Greece exits bailout: Is the Greek economy strong enough?

August 19, 2018 By administrator

Greece exits bailout

Greece will exit its stability program on Monday. How has the Greek economy developed since austerity was imposed in 2010? And is Greece prepared to meet the budgetary targets? A data analysis provides answers.

Greece’s government debt is more than twice the EU28 average; the country’s market value as measured by gross domestic product has decreased by a third since the crisis started; and one in five people are unemployed: At first glance, the situation doesn’t give rise to optimism.

Traditionally, the service sector is the strongest contributor to Greece’s GDP, followed by industry and agriculture. But Greece urgently needs new sources of income to avoid slipping back into recession after the third austerity program ends on August 20. Exports are a promising source of income: Despite some tough years, goods exports rose by 35.5 percent from 2010 to 2017, a welcome relief in Athens and Brussels.

With Greek exports slowly on the rise, the big question remains whether this development is sustainable and strong enough for the country to finance its debt repayments and meet strict commitments for its primary budget surplus. To answer this question, DW analyzed trade data from 2010 to 2018. The investigation shows that the idea of trade as a panacea comes with three caveats.

Caveat 1: Labor costs shrank during the crisis

When the crisis hit hardest in 2010, labor costs were the highest they had been in at least a decade. They dropped markedly from this peak: “The fiscal restructuring that took place as part of the stability program with the EU reduced the cost of labor significantly,” says George Pagoulatos, professor of European politics and economy at the Athens University of Economics and Business.

What turned out to be beneficial for exporters came with a downside: Labor costs measure both wages and taxes paid to the state. Wages have decreased even more than labor costs as a whole, and Greek businesses now pay less for skilled workers.

Greece, lenders reach deal on reforms under bailout review

December 2, 2017 By administrator

Greek Finance Minister Euclid Tsakalotos arrives for a cabinet meeting at the parliament in Athens, Greece June 13, 2017. REUTERS/Costas Baltas

ATHENS/BRUSSELS (Reuters) – Greece and its eurozone creditors reached a preliminary deal on Saturday on reforms Athens needs to roll out under its bailout program, a move that could pave the way for the country to leave the aid plan in August.

The agreement on a range of often politically sensitive measures – covering fiscal issues, energy and labor market reforms, bad loans and privatizations – could open up fresh loans and push Greece further along the path towards a return to full market financing.

Greek Bailout: Germany Cuts Own Throat by Twisting Greece’s Arm

July 18, 2015 By administrator

Germany has shot itself in the foot by persuading Greece to accept its new highly unpopular bailout deal and now “Europe as it is, is over,” according to Tyler Durden, an analyst for the financial website Zero Hedge.

The Italians, Spanish, and French anxiously watched how Germany and the Troika twisted Greece’s arm in an Italian mob-style, Tyler Durden, an analyst for the financial website Zero Hedge pointed out, adding that the EU as it is, is over now.

“The Germans just made their biggest mistake in a long time (how about some 75 years) over the weekend. Now, when all you have to bring to a conversation slash negotiation is bullying and strong arming and brute force, that should perhaps not be overly surprising. But it’s a behemoth failure all by itself regardless,” the analyst noted.

The author underscored that Greek Prime Minister Tsipras failed to introduce an alternative currency in Greece and has ultimately given in to the Troika not because he lost his nerve, but because he was actually “made an offer he couldn’t refuse.”

In other words, the Troika was ready to turn Greece into a “failed state.”

The analyst pointed to some of Tsipras’ remarks he made after the new deal had been concluded.

“We took the responsibility for the decision to avert the most extreme plans by conservative circles in Europe… We resisted demands for the transfer of state assets abroad and averted a banking collapse which had been meticulously planned… I promise you that as hard as we fought here, we will now fight at home, to finish the oligarchy which brought us to this state,” Tsipras stated.

Germany has obviously cut its own throat by undermining the trust of the EU member states which were closely watching the negotiations. Berlin’s era of economic strength is now over the hill, since “without trust you have nothing,” the analyst underscored.

It goes without saying that “the people here in Greece are being forced to pay for years for something they were never a part of, and that they never profited from.” Their profits went to Germany-backed investment banks and Greece’s corrupt elite. Such a business model is doomed, according to the author.

Indeed, Greece’s creditors have completely ignored the results of the Greek national referendum, turning a deaf ear to the plea of the people. The new bailout agreement concluded between Athens, Germany and the Troika can be called a “full colonization” of Greece by the West, Dimitrios Patelis, professor at the Technical University of Crete, noted.

This mob-style way of doing business is a distinguishing feature of the “fascist capitalism,” US publicist Eric Zuesse underscored in his article earlier this week. “This is not democratic capitalism. It is not socialism. It is, instead, fascism. It is dictatorial capitalism,” he stated.

