Greece and the economic crisis 2015

NEWS ARCHIVE - July 7 - July 10

July 10, 2015

"Sobered by reports that Eurozone partners were ready to let Greece fall out of the common currency club, the Greek government Thursday delivered a new package of economic reforms to its creditors that capitulated to lenders' demands for raising taxes and the retirement age.

...But faced with imminent collapse of the country's banking system and the specter of economic catastrophe and social unrest, the populist government was reported by Greek media to have yielded on the sticking points that led to collapse of previous talks on a new rescue plan...

...The apparent concessions by Athens were probably aided by a growing recognition among the creditors and Eurozone colleagues that Greece's debt, more than 175% of GDP, is unmanageable and needs to be reduced or rescheduled for payment over a longer period. There is also discussion on the lenders' side of ensuring that interest rates remain low to prevent the debt burden from growing further."

"Five hardliners in Greece's ruling SYRIZA party said on Friday dropping out of the eurozone and a return to the drachma was preferable to a deal with international creditors laced with austerity and without any provision for debt relief. "

Related: The drachma

"...Speaking of the Finns, the country's foreign minister Timo Soini has said today that Finland will not fork out any more money to bail-out Greece.

The Finns have a chequered history with the Greeks... As one of the "creditor" bloc countries which has been suffering from its own economic turmoil, the Finns are loath to give any more cash to the country.

...Mr Soini is reported to have said today: "These amounts, which are now talking about, would be a clear increase in responsibility." He has previously called Greece's bail-out a "ponzi scheme".

The country's parliament will have to vote through any new ESM programme by an absolute majority. They could, in theory, be part of a group of hostile countries that could form a "blocking minority"

"...In the five years that have passed since this crisis bubbled to the surface what remains to be seen is not so much whether Greece exits the euro currency but rather, whether German Chancellor Angela Merkel and French Prime Minister Francois Hollande opt for more bargaining, or final acceptance of the inevitable and/or ultimate denial that Greece must go. It’s time.

... it’s not a stretch to think that the whole economic formula – albeit well-intentioned – was not created to necessarily help Greece. Instead, it was nothing other than a means to keep other debtors (i.e. Italy, Portugal, and Spain) on the straight and narrow path of recovery, with promises of bountiful support from the ECB and talk of debt mutualization as a golden carrot on the end of a stick.

Once the market comes to its senses, it will realize that the rising or falling of Greece is inconsequential as compared to the overall discouragement of anti-austerity movements elsewhere on the continent. If Greece teaches Europe a lesson the job will have been complete and the recovery will continue. "

July 9, 2015

Greece rushes to finalize reforms and remain in euro - Inside Brockville

"Greece's government was racing Thursday to finalize a plan of reforms for its third bailout, hoping this time to get its European partners' approval and to stave off a looming, potentially catastrophic exit from Europe's joint currency, the euro.

Details of Greece's reforms are to be submitted Thursday to give creditors time to review them ahead of a summit of the European Union's 28 members on Sunday.

...Greece's financial institutions have been kept afloat so far by emergency liquidity assistance from the European Central Bank. But the ECB has not increased the amount in days, leaving the lenders in a stranglehold despite capital controls.

German ECB governing council member Jens Weidmann argued Thursday that Greek banks should not get more emergency credit from the central bank unless a bailout deal is struck. "

"Greece has one of Europe’s highest proportions of small enterprises and people working for themselves.

The ratio of self-employed to the labor force is about 35 percent, according to a report by the Washington-based Center for Economic and Policy Research. Among services companies, over 60 percent employ fewer than 10 people, Organization for Economic Cooperation and Development figures show.

Many are soon to be in “irreversible deadlock,” according to Haris Makryniotis, managing director of Endeavor Greece, part of a New York-based nonprofit organization that backs entrepreneurs in the country.

“Things have gone out of control since capital controls and cross-border transaction limitations were imposed,” he said. “This situation will very soon be irreversible. We expect shortages of goods in the next couple of weeks and dramatic shortages of basic foods within one or two months.”

