Greece to default as EU agrees €159bn bailout

[girl gone mad]

Greece to default as EU agrees €159bn bailout
http://www.telegraph.co.uk/finance/financialcrisis/8653634/Greece-to-default-as-EU-agrees-159bn-bailout.html

Greece is set to lead the eurozone's first-ever default as European leaders agreed that the private holders of Greek debt will take a hit of €50bn over three years.

Breaking weeks of deadlock, the heads of the 17 eurozone governments conceded that a "controlled" failure was the only way to prevent the collapse of the single currency and a global financial rout.

As part of the deal Greece will also receive another bailout package - from Europe, the International Monetary Fund and the private sector - worth €159bn. The second bail-out, which follows the €110bn rescue funds agreed last May, will cut Greece’s debt by a quarter. The private sector will provide €49.6bn via a variety of measures in the next three years including a €12.6bn debt buy-back programme. The fresh rescue attempt has been agreed to “decisively improve the debt sustainability and refinancing profile of Greece”.

In a bid to prevent the contagion seeping out across Europe, Brussels was granted radical new economic powers that pave the way for far greater economic union between members.

[nadinbrzezinski]

1. Well folks I guess all that public rage did, to a point, work

take notes people.

No, greece is not out of the woods either.

[LLStarks]

2. God help us if we ever get around to creating the Amero. nt

[girl gone mad]

3. No kidding!

[Renew Deal]

4. Couldn't Greece have defaulted without the agreements made a couple weeks ago?

:shrug:

[sabrina 1]

5. Why didn't they let it default in the first place?

We need to follow that money. The first bailout was forced on the people of Greece, they were told, to stop the default. Liars, or incompetents, which is it?

Iceland defaulted, they refused to bail out the banks, and they are the only European economy that is rebounding.

These crooks who are pulling the strings of every country in the world are evil. Why are they still in charge after probably the worst failure in history, on a Global scale?

I hope the European Union breaks up. It has stolen the sovereignty of those countries and I think the people will finally rise up and demand it.

It's almost as if a huge army invaded Europe and took it over. The effect is certainly almost as bad. But they didn't need an army. And we are being subjected to same 'austerity' program which they are trying to hide from us.

That is why SS, Medicaid and Medicare are 'on the table' because social programs are always the target of the Global Capitalists. It makes NO logical sense for this government to even be talking about SS, unless you realize it is not about US. We too, like Europe, have been taken over.

[pampango]

6. "I hope the European Union breaks up. It has stolen the sovereignty of those countries..."

Please. Liberals in Europe created the European Union at the same time that they were transforming their countries with progressive policies like national health care, a strong social safety net, strong unions with legal protection, and high and progressive taxes to support government policies that make people's lives better.

The Eurosceptics are all on the right and far-right. They value national sovereignty with border controls and tariffs against each other. Fortunately, Europeans have a collective memory of what hyper-nationalism brings to the continent. 65 years after WWII Europeans have built a continental entity of 500 million people that has a hugely more equitable distribution of income and a much higher quality of life for its people than existed before (or exists now in the US).

Oh and the EU didn't "steal" their sovereignty. (Unless the mighty EU army invaded one country after another in the dead of night and I happened to sleep through it.) The same liberals who fought for decades for a more progressive Europe, realized that national sovereignty is not more important than a better quality of life. They believed, and still do, that open borders with each other is more liberal than are closed borders. European conservatives would agree with that, but prefer closed borders and are working hard to erect barriers within Europe.

Conservatives have not gone away. They realize that national sovereignty is the most emotive card they can play (be afraid of the "other") to divide Europeans into "us vs them" groups, so people will be easier to control. Having French and German unions support each other is much more dangerous to conservatives than the prospect of having French and German unions competing with each other for the good of "national sovereignty".

[muriel_volestrangler]

7. Greece and Iceland were completely different situations

Greece, Ireland Can’t Copy Iceland Default Model, Sigfusson Says

Though the island never reneged on any sovereign debt, its bank failures left creditors trying to recoup more than double the $40 billion Russia defaulted on in 1998. Iceland’s resurrection 2 1/2 years after becoming a pariah in international capital markets may yet embolden leaders elsewhere in Europe to contemplate the prospect of life after burden sharing.

Iceland survived by taking over the domestic units of its banks and leaving the foreign creditors to bear losses. An 80 percent slump in the krona against the euro offshore in 2008 sent the trade deficit into surplus within months, while government spending cuts helped rein in the budget. Iceland will post a shortfall of 1.4 percent of gross domestic product next year after 2011’s 2.7 percent deficit, the Organization for Economic Cooperation and Development said on May 25.

http://www.bloomberg.com/news/2011-06-15/greece-ireland-can-t-default-like-iceland.html

The problem in Iceland was unregulated banks that borrowed money outside of Iceland, and lent it to Icelandic speculators, who made increasingly risky deals in other countries until the recession caused it all to collapse. Iceland's government finances were quite controllable.

Ireland was in a roughly similar position, and it might have been better for it to follow Iceland's path - let the banks go bankrupt, nationalise the domestic parts to keep the economy functioning and try and rebuild (though Ireland would have been complicated by a lot of the speculation being a property bubble inside Ireland, and by being a Euro member, which means immediate devaluation, pushing up consumer prices but making exports more competitive, wasn't available to it).

But Greece's problem wasn't its banks; it was its government running a huge deficit (and having turned out to have hidden the size of it over the years with the connivance of non-Greek banks). You can't just say 'the government is bankrupt - we'll forget about it', so it couldn't do what Iceland did. Because you have to keep government functioning, you have to work out a way to do that while hopefully giving it a long term prospect of looking trustworthy enough to lend to. There is not 'right answer' to this, so, no, they weren't 'liars'. 'Incompetent', perhaps; "too concerned with protecting the banks' loans, and too optimistic about recovery", I'd say.

[NNN0LHI]

8. Main export of Greece is olives

Hard to finance a country with olives.

Don

[WinkyDink]

9. Better than exporting illegal invasions and warfare. Hard to finance a country with THEM, too.

The US needs to keep its nose in its own trough.