On Monday, the Eurozone leaders agreed to provide Athens with a three-year 86-billion-euro loan to bolster the Greek economy in exchange for tough reforms to the country’s pension system, VAT and labor laws.

Source: sputniknews.com

Greece and eurozone reach agreement in bailout talks

July 13, 2015 By administrator

Donald Tusk says new programme is ‘all ready to go’ but backlash intensifies with critics calling creditors’ terms harsher than Versailles treaty

The government in Athens and its creditors have reached a deal that will shore up Greece’s place in the eurozone after marathon overnight talks.

After 31 hours of acrimonious discussions spread over one tense weekend, a breakthrough came early on Monday morning. Donald Tusk, the head of the European Council, announced that the 19 leaders of the eurozone had unanimously reached agreement. Report The Guardian

He said they were “all ready to go” on a new programme for Greece under the eurozone bailout fund, the European Stability Mechanism, adding that Athens had signed up to “serious reforms”.

But the hard-fought political deal is only the start of yet another round of talks to hammer out the technical details of a bailout plan that could be worth up to €86bn (£61bn) for Greece.

In order to get these desperately needed funds, the radical left government of Alexis Tispras had to submit to draconian economic reforms that the Greek people had rejected in a referendum barely a week before.

Greece has promised to pass laws introducing controversial economic reforms by Wednesday. These include reforming the VAT system, overhauling pensions and signing up to plans that ensure immediate spending cuts in the event of breaching creditor-mandated budget targets.

Athens has also agreed to sell off state assets worth €50bn, with the proceeds earmarked for a trust fund supervised by its creditors. Half the fund will be used to recapitalise Greek banks, while the remaining €25bn will pay down Greek debts.

Tsipras did manage to win a concession that the fund should be managed from Greece, not Luxembourg, as envisaged in a German plan, but the rules will be drawn up by Greece’s creditors – the troika that Tsipras vowed to throw off, but only succeeded in renaming as “the institutions”.
Advertisement

These institutions – the European commission, International Monetary Fund and European Central Bank – have also asked Athens to come up with a plan to “de-politicise” its civil service by next Monday.

In another humiliating climbdown, Athens could be forced to reverse measures it passed upon assuming power that are deemed to run counter to the bailout philosophy. Potentially, this could mean firing the government cleaners that Syriza rehired with such fanfare.

Paul Krugman, the Nobel-prize winning economist and prominent critic of austerity in Greece, said the creditors’ demands on Greece “went beyond harsh into pure vindictiveness, [leading to the] complete destruction of national sovereignty [with] no hope of relief”.

“It’s a grotesque betrayal of everything the European project was supposed to stand for,” he wrote several hours before the final deal emerged. As the talks dragged on through Monday night, #ThisIsaCoup became the top trending topic on Twitter in Greece, Germany, the UK and Ireland.

Echoing a widespread view on social media, one financial analyst claimed the deal was worse than the 1919 Treaty of Versailles that crushed Weimar Germany with debt and paved the way for the second world war.

Marc Ostwald, of ADM Investor Services, argued that the eurozone creditor countries wanted “to completely destroy Greece”.

Asked about the Versailles analogy, German Chancellor Angela Merkel said: “I never make historical comparisons.” She added that the Greek programme was “nothing special”, apart from the sums of money involved, and in line with other bailout schemes devised for Spain and Portugal.

Jean-Claude Juncker, the rejected criticism that Greece’s creditors had been too harsh. “I don’t think that the Greek people have been humiliated and I don’t think the other Europeans were losing their face. It’s a typical European arrangement.”

While recriminations continue to swirl, Greece urgently needs cash to stave off bankruptcy. Athens has to find €7bn by next Monday and a further €5bn by mid-July.

Eurozone finance ministers, who have been stuck on a loop of emergency meetings for three-and-a-half weeks, will reconvene at 15.00 in Brussels (14.00 BST) to discuss emergency bridge finance to tide over the Greek government while further talks on the €86bn bailout grind on.

Although EU leaders trumpeted the avoidance of Grexit, in the communique they made clear the deal could still unravel. “The risks of not concluding swiftly the negotiations remain fully with Greece.”

Greece’s parliament is expected to push through the controversial reform package by Wednesday, paving the way for parliaments in other eurozone members to ratify the agreement. The Bundestag and Finnish parliament are among several legislatures that must approve eurozone bailout programmes.

Finland is expected to reject any further bailout for Greece to avoid a schism that could topple its two-month-old government.

Report: Greece debt crisis: Athens accepts harsh austerity as bailout deal nears

July 9, 2015 By administrator

The Greek government capitulated on Thursday to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an emergency meeting of EU leaders on Sunday.

