Greece in Turmoil

[ludermor]

http://www.irishtimes.com/newspaper/breaking/2010/0211/breaking6.htm

What the fook does all this mean?
Im sure the Greeks will be delighted to hear Brian Cowen is coming to save the day.

[longrunsthefox]

http://www.irishtimes.com/newspaper/breaking/2010/0211/breaking6.htm

What the fook does all this mean?
Im sure the Greeks will be delighted to hear Brian Cowen is coming to save the day.

fook?   

[armaghniac]

fook?

I think he means φυξκ.

[rossie mad]

It has big consequences for europe as a powerful unit and also the euro as a currency itself.

The Greeks problems are much like our own in that they have a seriously over inflated public sector and jobs were created willy nilly to get votes (rings a bell )

A property boom that was as false as our own and a population hugely in debt.

The thing is we have acted and are keeping things tight but the greeks just kept spending over the last year or so and now find themselves staring into a big black hole pleading with the EU for help.

What happens if they dont get the help?

They may have to call in the IMF thus ensuring they are kicked out of the euro.
The markets crash around the world,the euro devalues and becomes worthless and the next thing is the same thing happens to portugal followed probably by spain and this will probably weaken the EU in global terms to nothing but a talking shop.

France and Germany nickmaned four countries PIGS because of their overrational spending in the past and their ecomic collapse.
We were the I but we seemingly have been replaced by Italy and the other three countries i mentioned make up the rest.

I would say the EU will offer help and bring the greeks into line in terms of spending.
The Greeks are a very socialist people however and may resist european interference so it could be messier than first thought.

If the Greeks can be towed into line then a big econimic catrasophee (i know spelling) can be avoided but the burning question is how many more Greeces can Europe take?

[ross4life]

Was in Athens last week & the place Certainly didn't look like it was in Turmoil!

Every night of the week the Pubs were full (unlike here only Saturday night) & the price of the Drink was a dear as temple Bar, yet it didn't stop the people drinking into the wee hours of the night!

[Zapatista]

Was in Athens last week & the place Certainly didn't look like it was in Turmoil!

Every night of the week the Pubs were full (unlike here only Saturday night) & the price of the Drink was a dear as temple Bar, yet it didn't stop the people drinking into the wee hours of the night!

The Greeks problems are much like our own in that they have a seriously over inflated public sector and jobs were created willy nilly to get votes (rings a bell )

The thing is we have acted and are keeping things tight but the greeks just kept spending over the last year or so and now find themselves staring into a big black hole pleading with the EU for help.

Aha

[gerry]

Could be bad news for all of euro land if it goes belly up.

On a positive note might mean cheaper pints when we head to croker.

[CiKe]

Rossie, Ireland were never the "I" in PIGS until recently. As far as I know, PIGS came about some time after the BRIC countries (Brazil, Russia, India and China) report by Goldman Sachs, and was used to refer to the "Club Med" Countries.

A Greece default would be very bad but would not necessarily mean the end of the Euro.  The debt Greece has to roll this year, is huge for a country it's size, but is relatively small in the wider European scheme of things - something along the Lloyds or RBS bailout. If I'm not mistaken there was a technical default on a Californian bond recently (not sure it state or municipal), but that doesn't mean automatically that the $ collapses (and California's economy is much much bigger than Greece!). Contagion would certainly be a huge worry however as investors start to bet against the next country to fail this driving up their costs of funding and possibly creating a liquidity crisis.

Greeks are living in their own little world. THey have always been fond of striking, but have lived beyond their means in much the same way Ireland (and many others did) for far too long. If they are bailed out without very onerous conditions then moral hazard is still a huge issue. Ireland has made large and painful cuts, and the market has recognised this. Things will be tough for years to come, but unless Greece does the same, I suspect they will only make things worse for themselves, as Germany and France won't want to touch them if they fail to implement stringent reform

[rossie mad]

Cike i wont argue with you on the pigs issue as i was just quoting an article i read in the business post a while back.
You seem to know what your talking about so ill trust your knowledge.

