Monday, June 25, 2012

Greece Near Economic Collapse?


Hugo Price and Max Keiser can save Greece
15th June, 2012
The Greece crisis continues as the debate over whether or not the country should leave the Eurozone will be at the forefront of the election Sunday. Hugo Price and Max Keiser offer solutions to the debt problems faced by the country, and some of their recommendations include getting out of the EU and focusing on a currency with real value: silver. They’re advice should also be heeded here in the US, as large banks like JP Morgan continue to make shady deals that are negatively impacting consumer confidence in these huge financial institutions. Less reliance on central banks is a must for financial freedom, and will help redirect funds back to the savers instead of the spenders.
Stop asking for more help: Germany tells Greece
Reuters, 25 June 2012
Greece's new three-party coalition government said on Thursday it would renegotiate the terms of the 130-billion-euro bailout deal that is helping the country avoid bankruptcy.
Greece's new government should stop asking for more help and instead move quickly to enact reform measures agreed to in return for previous bailouts from its European partners, German Finance Minister Wolfgang Schaeuble said on Sunday.
Schaeuble told Bild am Sonntag in unusually blunt language that Greece has forfeited much of Europe's trust during the sovereign debt crisis, as reflected in an opinion poll covering the euro zone's four biggest nations and published in the paper.
"The most important task facing new prime minister (Antonis) Samaras is to enact the programme agreed upon quickly and without further delay instead of asking how much more others can do for Greece," said Schaeuble, a close ally of Chancellor Angela Merkel and Europe's most powerful finance minister.
Greece's new three-party coalition government said on Thursday it would renegotiate the terms of the 130-billion-euro bailout deal that is helping the country avoid bankruptcy.
The coalition's platform particularly challenges euro zone paymaster Germany, which has offered to adjust the lifeline's terms to make up for time lost as a result of two Greek elections since May, but refuses to revise it radically.
Greece wants a two-year extension to the 2014 deadline for it to cut its budget deficit to 2.1 percent of national economic output, from 9.3 percent in 2011. The extension would require an extra 16 to 20 billion euros in foreign funding.
"The ball is now in Greece's court," said Schaeuble. "It's in their hands to win back the confidence of the people of Europe. They're only going to accomplish that with concrete actions and deeds."
The poll of 4,000 people in Germany, France, Spain and Italy showed 78 percent of Germans and 65 percent of French people wanted Greece to leave the euro zone, with 51 percent in Spain and 49 percent in Italy also backing a Greek exit.
Big majorities in all four countries, which have a combined population of 254 million, did not expect that Greece would ever repay its bailout loans.
The poll, conducted by the Ifop Institute for Bild am Sonntag and leading newspapers in France, Spain and Italy, showed only small minorities in the four states want to scrap the euro and return to their respective national currencies.
"The poll shows two things," Schaeuble said. "An overwhelming majority want the euro ...and secondly it shows how much trust Greece has forfeited among Europeans."
The new government must now work to fix its public finances while negotiating with euro zone leaders who are losing patience with Athens after two multi-billion-euro bailouts since 2010 that have failed to stem the crisis.
'Spending Other People's Money'
Samaras, 61, was sworn in on Wednesday after elections last Sunday ended weeks of uncertainty that rattled financial markets and threatened to push Greece out of the euro zone.
New Democracy narrowly defeated the radical leftist SYRIZA bloc, which wants to tear up the latest bailout deal and austerity programme, which it blames for driving the economy ever deeper into recession.
The government will also seek to extend the payment of unemployment benefits to two years from one, to offer benefits to the self-employed without work, and to limit public sector lay-offs. Lenders want the public sector payroll cut by 150,000.
In a separate interview on Sunday published in Der Spiegel news magazine, Schaeuble again ruled out any form of collectivised debt such as euro bonds and defended the German government's hard line on that.
"It's because you cannot separate the responsibility for decision-making from the liability," he said when asked why Germany was so adamantly opposed. "That's true for almost everything but especially when it comes to money.
"Anyone who has the chance to spend someone else's money will do that," he added, before telling the reporter: "You'd do that and so would I. The markets know that. And so from that point of view they wouldn't be convinced by euro bonds."
Greece Seen Blocked From Debt Markets Until 2017: Euro Credit
By Anchalee Worrachate and Lukanyo Mnyanda
Jun 25, 2012
Greece may have to wait at least another five years before it can sell bonds to investors, according to financial institutions that trade debt with European governments.