Athens is understood to have put forward a package of reforms and public spending cuts worth €13bn (£9.3bn) to secure a third bailout from creditors that could raise $50bn and allow it to stay inside the currency union.

A cabinet meeting signed off the reform package after ministers agreed that the dire state of the economy and the debilitating closure of the country’s banks meant it had no option but to agree to almost all the creditors terms.

Parliament is expected to endorse the package after a frantic few days of negotiation that followed a landmark referendum last Sunday in which Greek voters backed the radical leftist Syriza government’s call for debt relief.

Syriza, which is in coalition with the rightwing populist Independent party, is expected to meet huge opposition from within its own ranks and from trade unions and youth groups that viewed the referendum as a vote against any austerity.

report the guardian

Greece votes in bailout referendum LIVE UPDATES

July 4, 2015 By administrator

Polling stations have opened across Greece as millions of people are expected to cast ballots on whether to accept more austerity in exchange for international aid. Recent polls have predicted a knife-edge result, with ‘Yes’ having a slight advantage.

Sunday, July 5

04:42 GMT:

Greeks cast first ballots at polling station in Athens

Mass rallies in Greece over bailout vote

July 4, 2015 By administrator

Tens of thousands of Greeks have attended rival rallies in Athens ahead of a crucial referendum on Sunday, BBC News reported.
Prime Minister Alexis Tsipras was greeted with huge cheers when he told supporters to vote “No” to the terms of an international bailout.

But those attending another huge rally nearby warned a “No” vote would see Greece ejected from the eurozone.

A Greek court earlier rejected a challenge to the legality of the referendum and it will go ahead.
Greece’s current bailout programme ran out on Tuesday. All week banks have been shut, with limits imposed on cash withdrawals.

Another war of words flared late on Friday when Finance Minister Yanis Varoufakis dismissed a Financial Times report that Greece was preparing contingency plans for a possible “bail-in” of bank deposits as a “malicious rumour”. The report quoted sources as saying banks were considering a “haircut” of 30% on deposits over €8,000.
Opinion polls on Friday suggested the country was evenly split over the vote – an Ipsos survey putting “Yes” supporters at 44% and “No” at 43%.

Opinion polls within 24 hours of the voting are banned, as are more campaign rallies.

Greeks will vote ‘Yes’ over bailout terms, polls and bookmakers suggest

July 2, 2015 By administrator

The latest polls and betting suggest Greece will back the cash-for-reform deal proposed by creditors in the July 5 referendum. They point to a mood shift since Athens closed banks and limited cash withdrawals.

Debt crisis: Will Greece exit euro? LIVE UPDATES

A poll conducted by GOP for BNP Paribas, put the ‘Yes’ vote on 47.1 percent and the ‘No’ side on 43.2 percent. It also found that 60 percent of those asked believed Greece should remain part of the eurozone, no matter what the cost.

Another survey conducted by Reuters also hints at a ‘Yes’ vote. Of 21 US investors interviewed 15 expect Greeks to accept the international creditors’ bailout offer.

“The arguments in favor of a ‘Yes’ vote grow every minute the ATM machines don’t dispense money,” chief investment officer at Cumberland Advisors in Florida, David Kotok told Reuters.

Earlier opinion polls suggested that Greeks would oppose the bailout. However, the latest surveys showed that support for a ‘No’ vote had slipped after Prime Minister Alexis Tsipras imposed capital controls and closed banks on Monday. Some political analysts say this has become one of the key factors in determining the outcome of the plebiscite.

Bookmakers also say the ‘Yes’ vote is leading. More than 85 percent of bets placed with Ireland’s largest bookmaker Paddy Power gambled that Greek voters will accept austerity measures insisted on by the troika of lenders, the ECB, European Commission, and IMF.

‘Yes’ has become the betting favorite recently, according to UK bookmaker Ladbrokes. Sixty-two percent of the money is for ‘Yes’ and the probability is up to 66 percent. However, the head of Ladbrokes’ political betting operation Matthew Shaddick, said he remains cautious, because “obviously it’s very easy for events to move rapidly one way or the other.”

Greece will vote on Sunday whether to accept the creditors’ bailout demands or not. The Greek Prime Minister on Wednesday said he would accept most of the terms proposed by the EU with just minor changes. In a television address to the nation Tsipras said that the country needs reforms, different from the ones international lenders are insisting on. He also called the citizens to back a ‘No’ vote.

A ‘No’ in the referendum wouldn’t mean the end of negotiations with the Troika but would be an important step to getting a better deal, according to the Greek Prime Minister. He assured that the referendum has nothing to do with Greece staying in the eurozone, adding that any threats to expel Greece from the currency union are a bluff.