Greece and the economic crisis 2015

NEWS ARCHIVE - July 16 - July 20

July 20, 2015

"international creditors on Monday in the first signs of a return to normal after a deal to agree a new package of bailout reforms.

Customers were queued up outside bank branches open for the first time in three weeks on Monday after they were closed to save the system from collapsing under a flood of withdrawals.

...Limits on withdrawals will remain, however -- at 420 euros per week instead of 60 euros per day previously -- and payments and wire transfers abroad will still not be possible, a situation German Chancellor Angela Merkel said on Sunday was "not a normal life" and warranted swift negotiations on a new bailout, expected to be worth up to 86 billion euros.

"Capital controls and restrictions on withdrawals will remain in place but we are entering a new stage which we all hope will be one of normality," said Louka Katseli, head of the Greek bank association.

Greeks will be able to deposit cheques but not cash, pay bills as well as have access to safety deposit boxes and withdraw money without an ATM card."

"...This is the starkest example we've seen yet of just why Greece needs massive debt restructuring — the country is effectively an economic zombie existing solely to pay off debts. Its economy is flatlining, and any funding that comes in goes straight back out again. (Both The New York Times and Bloomberg have used the term "zombie" recently to refer to Greece's economy.)

Greece's creditors are starting to realise something has to change. The IMF has called these debts "unsustainable," and German finance minister Wolfgang Schaeuble says Greece should perhaps leave the euro temporarily.

It clearly doesn't make sense for Europe to pay out €7.1 billion to ensure "financial stability" when €4.2 billion simply returns to another European funding pot and much of the rest goes to other creditors. "

"Greece’s payments Monday comprise 4.2 billion euros in maturing debt and interest to the ECB, 2.05 billion euros to the IMF, and 470 million euros to the Bank of Greece, a second finance ministry official said.

An ECB spokeswoman declined to comment on whether the Frankfurt-based central bank had received payment."

July 18, 2015

"Work was supposed to begin next year on a 7 billion euros ($7.6 billion) waterfront urban renewal project almost twice the size of New York's Central Park that could have poured nearly a billion euros into Greece's depleted coffers. The plans stalled late last year after the far-left Syriza party took power and promised to halt attempts at putting the private sector in control of state assets, both on ideological grounds and because leaders believe rampant corruption must be addressed before any sell-off.

...Big money assets that Greece could sell include state-owned stakes in Athens' new airport, energy company Hellenic Petroleum and electrical utility Public Power Corp., plus offshore oil or natural gas drilling parcels. Greece also has stock in banks valued at 7.5 billion euros, but the true value of the stake is unknown because the Athens stock market stopped trading at the end of June as the country descended into financial chaos.

The Hellenic Republic Asset Development Fund, charged with matching state assets in deals with the private sector, also has parcels of land on beautiful islands available for long-term leases and a castle on the island of Corfu, plus buildings throughout Athens and across the country. "

"It may be too soon to say for sure whether the harsher German tone signifies a turning point in its role within Europe or if it is the transitory result of circumstances. But for many in Europe, especially on the center left, the Greek crisis “revealed a more brutal Germany, embodied in Schäuble,” said Hans Kundnani, the author of “The Paradox of German Power.”

“But we see, with this crisis, a qualitative transformation of the European Union into a more coercive bloc, different from the one the founding fathers had in mind, or even the creators of the single currency,” he said. “And Germany is at the heart of that.”

....One could argue, as many have, about the correctness of the German prescription of austerity in a time of recession. But the brutality of the negotiations over Greece in Brussels has damaged Germany’s reputation inside the European Union, said François Heisbourg, a French analyst.

“I think the Germans have crossed a line,” he said, “and it will be very difficult for them to walk it back.”

July 17, 2015

"In the early hours of Thursday morning, the austerity bill that will pave the way for financial aid worth 86 billion euros ($94 billion) was approved with 229 votes in the 300-seat chamber. There were 64 votes against it and six abstentions.

"Last night's parliamentary vote might well persuade the Governing Council to increase its ELA to the Greek banks," Scicluna said.

"While Draghi will take some satisfaction from the measured response of euro area financial markets to the Greek crisis and recent economic data and surveys, which remain consistent with steady economic recovery and improved credit conditions in most member states, we would expect him to maintain a dovish tone, and emphasize the importance that the ECB complete its asset purchase program in full, at least through to September 2016," he added."

"The reforms demanded by European creditors still need to be implemented, and the hanging question of Greek debt relief still needs tackling. The issue of Greece's debt burden is one of the reasons bailout talks dragged on for months.