A new administration in Athens and signs that European Union leaders are willing to loosen Greek austerity measures failed to convince primary dealers that the country will be able to return to the market before its second bailout ends in the next three years.
Three of 20 companies surveyed by Bloomberg News that deal directly with sovereign bond issuers expect it to take at least a decade before Greece issues debt again. Ten say investors would lend money to the country no sooner than 2017, while five predict 2015 at the earliest. The median forecast was a minimum of five years.
“The challenges facing Greece remain extremely large,” said Jamie Searle, a fixed-income strategist at Citigroup Inc. in London. “It will be a long while before they can get back to the market.”
Greece last sold bonds in March 2010 before the extra yield that investors demand for holding its 10-year securities instead of German bunds ballooned the next month to 443 basis points, then a euro-era record. That forced the country, facing 8.5 billion euros ($10.7 billion) of bond repayments, to start bailout talks with the EU, the European Central Bank and International Monetary Fund.
Ten-year Greek debt yielded 25.72 percentage points more than German bunds as of 12:25 p.m. London time today.
Possible Exit
Analysts at New York-based Citigroup said there’s a 50 percent to 75 percent chance that the nation will exit the euro region in the next 12 to 18 months. Their view hasn’t changed since before the June 17 election.
Antonis Samaras was sworn in last week as prime minister, Greece’s fourth since November, after his New Democracy party won the vote. He is under pressure to tackle the nation’s debt crisis with the economy in a fifth year of recession and unemployment at 21 percent.
Greece won a second bailout this year from the EU and the IMF, taking the total rescue package to 240 billion euros. Under the country’s bailout program, Greece has to reduce its budget deficit to 7.3 percent of gross domestic product this year from 9.3 percent in 2011, and cut its primary deficit, which excludes interest payments, to 1 percent from 2.4 percent.
Fiscal Union
It may need a third bailout or another round of bond writedowns, or both, to get debt to a manageable level, said officials from the primary dealers, who asked that they not be identified. Some said policy makers must signal their willingness to share the burden by issuing common bonds before investors are confident enough to buy Greek securities.
“The only thing that will get investors’ trust back is to get something that looks like a fiscal union because Greece isn’t going to grow out of the problem,” said John Wraith, a fixed-income strategist at Bank of America Merrill Lynch in London. “Investors have given up on the concept of a union that doesn’t have a fiscal transfer, but does have the interest rate and currency locked together.”
The country sparked Europe’s sovereign-debt crisis in 2009 after saying its deficit was bigger than previously thought, reaching a euro-region record of 15.8 percent of GDP that year.
European leaders will hold a two-day summit on June 28 to seek a way out of the debt turmoil. Billionaire investor George Soros warned that failure by leaders meeting this week to produce drastic measures could spell the demise of the currency.
Tough Times
Yields on Greek 10-year bonds dropped to 27.21 percent today from a record high of 44 percent in March. The rate is at least 20 percentage points above the level at which Greece could fund itself, as the country along with Ireland and Portugal all sought aid when 10-year yields surpassed 7 percent.
The nation’s ratio of debt to GDP is projected to rise to 168 percent next year from 161 percent, according to the European Commission’s report of May 11. The economy will contract 4.7 percent this year and show zero growth in 2013, the commission said.
“The country is still insolvent and there is little progress in the way of fiscal adjustment and growth,” said Piero Ghezzi, the head of global economics at Barclays Capital in London. “Investors will need to see what the end game for Greece is before they buy its bonds again. A country can borrow in the market only if there is demand for its debt. For Greece, that can be easily five years away.”
Primary Dealers
Companies participating in the Bloomberg survey were Bank of America Merrill Lynch, Bayerische Landesbank, BNP Paribas SA, Citigroup, Commerzbank AG, Credit Agricole SA, Danske Bank SA, Deutsche Bank AG, DZ Bank AG, HSBC Holdings Plc, ING Bank NV, Jefferies International, Landesbank Baden-Wuerttermberg, Lloyds TSB Bank Plc, Nomura International, Rabobank International, Royal Bank of Canada, Royal Bank of Scotland Group Plc, Barclays Plc and UniCredit SpA. They provided their forecasts on June 21 and June 22 on a non-attributable basis.
Petros Christodoulou, former head of the Greek debt office, said June 19 that his nation isn’t close to selling bonds and there may be common euro debt issuance by the time it returns to the markets. He also said Greece will remain a member of the 17- nation euro area.
