept more austerity in the knowledge it will cause his people even more torment.

He chose the latter -- slow pain rather than utter disaster.

...After weeks of brinksmanship, including the rupture of negotiations and the holding of a referendum -- in which the Greek people apparently voted "No" to more austerity -- a deal to lend the country more money and have the government sell some assets was reached.

The country will not fall out of the euro. But it could fall further into the economic abyss."

"The European Commission will recommend providing Greece with bridge financing over the next month through the European Financial Stability Mechanism (EFSM), in defiance of strong British and Czech objections, EU officials say.

...A multi-billion euro recapitalisation of Greece's banks will help protect savers' deposits, Greek Economy Minister George Stathakis says, after Athens agreed a deal that could lead to a fresh bailout from international creditors.

The White House said on Monday the United States welcomed the deal reached between Greece and its creditors, calling it "credible step" that would include difficult structural reforms by Greece. "

"European Council President Donald Tusk tweeted shortly before 9 a.m. local time Monday that the so-called EuroSummit had "unanimously reached agreement" on a financial aid program that included what Tusk called "serious reforms" and "financial support" for the beleaguered Athens government. At a news conference later Monday, Tusk jokingly referred to the deal as an "a-Greek-ment."

The deal calls for Greece, already reeling from harsh austerity measures, to cut back even further in exchange for more loans without which its financial system would surely collapse. It still requires approval from Greece's parliament by the end of Wednesday.

..."We managed to avoid the most extreme measures," Greek Prime Minister Alexis Tsipras said. "Greece will fight to return to growth and to reclaim its lost sovereignty."

...A breakthrough came in a meeting between Tsipras, Hollande, German Chancellor Angela Merkel and Tusk, after the threat of expulsion from the euro put intense pressure on Tsipras to swallow politically unpalatable austerity measures in exchange for the country's third bailout in five years."

"The hashtag #ThisIsACoup has been trending on Twitter since Sunday night - not just in Greece but in Germany and internationally. Greeks have taken to social media to express their dissatisfaction with the conditions their government has signed up to.

Prime Minister Alexis Tsipras will now have to rush measures on pension reforms, tax increases and spending cuts through parliament.

The agreement also includes plans for Greece to transfer assets to a €50bn fund to be privatised or managed under European supervision.

...The economy here is close to collapse, capital controls remain in place, and there are still long queues at cash machines. People in line bunch together in patches of shade as they wait."

July 13, 2015

"After grueling, often angry negotiations that tested the limits of European unity, Greece struck a preliminary rescue deal with its creditors Monday that should avert an imminent financial catastrophe but also guarantees years more hardship and sacrifice for its people.

Prime Minister Alexis Tsipras flew home to sell the bailout plan to skeptical lawmakers and political allies, some of whom accused him of selling Greece out. Panos Kammenos, leader of the junior partner in Tsipras' coalition government, denounced the deal as a German-led "coup."

...To close the deal with his partners in the euro currency, Tsipras had to consent to a raft of austerity measures, including sales tax hikes and pension and labor reforms — measures he had campaigned vociferously against over the last five years of Greece's financial crisis."

Greece reached a desperately-needed bailout deal with the eurozone on Monday after marathon overnight talks, in a historic agreement to prevent the country crashing out of the European single currency.

Leftist Prime Minister Alexis Tsipras agreed to tough reforms after 17 hours of gruelling negotiations in return for a three-year bailout worth up to 86 billion euros ($96 billion), Greece's third rescue programme in five years.

"EuroSummit has unanimously reached agreement," EU President Donald Tusk said. "All ready to go for ESM (eurozone bailout fund the European Stability Mechanism) programme for Greece with serious reforms and financial support."

The new rescue for Athens is the country's third since 2010 and came after a bitter six-month struggle following Tsipras's election in January that put Greece's membership of the eurozone in the balance.

July 12, 2015

Greece closer to desperately needed deal with creditors - MSN

"Greece moved closer on Sunday to a desperately needed deal with European creditors which would stave off immediate financial collapse and the country's potential exit from the euro but impose more hardship on its people.

Facing a self-imposed Sunday deadline, the eurozone's top official, Jeroen Dijsselbloem, said the sides have "come a long way" after two days of talks among finance ministers, but that the final effort on "some big issues" would be handled by eurozone leaders in a summit which was expected to go into the night.

Underscoring the optimism despite the often fundamental differences among the leaders, Italian Prime Minister Matteo Renzi said "we are very close."