However in relation to the effect the current problems in Greece will have on the euro is very real as they might not damage it in the short term but if Greece goes to the wall then it will have a knock on effect on the other fragile economies in the euro area which in turn will weaken the currency to an extent its next to worthless.

There was 8 billion bet on the markets on the strength of the euro in the last few days and that alone spells trouble down the line for the economic strength of the single euro currency.

[muppet]

Cike, Google 'the PIIGS' and see how many articles and financial blogs refer to it as Portugal, Ireland, Italy, Greece & Spain.

What you say may be true for some commentators but not for all of them.

http://blogs.telegraph.co.uk/finance/edmundconway/100003661/britains-quarter-of-a-trillion-pound-exposure-to-the-piigs/
http://seekingalpha.com/article/187735-piigs-2010-similar-to-uruguay-and-argentina-2002-and-that-ended-badly
=963]http://www.investingsuccess.ca/index.php?id=3890&tx_wecdiscussion[single]=963

[Declan]

David McWilliams: A legacy of debt is not the best start for our children

By David McWilliams

Wednesday February 17 2010

Driving past Holles Street Hospital yesterday reminded me that, despite all the economic and political travails, life goes on.

We still fall in love, still have children, still protect them and try to give them the best start we can. Sometimes we overburden them with our expectations or maybe sometimes we don't push them hard enough -- but as I saw a new mother walk out the door with her swaddled infant, I thought to myself, this is what life is all about.

That warm feeling stayed with me until I started to do some calculations. Finance Minister Brian Lenihan was on the radio telling us how we were not Greece. Obviously the mutual backslapping of his European counterparts had gone to his head. The spin now coming out from Brussels is why can't Greece be more like Ireland.

Our politicians and top civil servants love this position, Ireland as the teacher's pet, the role model, the prodigal son. Why can't the errant Greeks take a leaf out of our book? The reason is they are not half as delinquent.

Let us go back to Holles Street and look at the prospects of a child born in Dublin vis-a-vis a child born in Athens. The child born in Dublin today will come out of its mother's womb owing €46,641. This is before the baby takes its first breath. There will be more than 66,000 children born in Ireland this year and each one will be weighed down by this enormous debt -- the legacy of the Cowen/Ahern years.

Contrast this with the situation in Greece. The newborn Greek baby will owe about half as much as the newborn Irish baby. The figure is still huge at €26,300 but it is €20,300 less than the Irish child. So don't tell me Ireland is better off than Greece. It isn't.

Mr Lenihan was in Brussels yesterday telling the Europeans that we are not Greece. This is true, we are worse than Greece.

Ireland's total debt per head is much worse than Greece's. Its government, in collusion with its banks, lied to foreigners; in Ireland, our banks, in collusion with our Government, lied to us. And clearly there is no way in the world the next generation can or should be lumbered with paying back the debts of the previous generation.

Let's look at the numbers. Our national debt is €17,042 per person; Greece's is €26,300. However, the Greek bank lending to the Greek people is covered by deposits. The Greek banks were well-behaved in the boom. They didn't borrow from every Tom, Dick and Gunter to enrich themselves and inflate a property bubble.

Our banks, on the other hand, have a funding shortfall of €120bn. This is what they borrowed abroad to lend to the developers and the property buyers. Now the balance sheet is in ruins, these so-called assets are worthless -- but the debt remains. If you add this €120bn to the national debt of €208bn, you get the real level of debt in this country. This is our babies' inheritance -- €46,641 of debt before they learn to walk.

So we are a more delinquent version of Greece, the only difference is that the financial markets are looking at sovereign debt rather than total debt at the moment. In so doing they are missing the picture. But should that surprise you? As they were the people who cheer-led the Irish lending splurge, the same people who rated our banks as virtually risk-free and who in the end believed "this time it's different". They were the same people who brought you sub-prime debt, 30-year mortgages and financed great opportunities like the Glass Bottle Factory and the Jurys site.