The IMF recommended issuing common debt on June 21 after warning that the euro-area crisis has reached a “critical” stage.
“Greece could return to the market quickly if leaders take the right policy decisions,” said Padhraic Garvey, head of developed market debt at ING in Amsterdam. “But the risk that things could go in a very wrong direction, taking Greece much longer to return to the market, is greater than the other way around.”
To contact the reporter on this story: Anchalee Worrachate in London at; Lukanyo Mnyanda in London at
To contact the editor responsible for this story: Tim Quinson in London at
Greece outlines plan to ease bailout burden
By Lefteris Papadimas
Sat Jun 23, 2012
(Reuters) - Greece wants tax cuts, extra help for the poor and unemployed, a freeze on public sector lay-offs and more time to cut its deficit under a plan likely to run into strong opposition at a European Union summit next week.
The new coalition government's program, seen by Reuters on Saturday, reflected public pressure to ease the terms of a 130 billion euro ($163 billion) bailout saving Greece from bankruptcy but only at the cost of harsh economic suffering.
If implemented in full, the new program would undo many austerity measures the country agreed in February to clinch the bailout package, its second since 2010.
Euro zone partners have offered adjustments but no radical rewrite of the bailout conditions, with paymaster Germany particularly resistant to Greek calls for leniency.
Greece's program includes a call for the recapitalization of the country's fifth-largest lender, ATEbank - a state-owned agricultural bank that EU sources said this month was among several lenders the European Commission wanted to be wound down. The finance ministry has denied that report.
The program, agreed by leaders of the three-party coalition after a June 17 election, faces its first test at a two-day EU summit starting next Thursday and sure to be dominated by the debt crisis that started in Greece and is now threatening to engulf Italy and Spain, the euro zone's third and fourth-largest economies, respectively.
Inspectors from Greece's "troika" of lenders - the EU, European Central Bank and International Monetary Fund - were due in Athens on Monday to review the country's progress.
Euro zone officials have said the bailout package should be revised only to reflect time lost on two elections since early May and a deeper than expected recession.
"The general target is for there to be no further reductions in wages or pensions and no more taxes," the Greek government program said.
Uneasy Allies
It called for a cut in the 23-percent value-added tax (sales tax) rate for restaurants and farmers, a freeze on lay-offs in the bloated public sector and for unemployment benefit to be paid for two years rather than one.
The government will also ask for two more years, until 2016, to cut its budget deficit to 2.1 percent of national economic output from 9.3 percent in 2011, an extension that would require extra foreign funding.
The lowest income tax threshold should be raised, the document said, and the minimum wage - cut by 22 percent in February - revised in line with agreements between employers and workers.
The program also calls for the accelerated payment of 6 billion euros of government debt to suppliers.
The coalition brings together the conservative New Democracy, Socialist PASOK and Democratic Left in an alliance that will face constant pressure from an opposition led by the radical leftist Syriza bloc.
Led by charismatic ex-communist Alexis Tsipras, Syriza surged into second place in the election on a vow to tear up the terms of the bailout.
Conservative Prime Minister Antonis Samaras, a Harvard-educated economist who switched from opposing the first bailout to reluctantly supporting the second, has promised to soften the terms without jeopardizing Greece's place in the euro zone.
"Though the troika will be in Athens on Monday, the crunch test will be Thursday's EU summit," the centre-left Ethnos daily wrote in an editorial on Saturday.
($1 = 0.7977 euro)
(Writing by Matt Robinson; Editing by Barry Moody and Dan Lalor)
Greek healthcare system collapses, hospital workers now working without pay
by Jonathan Benson, staff writer
Friday, June 22, 2012
(NaturalNews) The economic situation in Greece is only continuing to worsen, as reports indicate that hospitals and care centers throughout the nation are running completely out of medicines, and many healthcare workers are now voluntarily providing care services without pay.
Strapped with spiraling debt, the Greek healthcare, which is government-run, has had to receive gobs of international financial aid just to keep operating with some semblance of normalcy. There has also been plenty of IOUs issued, and desperate patients quietly forking over cash "gifts" to doctors to receive treatments. All in all, the healthcare situation is in utter chaos, save for those that have sacrificed their own time, often free of charge, just to help those in need.