"The unyielding tone left Greeks on both sides of the bailout debate grappling Wednesday with the possibility that Mr. Tsipras pushed things too far, as a second week of capital controls and closed banks start to affect the supply of many goods, including medicine, and the specter looms of being forced out of the eurozone if no deal is struck.

...U.S. Treasury Secretary Jacob Lew and IMF Managing Director Christine Lagarde said Greece’s debt burdens would overwhelm the country without eurozone lenders, particularly Germany, reducing its overall debt load."

"Prime Minister Alexis Tsipras has until midnight to submit detailed, comprehensive reform proposals to support Greece's request for a three-year conditional loan from the European Stability Mechanism bailout fund, along with a list of prior actions Athens commits to take before aid is disbursed.

The letter will be sent to Jeroen Dijsselbloem, chairman of euro zone finance ministers, in his capacity as chairman of the ESM board. Dijsselbloem immediately forwards the plan to the European Commission, the International Monetary Fund and the European Central Bank - known jointly as the institutions - for their assessment."

July 8, 2015

"In its formal request to tap the fund, the Greek government said it would "immediately implement a set of measures as early as the beginning of next week."

After months of fruitless negotiations with the Greek government, the skeptical European creditor states have said they want to see a detailed, cost-accounted plan of the reforms by Thursday. That is meant to give the creditors enough time to review the plan before leaders of the European Union's 28 countries meet on Sunday in what has been termed as Greece's last chance to stay in the euro.

In the letter, the Greek government said it was aiming to be able to finance itself once the new aid program is over in three years. "

"Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin.

...French President Francois Hollande said the European Central Bank would ensure that Greek banks had the minimum necessary liquidity to stay afloat until Sunday.

The situation in Greece worsened with banks closed for a second week, limited cash withdrawals and businesses feeling the crunch of demands from vendors for cash payments.

..."The ball is in Greece's court," Italian Prime Minister Matteo Renzi said, calling Sunday "the final meeting on Greece". "

Greece seeks new bailout as deadline looms - Zeen News

"Greece asked for a new international bailout on Wednesday as Prime Minister Alexis Tsipras said he was confident debt-stricken Athens could meet a weekend debt deal deadline to stay in the euro.

The Greek request for what would be its third debt rescue from the eurozone`s bailout fund was the first step demanded by exasperated leaders of the single currency union at an emergency meeting in Brussels late Tuesday.

Athens must now table a complete reform plan by Thursday night ahead of a full EU summit on Sunday, which the eurozone leaders warned was the "final deadline" to reach a deal and save Greece from bankruptcy.

...The European Central Bank has been providing emergency liquidity to keep Greek banks from collapsing, but further support will depend on political developments in Brussels and Athens.

A European banking source said that "exasperation and impatience are mounting in the council of governors of the European Central Bank in the face of the attitude of the Greek government."

"For now, local banks are weathering the capital controls imposed on their Greek parent firms, and the Bulgarian National Bank assured last week that actions by the Greek authorities “can in no way affect the smooth functioning and stability of the Bulgarian banking system.”

That is partly because Bulgaria has already seen some of the effects of the Greece crisis and has fortified its banks and economy. Still, the outlook is far from certain.

“The destabilizing of Greece is bad news for Bulgaria, as Greece is one of our main geopolitical and economic partners so this will no doubt have economic repercussions for us” said Radan Kanev, member of the governing coalition in Bulgaria’s national assembly. “In the border region, we have already seen some of the effects this can have in the last five years.”

"GREEK PRIME MINISTER ALEXIS TSIPRAS: I find myself here only a few days after the resounding verdict of the Greek people, after a decision we took to give the floor directly, to ask the Greek people directly, for the their views and be an active part of the negotiations affecting their own future. A few days after these negotiations we've now been given a mandate to redouble our efforts to get a socially just and economically sustainable solution to the Greek problem, without repeating the mistakes of the past which condemn the Greek economy to a period of never-ending impasse of austerity which trapped our economy in a recessionary vicious circle.

Let me assure the house that, quite apart from the crisis, we will continue with our reform undertakings. Let's not forget that for the past five years the Greek people have made a tremendous effort for adjustment but this has exhausted the resilience and the patience of the Greek people.

