Greece on verge of default as doubt grows over €8bn bailout

[alp227]

Source: The Guardian

Greece's embattled prime minister, George Papandreou, has moved to counter growing fears that Athens is about to default on its debts, saying there was a clear route back to economic health.

Speaking amid high security as protesters converged on the northern city of Thessaloniki for its annual international trade fair on Saturday, the socialist leader said: "There are two paths. One is the path of major change that will lead to a productive and creative Greece.

"The other path, the supposedly easier one, does not look problems straight in the eye and leads to disaster. We insist on the path of change."

Despite strong denials that the country is heading for a default, rumours have grown that the end game is approaching. Wolfgang Schäuble, the German finance minister, has insisted that a sixth, €8bn (£6.8bn) instalment of aid will not be released unless Greece enacts corrective measures to kickstart its economy and improve competitiveness. Experts from Washington and Brussels will fly into Athens this week to assess whether Greece is sticking to its programme of drastic spending cuts and tax rises, amid fears that its creditors could be ready to pull the plug.

Read more: http://www.guardian.co.uk/world/2011/sep/10/greece-verge-default-bailout-doubt

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Conservatives: "See? Socialism doesn't work!"

[DJ13]

1. Conservatives: "See? Socialism doesn't work!"

Lberals: "See? Socialism for the moneyed class doesnt work!"

[Psephos]

2. What doesn't work is perpetual sovereign borrowing for current expenses. n/t

[elleng]

5. Right; they've got to COLLECT taxes.

[bemildred]

3. We are past the point where this sort of inept bleating is going to accomplish anything. nt

[elleng]

4. Whatever it is, the Greek system/culture doesn't work.

They don't collect taxes, tho they are 'assessed.' That can't ever work.

[cliss]

6. I just read in the Scandinavian press

that the interest rate for Greek paper is now at 98%. That is absolutely unsustainable. Finland was a potential lender, but they asked for a lot of collateral. Not sure how that played itself out. It seems that they may have backed out of that.

Otherwise, the european press is bracing for a "bloody Monday" in the stock market. They are expecting Greece to default.

Keep an eye on asian trading, starting Sun. evening.

[Prometheus Bound]

7. Germany wants Greece to "kickstart its economy and improve competitveness."

What does that mean? You can't kickstart the economy without money. You can't improve competitiveness in the short term without cutting wages or devaluing the currency. So I guess Wolfgang means he wants wages cut further.

[Javaman]

8. if Greece has an ounce of brains they will follow Iceland's lead. nt

[dipsydoodle]

12. Presumably you mean

they'd instigate a recognisable tax collection system.

[Prometheus Bound]

13. I think Iceland's and Ireland's problem was different from Greece's.

In the former two it was the banks that were insolvent and the question was whether taxpayers could or would bail them out. In Greece I think it is the government's insolvency that is the problem.

Did I get that right?

[dixiegrrrrl]

14. Sorta.....

The problem is that that Greece owes HUGE sums of previously borrowed money to big banks in Europe and the USA, so both Greece AND the big banks are facing insolvency, in tandem. Greece is balking at bailing out the big banks, which is one of the reasons it is already insolvent, from previous bailouts.
The time for Greece ( and Spain, and Ireland, and Portugal, etc) to have said NO to the banks was when the IMF offered the first "many strings attached" loans and conditions.

[Safetykitten]

9. Nothing to see here, move along...your fiend...er friend, The Bernank.

[banned from Kos]

10. Greece needs a Bernanke -- they don't have one

The USA borrows 40% of its spending like Greece does. We have a credible central bank/er and they do not.

Greece's social program's are doomed due to poor governance.

[potone]

11. The previous conservative government is largely to blame.

They, along with the help of Goldman Sachs, cooked the books to enable Greece to join the Euro. Now it is the socialist government of PASOK that has to clean up the mess. It is true that there are systemic problems in Greece, the greatest of which are a greatly bloated bureaucracy, endemic tax evasion, and nepotism in hiring. But it is also true that Greek wages are low and the massive layoffs of government workers and the cutting of pensions is going to cause great suffering, and that with all the layoffs and companies going bust, Greece will not be able to generate the tax income to pay back the debt even if it could solve the tax evasion problem. This is another case of draconian privatization measures being imposed on a country to the detriment of its citizens.