Athens made a major concession by getting no up-front guarantees on debt in its agreement (among the dozens of concessions it made). German negotiators seemed to be particularly against a discussion of debt relief before another bailout and austerity programme was in place.

...the "full implementation of the measures" in a new programme may be borderline impossible. For example, the privatisation programme to which Greece just signed up is more than twice as optimistic on the revenue it can raise as the previous one was. And the previous one was already probably too optimistic."

"After months of grueling negotiations, recriminations and reversals, it's hard to see any winners. The deal Greece reached with its creditors -- if it lasts -- pursues the same economic strategy that has failed repeatedly to heal the country. Greeks will get more of the brutal belt-tightening that they voted against. The creditors will probably see even less of their money than they would with a package of reduced austerity and immediate debt relief.

...A German return to the deutsche mark would cause the value of the euro to fall immediately, giving countries in Europe's periphery a much-needed boost in competitiveness. Italy and Portugal have about the same gross domestic product today as when the euro was introduced, and the Greek economy, having briefly soared, is now in danger of falling below its starting point. A weaker euro would give them a chance to jump-start growth. If, as would be likely, the Netherlands, Belgium, Austria and Finland followed Germany's lead, perhaps to form a new currency bloc, the euro would depreciate even further. "

"Chancellor Angela Merkel warned of chaos on Friday if German lawmakers do not give her government backing to start negotiations on a third bailout program for Greece.

"Do the advantages of Monday's result outweigh the disadvantages. My answer is a completely convinced 'yes'," Merkel told the Bundestag lower house of parliament, with reference to a deal for further aid."

July 16, 2015

"The European Central Bank increased emergency funding for Greek lenders, although capital controls will have to remain to avoid a bank run when they reopen on Monday.

European Union finance ministers also approved 7 billion euros ($7.6 billion) in bridging loans to keep Greece afloat, allowing it to make a bond payment to the ECB next Monday and clear its arrears with the International Monetary Fund.

The loans will be finalised on Friday provided Germany's parliament approves a Berlin government request to open talks on a three-year bailout programme - Greece's third in the past five years - worth up to 86 billion euros.

The twin lifelines were a reward for Greek Prime Minister Alexis Tsipras after he won the backing of parliament in the early hours of Thursday for the tough reform measures demanded by creditors led by Germany. "

"It was the second time this week that Mr. Schäuble has raised the idea in public. His statement, in a radio interview, came just hours after the Greek Parliament reluctantly approved a package of economic policy changes, demanded by Germany and other creditors, intended to allow Greece to remain in the eurozone and to qualify for a new round of bailout financing.

...Mr. Schäuble signaled on Thursday that it might be difficult to reduce the burden of the debt payments sufficiently without some debt forgiveness — a step that he said could not be taken while Greece is a member of the common currency area. "

"In his speech before Parliament, Finance Minister Euclid Tsakalotos sought to defend Greece’s agreement with creditors as a necessary evil. “It’s a difficult agreement, a deal which only time will show if it is economically viable,” he said. “I don’t know if we did the right thing, but I know we felt we had no choice,” he said. “We never said this was a good agreement,” he added, noting that “a lot will depend on how politicians will handle the many changes included in the agreement.”

... New Democracy’s rapporteur Kyriakos Mitsotakis told Parliament that Greece “is paying very dearly for the political coming-of-age of SYRIZA.”

"...Greece faces a medical crisis as deadly as the Plague of Athens, one that could throw the country deeper into economic crisis.

Today, in the face of severe pharmaceutical drug shortages, 12,000 pharmacists throughout Greece will begin an open-ended strike to protest changes to draft legislation that they say will limit the role of pharmacies and threaten their livelihood. Such a prolonged strike could prove catastrophic to diabetics, heart patients, cancer patients and others. With this in mind there are three indications that the Greek medical system, once one of the best in Europe, is on the verge of collapse.

...The second indication of a Greek crisis is behavioral changes within the country leading to increased death and disability. People are already going to the doctor less frequently, even though there is no co-pay for primary care physician visits. Greece’s 132 hospitals had a budget of $735 million for the first four months of 2014. This year the budget for the same time period was $50 million total. "

"The International Monetary Fund says Greece's debts are too big to pay and need to be partly forgiven.

Germany says that's out of the question.

German officials, led by Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble, say that as part of a new rescue package for Greece they will consider giving it more time to pay its debts and perhaps lower interest rates. But no outright cut on what it owes."

NEWS ARCHIVE - July 2015

INDEX NEWS ARCHIVE

Advertisement: I am an Amazon affiliate

Greece Travel 2024