We demand an agreement with our neighbors but one which gives us a sign that we are on a long-lasting basis exiting from the crisis, which will demonstrate that there's light at the end of the tunnel. "

July 7, 2015

"Greek Prime Minister Alexis Tsipras had a final chance to present credible reform proposals to an emergency euro zone summit on Tuesday to persuade sceptical creditors to reopen aid talks before his country's banks run out of money.

... Greek officials said the leftist premier's proposals would not go far beyond a plan he sent to the euro zone last week before Greek voters overwhelmingly rejected the austerity terms of a bailout in a referendum on Sunday.

...At stake at the emergency summit beginning at 6 p.m. (1600 GMT) in Brussels is more than just the future of Greece, a nation of 11 million that makes up just 2 percent of the euro zone's economic output and population.

If Greek banks run out of money and the country has to print its own currency, it could mean a state leaving the euro for the first time since it was launched in 1999, creating a precedent and fuelling doubts about the long-term viability of an incomplete European monetary union."

"Merkel flew to Paris on Monday to consult with French President Francois Hollande on a new approach to Greece's debt crisis a day after Greek voters rejected her signature strategy for getting Athens' finances in order.

As leader of the eurozone's largest and most influential country, Merkel has been the key architect of eurozone bailouts that have forced tough austerity measures on Greece in exchange for loans enabling it to remain part of the 19-nation common currency club.

...Greek Prime Minister Alexis Tsipras, whose leftist government had urged voters to say no to more austerity, spoke with Merkel by telephone Monday and said he would bring new proposals to an emergency meeting of the eurozone finance ministers in Brussels on Tuesday, a Greek government official told reporters in Athens.

But with both voters and the government having spurned what was presented as a final offer by the major creditors — the European Central Bank, the International Monetary Fund and the European Commission — many European leaders believe there is nothing left to talk about. "

"Eurozone leaders' meeting still going ahead - despite no new proposal

So, this is awkward. The eurozone leaders' summit is due to start at 5.30pm BST this afternoon - and the Greeks have turned up without a new proposal. (Although the Greeks claim they did...) They've even rolled out the red carpet for them. It's unclear what they will talk about now that the Eurogroup has been something of a failure."

"You have to admire the Greeks. They certainly don’t like getting pushed around and their history is replete with tales of derring-do in the face of overwhelming opposition. Whether against the Persians at Thermopylae, or the Romans at Corinth, or the Ottomans in the Peloponnese, or the Germans in Crete, the Greeks have heroically stood their ground. Unfortunately, in most of these instances they have eventually been overwhelmed.

Over the past 2,000 years, rebuilding Hellenic national identity has often been a long and painful process, with help from outsiders like Byron who considered the country of Homer and Plato, of Pericles and Aeschylus, to be the cradle of civilisation. “A land of slaves shall ne’er be mine,” he wrote in Don Juan.

...Taking a lead from their oddball neo-Marxist government, the “No” voters have denounced their EU masters as bullies, and even as terrorists. And yet they also insist that they are “good Europeans” and want to remain in both the EU and the eurozone. Eurosceptics may find this hard to understand; but given the history of Greece it does make sense. After the fall of the Colonels in 1974, Europe offered the Greeks the democratic anchor they needed. The same was true for the Spanish and the Portuguese emerging from dictatorship in the Seventies "

"We are dangerously close to a huge disaster and yet we still appear oblivious to what is happening, living on an entirely different planet to the rest of Europe.

...I have been wracking my brain to think of how we could possibly avert, even now, being cut off from Europe, and none of the scenarios I can envisage seem anywhere within within reach.

To begin with, Prime Minister Alexis Tsipras is now basically as ensnared by the “no” vote as he is by the radical left faction of his party.

...The hawks in Northern Europe are circling after having found the excuse they were looking for to place Greece in complete isolation before ousting it from the euro. They obviously don’t want to give Tsipras a win because this would give other parties in the eurozone the idea that flexing muscle is a way to get ahead."

NEWS ARCHIVE - July 2015

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