Everybody gets so much information all day long
that they lose their common sense.
~ Gertrude Stein
A round up of recent headlines, ledes and soundbites from around the internet on the economic bailout of Greece, austerity measures that are being suggested, and social fallout…
Greece agrees rescue deal terms: “The Greek PM says he has agreed a bail-out deal with the EU and IMF but that the nation must make ‘great sacrifices’.”
(via BBC News.)
Greek Workers Protest Austerity Plan: “Hundreds of demonstrators took to the streets in Greece on Tuesday, unfurling banners over the Acropolis to rail against new austerity measures aimed at helping the debt-ridden country stave off economic disaster.
Greeks strike against austerity, test govt mettle: “ATHENS, May 5 (Reuters) – Greek protests against new austerity measures are set to swell on Wednesday when public and private sector workers take to the streets together in a test of the government’s resolve to enforce tough budget cuts.
About 4,000 teachers, garbage collectors, pensioners and civil servants rallied in Athens on Tuesday, in the first march organised by unions after the government announced sweeping spending cuts to secure an EU/IMF rescue package.
Greece’s Stumble Follows a Headlong Rush Into the Euro: “The economic challenges facing the European Union unsettled investors around the globe on Tuesday as hundreds of demonstrators took to the streets in Greece, unfurling banners over the Acropolis to protest the government’s new austerity measures.
Euro market meltdown resumes despite Greek deal: “A renewed selling frenzy gripped euro zone financial markets on Tuesday as concern mounted that a record EU/IMF bailout for Greece would not stop a debt crisis spreading in the single currency area.
Greek woes hit Asian shares, euro down: “(Reuters) – A tumble in global stocks spread to Asia on Wednesday on heightening fears that Greece’s debt woes could spread to other countries.
“One gets the feeling that the euro zone is turning out to be a basket case and of course rumors about Spain and Portugal’s sovereign debt isn’t helping. I suspect the market wants to take the euro to as low as $1.25 in the short term,” said Joanthan Cavenagh, currency strategist at Westpac, Sydney.
Greece erupts in violent protest: “May Day clashes in Athens as belt-tightening policies are set to reverse rights won by workers over 30 years
Athens erupted into violence as traditional May Day festivities turned into a bitter protest against draconian austerity measures aimed at tackling Europe’s worst debt crisis in decades.”
Greece still has a choice: “It could abandon the euro and default on the bulk of its debt. After all, it worked for Argentina
In truth, Greece does have an alternative. Instead of submitting to the ferocious and pro-cyclical conditionality imposed by Germany and the IMF – cutting its budget deficit by 11% over three years in return for a €120bn (£104bn) loan – it could follow Argentina’s example in 2001-02, and default on the bulk of its sovereign debt. This would mean abandoning the euro, introducing a ‘new drachma’ and probably devaluing by 50% or more.”
Greece: The default option: “For Greece and other cash-strapped nations, bankruptcy seems to be the ultimate fear. But should it be?
Whatever else is going to have to go in the great fire sale of the Greek public sector, whoever else will suffer, the country’s prime minister made clear yesterday that one group will be safe: its creditors. Speaking on television, George Papandreou was adamant: ‘Our national red line is to avoid bankruptcy.’
So a nominally socialist government will whack up VAT and go to war with its civil servants, cutting jobs, wages and pensions – all in the name of keeping the bond markets sweet. The itemised list of cutbacks that Mr Papandreou has to make is so long and so major and so deeply contentious that even Germany’s chancellor Angela Merkel yesterday described it as ‘very ambitious’. Not that Athens is left with much choice: if it wants to remain in the European single currency, it has to make them. And the other members of the eurozone have to force Athens to take the scorched-earth road if the contagion from Greece to Spain and Portugal is to be contained”
The divisive politics of the eurozone | Ilana Bet-El: “The Greek bailout is not just an economic crisis but highlights failures of political will over the entire European project
Of all the many words spilt on the Greek financial crisis and the danger to the euro, some of the most repeated are that it was a mistake to go ahead with EU monetary union before there was a political union. On the whole, this is the economists’ view, which reflects a fundamental misunderstanding of the European Union: it is a political union, which is why Germany finds itself tied at the hip to Greece, Spain and Portugal. What it lacks is a mechanism for day-to-day political management, and even a modicum of political will on behalf of most of its members. In addition, it is currently afflicted by possibly the weakest generation of European political leaders since the second world war.”