As we reported here at NaturalNews back in 2010, Big Pharma had already been withholding drugs from Greece because of the country's inability to pay for them. Greek authorities had tried to negotiate with drug companies to lower the exorbitant costs associated with drugs, and some complied. But many others simply stopped shipping in medicines, leaving thousands of ill patients without any options. (
Today, the situation has gotten even worse, particularly because the Greek healthcare system heavily relies on brand-name drugs rather than far-less-expensive alternatives. Since the entire system is clogged because of unpaid bills, many pharmacies, for instance, have had to simply close their doors. Those that still remain and continue to supply drugs on credit -- these are few and far between -- are being overwhelmed by long lines of desperate patients seeking life-saving medications.
"We're not talking about painkillers here," said one Greek woman, a cancer survivor, to Reuters. "We've learned to live with physical pain. We need drugs to keep us alive."
MSNBC reports that many hospital workers have been working for a many as five months without pay, including at the Henry Dunant Hospital in Athens, which is owned by the Hellenic Red Cross Foundation. These workers hope to one day receive the backlog of pay they are owed, but because the crisis only appears to be worsening rather than improving, this may not ever happen.
As of this past weekend, the New Democracy Party's Antonis Samaras claimed victory as Greece's new prime minister, ending a seven-week period in which the nation was essentially being ruled by nobody. Much to the chagrin of many Greeks, this new regime plans to stick with the eurozone and pursue more financial bailouts (
Back to the 1930s: the hammer, sickle and swastika
By Aristides Hatzis
June 18, 2012
Ten days before Greece’s elections, a member of the neo-nazi party, Golden Dawn, repeatedly hit a female candidate of the communist party while appearing live on a television talk show and threw water over a female candidate of the radical left Syriza. The communist had just called him a “bloody fascist” and he addressed her as a “commie”. Greek elites (journalists, intellectuals, politicians) condemned his violence almost unequivocally. Yet the ugliest part of this incident was the readiness of many lay people to defend him, even cheer him, while the neo-nazis rose in the polls.
Unfortunately this episode was not isolated. Despite the narrow victory of a centrist party in Sunday’s vote, almost every day extremist violence breaks out in Athens and beyond. Neo-nazis against immigrants, anarchists and leftists. Anarchists, ultra-leftists and other fringe groups of the nationalist-populist camp against riot police, mainstream politicians, journalists, liberal intellectuals, even artists. Add to this a surge in crime and rising tolerance of violence and you have a clearer picture of today’s Athens. Does it remind you of anything?
That’s right. Greece’s situation recalls the Weimar Republic. Violence (and its banalisation), hate, rage, polarisation, fear, despair and resignation. As for the police, it has already taken sides: neo-nazis won by a landslide in polling stations where officers were assigned to vote.
The electoral results demonstrate the dangers to the Greek democracy. The centre-right New Democracy party may have edged ahead, but the parliament, for the first time in Greek history, will be full of extremists. Besides the neo-nazis and a Stalinist communist party there is Syriza, whose leader is a fan of Mao Zedong, Fidel Castro and Hugo Chávez. It is difficult to find a notable dictator, even among the great butchers of the 20th century, without a steady following in the Greek parliament. The three protagonists of the dreadful TV incident were also elected. Imagine them together in routine parliamentary proceedings. Golden Dawn members have already made it clear they would come down hard on any member of parliament saying something they strongly disapprove of.
How did Greece, the birthplace of democracy, come to have a parliament full of hammers, sickles and swastikas? This is not how it was ever meant to be. After winning independence in the late 1820s, Greece was attached to the west and particularly to the UK, which protected and patronised Greece until it was replaced by the US in the late 1940s. This patronage had some beneficial side effects. Greece was always on the winning side: in the first world war, the second world war, the cold war. From 1929 to 1980 Greece had an average growth rate of 5.2 per cent and was admitted to the European Community as early as 1981 partly as a reward.
The rest is history: welfare populism, cronyism, statism and corruption can describe the Greek political system for most of the period from 1981. This is why Greek people have finally punished the two former main parties (New Democracy and the social-democratic Pasok party) for leading Greece into a horrible economic crisis with huge debts and deficits and a corrupt, inefficient state, unfit for reform and captured by special interests.
This failure of the mainstream political system and of the short-sighted, growth-stifling austerity policies enforced by the European leadership led Greece to the precipice. Greek people are disillusioned, miserable, exasperated and very frightened. They seem to be falling into the same trap again, by rewarding demagoguery, political opportunism and arrogant ignorance. Their knee-jerk reaction was to vote for parties such as Syriza, the rightwing nationalist and populist Independent Greeks and the Golden Dawn. These parties became vehicles for a popular backlash, gathering more than 41 per cent of the vote.