Just because the financial markets don't see what is going on in Ireland, it doesn't mean we should stick our heads in the sand too. Remember, when the bill is presented it will be you and me who will cough up for this mess, so we need to look deeper than the headlines in the 'Financial Times'.

There are a few essential differences between Ireland and Greece but one of the most significant is that Greece is having a government spending crisis which is undermining its banking system, while Ireland is having a banking system crisis that is undermining our Government. Clearly the Irish Government and, arguably more egregiously, top civil servants are culpable in all this as they are the people who caused the mess. They were elected or promoted under the assumption that they would make the right policy choices to run the place. They failed miserably.

Their failure has left Ireland in a more significant debt bind than Greece. In looking at a country's ability to pay its debt, there is little point at looking at the government's debt or looking at the government's ability to service government debt. This is because the 'government' doesn't pay government debt; the people pay government debt.

There is a myth sometimes swallowed by financial markets and most often believed by politicians and mandarins that the 'government' is some autonomous outfit that can raise revenue to pay the debts that it has incurred. This is a grave misunderstanding of how a country works. The sovereign or the government is only the amalgamation of each and every one of us -- the people. So you need to look at the total debt of the people and add this to the government's debt to get the full picture.

When you do this for Ireland, the numbers make Greece and the average Greek citizen look like a paragon of virtue.

Taking the total debt into account, we can see that Ireland is caught in a debt cul-de-sac. This means we have nowhere to run, nowhere to hide. With these debts, the banks will not lend to us. So we don't buy things that we used to because we can feel credit leaving the economy. This is why mortgages are down 50pc in the past year and will be down again next year. Houses prices are falling precipitously and everyone knows this. So we keep adjusting our price expectations downwards and keep postponing. So we don't spend.

Meanwhile the banks, despite all the capital they have been and will be given, and despite NAMA, are not lending but are advertising in all the newspapers for deposits. This will cause the economy to contract.

Mr Lenihan can take all the plaudits from eurocrats, but the real story of this Government and the civil service elite's mismanagement lies behind the proud smile of the new mothers at Holles Street. Each baby carries this Government's €46,000 legacy.

What was that one about giving our children the best start we can?

[muppet]

I really hope he is wrong but I think probably not.

[CiKe]

For some reason I find the gloomiest articles the most interesting and compelling - I think it's the pessimist in me. Unfortunately he makes a very good point about government debt being society's debt. The thing about this whole situation is that if they go down the route of trying to inflate the debt away, then it's actually those who have been disciplined get screwed as their savings disappear...

In relation to the short € position in FX markets - it sounds big but its not particularly large given volumes in FX trading.Think I read that €8bn is only 1% of daily turnover in the €$? Soros broke the £ with a $(?)10bn bet in the 90's which was big at the time.

[Denn Forever]

Not good news. 

Three dead as Greece protest turns violent

At least three people have been killed in the Greek capital as protesters set fire to a bank during a general strike over planned austerity measures.

The fire service said three bodies were found inside the Marfin Bank in Athens. Two other buildings are also on fire.

Petrol bombs were thrown at police who responded with pepper spray, tear gas and stun grenades.

Protesters are angered by spending cuts and tax rises planned in return for a 110bn euro (£95bn) bail-out for Greece.

Parliament is to vote on the measures by the end of the week.

AT THE SCENE

By Malcolm Brabant, BBC News, Athens



I have not seen this level of anger for quite some time, but the cuts that have been announced are much more severe this time and people have realised how much these austerity measures are going to hit them in their pockets.
This demonstration however, looks better organised too, with clear "military" objectives.

But the deaths are going to make the protesters pause. And there is going to be a backlash against the anarchists who are going to be the main suspects in this.

It is very difficult to predict which way the situation is going. This is a very volatile country. But the protesters have managed to send a message to the international community that social unrest is a serious problem and that is going to undermine trust in the Greek government.

