Friday, May 27, 2011

Greek political leaders meet over financial crisis

The heads of the various parties in Greece were convened by President Karolos Papoulias to discuss "additional measures ... to ensure social cohesion and to protect the financially weaker strata." (Crucial meeting of political leaders concluded Athens News/ANA-MPA 05/27/2011)

The first to arrive at the Presidential Mansion for the meeting was Communist Party of Greece (KKE) leader Aleka Papariga, followed by Coalition of the Radical Left (Syriza parliamentary alliance) parliamentary group Alexis Tsipras, main opposition New Democracy (ND) leader Antonis Samaras, Popular Orthodox Rally (Laos) leader George Karatzaferis, and prime minister and ruling Pasok leader George Papandreou, respectively.

Of the political leaders present, only Yiorgos Karatzaferis made a statement to the press, insinuating that no consensus was found.
Papoulias was responding to demand from the EU for the establishment of even more brutal austerity measures, in pursuit of the Herbert Hoover economics that currently dominate the EU and the European Central Bank (ECB). Maria Petrakis reports in Greek Political Parties Meet to Seek Consensus on Bailout Bloomberg Business Week 05/27/2011:

European Union officials have called for consensus on the package, which include an additional 6 billion euros ($8.5 billion) of budget cuts and a plan to speed state-asset sales, before approving more aid that Greece needs to avoid default. Antonis Samaras, leader of the biggest opposition party New Democracy, rejected the measures on May 24, calling them the "same old failed recipes."

One year after a 110 billion-euro bailout that aimed to stem the spread of the region’s debt crisis, Greece remains shut out of financial markets and Portugal and Ireland have followed in needing rescues. EU leaders are considering new loans and a voluntary extension of bond repayments for Greece to close a funding gap in 2012 of about 30 billion euros.
More loans? Extension of payments, aka, restructuring of loans? This is pretty much magical thinking on the EU's part.

Even in pursuit of their undemocratic and unworthy goal of protecting German and French banks against the consequences of their own poor business decisions and risk evaluations in the loans they made to Greece, this just isn't rational. More cuts are going to further slow the economy, push more Greeks into unemployment and poverty, and make the already-impossible debt repayment worse. If German and French voters want to use public money to bail out their big banks from the consequences of their own failures in the glorious "free market", they should do so without pursuing a destructive policy of impoverishing the people of Greece. Petrakis:

The EU and the International Monetary Fund had demanded that Papandreou adopt the additional budget measures before approving the next installment of the initial bailout and considering additional aid for next year. Under the original rescue plan, Greece was due to return to markets next year.

Papandreou acknowledged last week that won't be possible given investors’s lack of confidence in Greek debt. The yield on the country’s 10-year bond rose 3 basis points to 16.4 percent, more than twice the level at the time of the bailout. ...

Officials from the EU, the IMF and the European Central Bank are due to complete their review of Greece's progress in meeting the bailout terms as soon as next week. The recommendation from the group of inspectors known as the troika is necessary before the next installment of the bailout worth 12 billion euros can be distributed.

Jean-Claude Juncker, who leads the group of euro-area finance ministers, said yesterday that the IMF may withhold its 3.3 billion-euro share of the June payment until the EU gives assurances on how it will close Greece's funding gap for next year, adding to pressure on politicians to reach agreement on the new measures. [my emphasis]
The banks holding Greek debt are going to have to take a "haircut" - reduction of principle, aka, losses, writedowns - on the debt they are holding. The sooner Greek and other European politicians recognize that reality, the sooner they can stop impoverishing Greeks and wrecking the eurozone and the European Union.


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