Europe puts brakes on Greek bailout

[marmar]

from the Guardian UK:



European finance ministers on Friday heaped pressure on the Greek government to accelerate its privatisation programme and implement deeper spending cuts, after they told Athens a crucial €8bn (£6.9bn) bailout payment would be delayed until next month.

Luxembourg prime minister Jean-Claude Juncker, who chaired a meeting of the eurogroup of single currency finance ministers in Poland on Friday, said officials recognised the renewed efforts by Greece to meet its fiscal targets, but a decision on releasing the next tranche of cash would not be taken until October.

The move was met with incredulity by Greek officials. They have already warned they will be out of money by mid-October and are reported to be making contingency plans to lay off public sector workers.

US secretary of state Tim Geithner, who flew to Poland on Friday to emphasise Washington's fears of a second financial meltdown, urged eurozone countries to expand their bailout fund to better tackle the debt crisis. He warned the debt crisis posed a "catastrophic risk" to financial markets and added "What is very damaging from the outside is not the divisiveness about the broader debate, about strategy, but about the ongoing conflict … You need … to work together to do what is essential to the resolution of any crisis." .............(more)

The complete piece is at: http://www.guardian.co.uk/business/2011/sep/16/greece-finance-ministers-bailout-payment

[no_hypocrisy]

1. I don't understand why Greek public assets need to be sold outright

instead of being held as collateral with their return upon repayment with interest.

[underpants]

2. interest

that is the key. They don't just want their stuff they want to take their stuff AND make them pay interest on it.

[xchrom]

5. +1 -- we can go to mykonos run by a consortium of financialists -- or something. nt

[Chimichurri]

4. The Shock Doctrine.

http://www.naomiklein.org/main

[ixion]

6. exactly...

[blindpig]

3. It's coming..

Default will bring great hardship, likely heavy state repression and possibly revolution.

[blkmusclmachine]

7. The Revolution Awaiteth...

n/t

[AndyTiedye]

9. Revolutions are Very Costly for Countries that Depend on Tourism

Greece, like Egypt, depends heavily on tourism to keep their economy going.
Rioting in the streets tends to scare away the tourists.

In Egypt, they have been able to seize a portion of Mubarak's ill-gotten gains
and those of some of his henchmen, but that pales compared to the loss of almost
all of their revenue from tourism this year, and perhaps for some time to come.

Greece faces a similar predicament.

[dkf]

8. It will be a nightmare for the Greek people when they default...state pensions gone, state jobs gone

http://www.ft.com/intl/cms/s/0/80094624-e076-11e0-bd01-00144feabdc0.html#axzz1YAbv4mwD

Because Athens still does not raise sufficient tax revenues to fund its public services, it would fail to pay all of its domestic bills. Public sector workers might not be paid, some social security benefits might fall short. The shock of default and the lack of money would send the economy reeling.

At the same time as the Greek state ran out of money, the country’s banks would face collapse because their holdings of domestic sovereign bonds would be heavily written down. The European Central Bank could not accept defaulted bonds as collateral to lend to banks, since they would be worth little.

The closure, even temporarily, of payment systems and cash machines would amplify the problems. To restart normal economic life, Greece would need to recapitalise its banks and balance its books on a day-to-day basis. If creditors were willing to lend fresh money to Athens, the direct consequences could stop there. But finding new lenders after default is not easy.

The alternative would be to restore Greece’s ability to create money to pay its bills – and that would require exit from the euro, to re-establish the central bank’s ability to create money.