Measures include wage freezes, pension cuts and tax rises. They aim to achieve fresh budget cuts of 30bn euros over three years, with the goal of cutting Greece's public deficit to less than 3% of GDP by 2014. It currently stands at 13.6%.

Outside parliament, a group of protesters rushed up a flight of steps, taunting MPs to come out and calling them "thieves".

Riot police forced them back, but right next to parliament, others groups set buildings on fire - including a tax office.

The Greek protesters' ire is aimed against symbols of capitalism, says the BBC's Malcolm Brabant in Athens.

Our correspondent says the deaths will change the equation, increasing pressure Greek Prime Minister George Papandreou who has spoken of "great sacrifices" needed.

But it may also create a backlash against violent protesters, our correspondent says.

The general strike is the third to hit Greece in as many months.

Meanwhile, the German parliament has begun considering the bail-out plan for Greece.



Quite simply Europe's future is at stake. Europe is at a fork in the road



German Chancellor Angela Merkel


Merkel urges support for Greece 
Chancellor Angela Merkel urged MPs to back the emergency loan package agreed by European finance ministers at the weekend.

It requires Germany to pay the largest proportion of the loans.

"Quite simply, Europe's future is at stake," she said.

The EU has agreed to provide 80bn euros (£69bn) in funding - of which around 22bn euros would come from Germany - while the rest will come from the International Monetary Fund (IMF).

'Concern'

Flights in and out of Greece stopped at midnight, and trains and ferries were not running. Schools, hospitals, and many offices are shut.

The government has appealed to demoralised staff in the military, police, schools and hospitals not to retire, fearing the surge in demand for benefits could further drain treasury resources.

  I'm feeling more and more angry every day, because those who got us into this mess are not held responsible

Thrasyvo Paxinos
Teacher


In pictures: Greece protests
Angry Greeks 'left carrying the can'
Greek economy 'to shrink by 3%'
Hewitt: Europe's days of anxiety 
Foreign governments and investors are watching events in Greece with concern.

Chris Lowe of FTN Financial in New York told the BBC that the US financial community had been shocked by the violent protests.

"The [US] reaction is that [Greek] people will simply refuse to accept the austerity plan," he said.

"If the Greeks are this upset, then maybe we need to worry about the Portuguese and Spanish and Italians being upset with the cuts they're going to have to make."

Union leaders say the cuts target low-income Greeks.

"There are other things the [government] can do, before taking money from a pensioner who earns 500 euros (£430) a month," Spyros Papaspyros, leader of the public servants' union ADEDY, told Greek private television.

What went wrong in Greece?

Greece's economic reforms that led to it abandoning the drachma in favour of the euro in 2002 made it easier for the country to borrow money.
Greece went on a debt-funded spending spree, including high-profile projects such as the 2004 Athens Olympics, which went well over budget.
It was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics.
Greece's economic problems meant lenders started charging higher interest rates to lend it money and widespread tax evasion also hit the government's coffers.
There have been demonstrations against the government's austerity measures to deal with its 300bn euro (£267bn) debt, such as cuts to public sector pay.
Now the government has announced that it needs to access the 30bn euros (£26bn) in emergency loans it has been offered by other EU countries.
BACK 1 of 6 NEXT In Athens, Greeks spoke of their anger at the tough economic measures.

Businessman Dmitris Mentis told the BBC that wealthy Greeks had to pay their "fair share of the burden".

"The rich class has been evading taxes for decades now," he said.

Athens-based journalist Christos Michaelides told the BBC: "There is a big fear in the whole of society - a sense of injustice in most of the measures.

"There is a fear that things could get very, very ugly if people don't feel that what they are doing now, in these austerity measures, is going to be worthwhile."

On Tuesday, several thousand teachers and students marched to parliament carrying black flags and banners.

The demonstration was largely peaceful but some scuffles broke out near the parliament building.