However, more than 50 per cent of Greeks voted for parties strongly committed to European unification. These parties will probably form a government that must achieve the impossible: renegotiate better bailout terms and enforce reforms in the face of fierce opposition from Syriza.
Mario Vargas Llosa wrote recently in El Pais that “Greece is the symbol of Europe and symbols cannot be abolished without that which they embody collapsing and degenerating into the barbaric confusion of irrationality and violence that Greek civilization liberated us from”.
Yet Greece is only a small step away from civil unrest and total collapse. It does not deserve this. Europe has the power to push us off the cliff but also the ability to hold us back and save us. This is not just an economic decision; it is largely a political decision. A fatal mistake will haunt Europe for ever.
The writer is an associate professor of law and economics at the University of Athens and runs the blog
Will hungry Greek bear dance to EU tune?
By Tony Barber in Athens
June 18, 2012
A hungry bear won’t dance, says the Greek proverb. Twenty-four hours after national elections that revealed a deeply fractured political landscape and a society close to psychological exhaustion, it is an image Greece’s foreign creditors will need to keep in mind.
Temporarily, the victory of the centre-right New Democracy party will keep at bay the forces of Syriza, the radical leftist party determined to break the stranglehold that it accuses the creditors of imposing on Greece as their price for emergency financial help. In this narrow sense, the eurozone lives to breathe another day.
But the sickness of the Greek economy is so far advanced that it is inconceivable the next government will meet the economic and fiscal targets set by other European countries and the International Monetary Fund. The Greek state is within weeks of running out of cash to meet its wages and pensions bills, tax collection has slumped and private sector economic activity is grinding to a halt.
The once well-fed Greek bear cannot dance to the eurozone-IMF tune because it is lying on a stretcher in the intensive care ward. It is hungrier than ever for jobs, living wages, business credit, medical supplies and plain hope. Turnout in Greek elections is usually high by European standards, but on Sunday, despite being warned that the nation’s destiny hung in the balance, barely 60 per cent of registered voters cast ballots.
In order to satisfy its creditors, Greece is required in coming weeks to make public spending cuts of up to €11.5bn and implement the bulk of them by the end of 2013. But the desperate condition of Greece’s economy and the post-election alignment of political forces in parliament make it an open question whether the next government will be able or willing to honour this commitment.
Like a previous, inconclusive election on May 6, Sunday’s vote did nothing to resolve the paradox at the heart of Greece’s plight: the nation wants to stay in the eurozone, but bursts with despair and resentment at the terms demanded of it to do so.
The two elections have accelerated the disintegration of the political order established in Greece after the fall of the 1967-74 military junta. But Sunday’s result left little option but to reinstall in power the two parties – New Democracy and the socialist Pasok party – most closely identified with that discredited order. It is not a recipe either for resolute government or for the general public’s readiness to accept more economic ordeals.
Greece is not the only eurozone country whose political structures are buckling under the pressure of economic recession, rising unemployment and welfare state cutbacks. Ireland’s leftwing nationalist Sinn Féin party exploited a referendum on a European fiscal treaty last month to strengthen its position as the main anti-government voice at the expense of the once hegemonic Fianna Fáil party.
Silvio Berlusconi’s People of Freedom party and Umberto Bossi’s Northern League are losing their grip on conservative voters in Italy, and Beppe Grillo’s idiosyncratic Five Star movement is climbing in the polls. For seven months Italy has been under the rule of non-party technocrats.
Elsewhere in Europe, with the notable exception of Germany, populist and xenophobic parties flourish. Apart from Syriza and the hardline Communist party on the far left, Greece’s two elections catapulted the neo-fascist Golden Dawn into parliament.
If there is a crumb of comfort for the starved Greek bear, it lies in the erosion of the corrupt clientelism that was the hallmark of politics and state administration under Pasok and New Democracy. Economic collapse dictates that there are fewer jobs and favours for politicians to distribute in exchange for votes.
So far, however, Syriza – the bête noire of European governments – is the only political movement to have truly capitalised on the implosion of the old order. Syriza now waits restlessly in the wings for its chance. Without a revision of Greece’s financial rescue terms, and a spell of competent government in Athens, it may only be a matter of time before Syriza moves to centre stage.