International Money Fiends: “The International Monetary Fund devastated the developing world – and now it’s targeting eastern Europe, writes Nick Dearden
It’s stripped millions of people of their livelihoods, but the global economic crisis has brought one institution back from the dead: the International Monetary Fund.
Two years ago, the IMF looked to be on its last legs. It had got to the stage where nobody wanted to borrow its money. Many developing countries started accumulating reserves to avoid ever having to go to…”
(via Red Pepper.)
News Analysis: Deflation Could Stall Efforts to Revive Greece in Debt Crisis: “There are serious questions about whether the harsh austerity measures Greece committed to are sustainable.”
(via The New York Times.)
Greeks face ‘big sacrifices’ for bailout: “Greek PM warns of ‘big trial ahead’ as EU and IMF agree to multibillion-euro rescue package for Greek economy
George Papandreou had to make one the toughest speeches by a European prime minister today, announcing he had bowed to the demands of the EU and IMF and agreed harsh economic reforms to avert bankruptcy in Greece.
At an emergency meeting of his cabinet, the first held on a Sunday morning, the socialist leader effectively conceded defeat in the battle to deal with the debt crisis without international aid.
Papandreou told Greeks, who have taken to the streets in protest against the austerity drive, that they had to chose between a rescue or an economic collapse….
The deal will be sealed in Brussels this evening and could see Athens receiving as much as €140bn (£122bn) over the next three years, the biggest international bailout ever.
Civil servants will lose up to two months in wages, with salaries and pensions being frozen during the three-year programme. Job losses will also increase….
Under the deal, agreed after 10 days of intense negotiations with the IMF and EU, VAT will also rise by two percentage points from the current 21%. Duties on fuel, cigarettes, alcohol and luxury goods will similarly increase by 10%.
Unions have been quick to react to the move, announcing walkouts, including a general strike that will paralyse the country on Wednesday….”
Greece granted €110bn aid package: “Package agreed in return for pledges on most drastic overhaul of a European economy ever attempted
European countries stepped into uncharted territory tonight, deciding on the first bailout of a single currency member state by agreeing a three-year package worth ¤110bn (£95bn) to rescue Greece from financial meltdown in return for pledges on the most drastic overhaul of a European economy ever attempted.
Finance ministers from the 16 countries using the single currency met yesterday in Brussels to seal the pact following months of sitting on the fence and two weeks of tough negotiations in Athens involving the International Monetary Fund, the European commission, and the European central bank, which concluded on Saturday night.”
Greece: EU must prevent social domino effect | Janis Emmanouilidis: “The debt crisis in Greece could trigger a social and political changes that go well beyond the economic realm
The fear of contagion has spread over Europe. Many see Greece as the potential first domino to fall in a scenario that runs as follows: the Greek austerity measures do not suffice, the debt crisis deepens, and the risk of a sovereign default spreads to other European economies. As the Greek domino falls, countries like Portugal, Spain, or Italy start tumbling, and a small economy’s crisis turns into a major European calamity.
This view suggests that other countries might be forced to rush and help their European ‘brothers in arms’ – whether or not Berlin or other capitals want to. Eventually, the sovereign debt crisis might hit the real economy, with Europe ending up in a vicious circle of even higher deficits, lower growth rates, exploding unemployment and decreasing competitiveness.
Obviously, this is the scenario that everyone – with the possible exception of some speculators – wants to avoid. And, after the recent EU summit agreed on an ‘ultima ratio’ rescue plan for eurozone countries facing the danger of default, chances are high that it will not materialise. But the prevailing domino theory is incomplete. The crisis could have social and the political spillover effects that go well beyond the economic realm.”
How will Greece’s tragedy end?: “With its huge austerity programme and bailout, the country could be on the mend in a year … or be pushed out of the eurozone
After weeks of speculation and negotiations, a deal has been struck between the Greek government, the EU and the IMF. It offers Greece an unprecedented amount of money and asks it to implement an unprecedented austerity and reform programme. The question on everyone’s lips is: will Greece make it?”
Greece Gets Aid, Promises Austerity: “Wall Street Journal – By Charles Forelle, Nick Skrekas, Bob Davis – May. 03 (News) – Prime Minister George Papandreou said Greece has reached agreement with the IMF and EU on a rescue package for the debt-laden country.”
Protesters confront Greek police: “Greek police fire tear gas at crowds of demonstrators in Athens during a march against government austerity measures.”
(via BBC News.)