The broad outline of a deal appeared to consist of a long series commitments from Greek Prime Minister Alexis Tsipras to push through much of a drastic austerity program within days, while the 18 other eurozone leaders would commit to start talks on a new bailout program.quot;

"The EU cancelled an emergency summit Sunday, though talks among eurozone leaders regarding Greece continued. The talks are seen as Greece's last chance to provide a list of pension cuts and other economic reforms that European leaders are demanding in exchange for debt relief and a bailout of the nation's crippled financial sector.

The crisis has created chaos in Greece, with ATMs being forced to close and basic supplies becoming harder to find as capital flees the country. "

"Should a deal fall through, The Telegraph reports the German government has prepared to negotiate a temporary five-year euro exit for Greece, giving the country humanitarian aid while it makes the transition.

The plan, backed by Germany’s finance ministry, gives Greece two options: either submit a proposal to make drastic changes like placing 50 billion euro in a trust fund of sorts to pay off its debts and have Brussels take over its public administration or agree to the temporary exit from the euro zone.

German Vice Chancellor Sigmar Gabriel said it was the only options Greece has in the matter as creditors voiced mistrust with Athens, a week after the Greek government held a referendum in which it urged voters to reject bailout conditions that it now has signed up to.

The Greek government denied the report. Theodoros Mihopoulos, who heads Greek Prime Minister Alexis Tsipras' office, said in a tweet that the report "is completely denied."

July 11, 2015

"It was at a meeting of eurozone finance ministers in Riga, Latvia, in late April that Dušan Mramor, Slovenia’s finance chief, decided enough was enough.

Then-Greek Finance Minister Yanis Varoufakis had just given another long lecture on the social impact of the Greek crisis when Mr. Mramor snapped and broke one of the last remaining taboos of the currency union’s five-year old debt crisis, suggesting for the first time that Greece might need a “Plan B.”

...The episode highlights an unexpected force in this latest round of Greek crisis talks: small, relatively poor countries in Europe’s east, many of which joined the currency union only after Greece plunged into crisis.

Having implemented painful cuts and austerity measures to deal with their own financial troubles, politicians from these states are resisting more leniency for Greece, a country whose citizens they argue enjoy higher wages and pensions than their own. And while they long hid under Germany, they are now venting this discontent openly.

...In Latvia, with a population of about 2 million, the bare mention of Greece drives Sandra Lāce into a fury.

“The Greeks are just shameless, shameless,” said the 50-year old woman, who was selling T-shirts with Latvian symbols at a market in downtown Riga. “When we had austerity measures my salary was cut and my workload increased. Latvians didn’t protest, they could not afford to.”

"Whatever happens, I’m heading for Greece this summer. Once upon a time that would not have sounded like a political statement, but it does today. And yet I am only going to Greece for the same old reasons I ever did: warm breezes off the sea well into October, traces of ancient heritage, the elemental, straightforward lifestyle, and to try, once again, to convince myself that retsina tastes good. And what could be more straightforward than putting your money, and your faith, in a place that you know and love?

...In normal years, around two million Britons visit Greece, contributing to the 18% of GDP that is the tourist industry. For many areas it is the only industry of any value. All those small, independent guesthouses and hotels need the lifeblood of visitors. Without them the Greece we know and love will disappear – not because of any banking over-lending balls-up, but because our money didn’t reach the right people. It’s the same as any worthwhile way of spending your spare cash: African wildlife needs it, as do Amazonian rainforests and eco-lodges, as well as that grizzled old veteran who runs the taverna by the fountain. Let’s not rely on banks to keep what we love alive."

"Hardline German Finance Minister Wolfgang Schaeuble led a chorus of scepticism about Greek Prime Minister Alexis Tsipras's new reform plan aimed at a third debt rescue package worth more than 80 billion euros ($89 billion).

"....We will have extremely difficult negotiations," Schaeuble told reporters in Brussels.

...Tsipras won the backing of 251 out of 300 deputies for his reform plans, even though they are similar to the ones that Greeks rejected in the referendum after he branded them "humiliating".

Greece's creditors fear it will not keep its promises after two previous bailouts worth 240 billion euros merely heaped fresh debt on a mountain worth nearly 180 percent of the country's GDP.

....If eventually approved, Greece could receive between 74 billion and 82 billion euros from its EU-IMF creditors, including 16 billion euros from the IMF that is part of an old programme due to expire next March, sources close to the negotiations said. "

NEWS ARCHIVE - July 2015

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