Category Archives: Debt

Troika agrees to modest debt relief for Greece


Greece, the European nation hardest hit by the Wall Street-sparked Great Recession, has been granted some modest debt relief, but conditions set the Troika [the International Monetary Fund, European Central Bank, and European Commission] mandate that the regime of austerity continue.

That means that cutbacks in pay, pensions, healthcare, and other social programs will continue, along with privatization of national resources and higher taxes on necessary consumer goods.

But the conditions set also require that the government maintain a high surplus, a measure ensuring that austerity pains will continue.

From Ekathimerini:

Monday’s decision at a Eurogroup meeting in Brussels to approve short-term debt relief measures for Greece was a “decisive step towards stabilizing the Greek economy and restoring trust,” the government spokesman said on Tuesday.

Speaking to the press, Dimitris Tzanakopoulos said that the government will continue negotiations with its eurozone partners for longer-term measures to reduce Greece’s huge debt pile, but stressed that Athens will “under no circumstances” agree to more belt-tightening once the bailout program is complete.

Tzanakopoulos was referring to the International Monetary Fund, which has demanded more structural measures in order to join the Greek program.

“The IMF cannot pressure the Greek government for new measures and not its European partners for lower primary surplus targets,” Tzanakopoulos said, referring to a demand that Greece maintain a primary fiscal surplus of 3.5 percent after 2018, a factor considered crucial by the IMF.

His comments echoed those of Finance Minister Euclid Tsakalotos who warned international creditors, including the IMF, on Monday not to pressure Athens to implement measures it had not previously agreed to.

But the IMF isn’t as happy with the deal as Tzanakopoulos indicated and has called for a halt to further austerity measures, as well as a lower GDP surplus, reports To Vima:

The International Monetary Fund welcomed the short-term debt relief measures that were announced at the Eurogroup, however it noted that they are not sufficient.

An IMF officer reportedly told Bloomberg that the Fund insists that the primary surplus targets after 2018 must not exceed 1.5% of the GDP, since anything higher is unrealistic.

As the officer commented, the targets set must not require austerity and argued that the fewer years the high targets are maintained, the lesser the impact will be on the country’s growth, since the 3.5% GDP target will require additional reforms in the pension and tax system.

The officer also called Athens and Brussels to present measures to be taken, should the primary surplus target of 3.5% be maintained after 2018.

The Troika’s official statement is posted here.

Finally, some debt relief for Greece on the table


After cutting out their pound of flesh from Greeks workers, the poor, the disabled, and their schools, as well as forcing their sale of much of their national wealth, the Troikarchs may be cutting the beleaguered nation a little slack.

Greek was the nation hardest hit by the Great Recession, the crisis ignited by the greed of banksters in Wall Street and London,, and they’ve paid the highest price for the ensuing crisis.

From Kathimerini:

Eurozone finance ministers hope to forge a compromise on Greek reforms on Monday in a final push to secure the support of the International Monetary Fund for Athens’s bailout program by the end of the year.

The 19 ministers of the currency bloc were holding their regular meeting a day after Italian voters rejected constitutional reform plans in a referendum, putting the euro under renewed pressure and reigniting the smoldering eurozone crisis, further complicating the Greek talks.

Athens is required by its eurozone creditors to pass wide-ranging reforms and sell state assets under an 86 billion euros ($92 billion) bailout program, but negotiators have not been able to agree on labor and energy reforms or Greece’s 2018 fiscal targets, leaving ministers to close the remaining gaps.

A deal would allow discussions on substantial relief measures for Greece, whose debt, at about 180 percent of gross domestic product, is the highest in the eurozone.

Meanwhile, the banksters who caused it all continue to collect their billions in bonuses. and continue to toast their greed aboard their yachts, rather than eating the swill in the prisons where they belong.

Quote of the day: A call for resistance in Greece


As the austerians demand yet more draconian cuts as a condition for further financial assistance to a Greece reeling from the Wall Street bankster-created Great recession, a call for action comes from Stavros P. Psycharis, president of the Lambrakis Press Group, publisher of the influential newspaper To Vima:

It is clear that we are faced with the most serious financial crisis that Greece has ever experienced. For the past seven years the country cannot move forward aside from within the economic paths set by our foreign “rulers”. The United Europe is losing respect for Man and its political leaders are seemingly turning into second-rate cash lenders.

Against this situation, Greece must resist, fight and win. It is unacceptable to be blackmailed by a mob of “technocrats” who propose and impose measures like the village doctor hands out aspirin!

But what is done, is done. It is time to refuse the humiliation of the poor relative being humiliated by his own family.

One quick example. Greece cannot implement labor laws other than what is provided in the European acquis.

It is time for Greece to demonstrate that it has the power to ask and receive fair treatment from the people of Europe family. Otherwise the country’s political leadership must be united in facing the crisis that has brought poverty to Greece for the past seven years.

Disabled Greeks oppose new austerity regime


We should give austerity a new name: Call it the Reverse Robin Hood Doctrine.

Austerity is the regime imposed on the world’s debt-ridden poor nations to qualify them for loans to pay the corporations and banksters of the world’s richest nations.

To make those payments, the debt-plagued countries are forced to slash programs designed to help the nation’s afflicted, poor, sick, and otherwise afflicted.

The latest crisis, the Great Recession, brought Greece to its knees, and the government sought loans from the Troika, the International Monetary Fund, the European Central Bank, and the European Commission.

Needless to say, austerity was imposed, forcing drastic cuts in the national healthcare system, the selloff of public assets [including power companies, transit systems, ports, and much more], as well as drastic cuts in public pensions and paychecks, as well as reduced social benefits payments imposed on those who could least afford the loss.

The austerity regime prompted voter to elect a government which promised them an end to austerity, but Prime Minister Alexis Tsipras has knuckled under, and new rounds of deprivation are underway.

Some of those most deeply impacted are now expressing their outrage.

From Kathimerini:

Disabled people and patients with chronic illnesses from around Greece protested in central Athens Friday against austerity measures as the government races to clinch a new deal with bailout lenders.

Protesters in wheelchairs carried black balloons while deaf demonstrators wore white gloves as they used sign language to join chants of anti-government slogans.

Disabled groups are seeking exemptions from budget austerity measures imposed under the country’s international bailout agreements.

Unemployment among people with disabilities was more than double the national jobless rate of 23 percent with poverty levels also sharply higher, according to Yannis Vardakastanis, head of the National Confederation of Disabled People of Greece.

“We want to live in dignity,” Vardakastanis, who is blind, told the AP. “It’s the obligation of the government and European institutions to stop us from being further isolated, impoverished and discriminated against.”

Greece is currently finalizing a new package of economic measures that would make home foreclosures and business firings easier. The measures are required in exchange for new bailout loan payouts and talks on debt relief measures.

Shame on the Troika, and shame on Tsipras.

Chart of the day: The collapse of Greek retailers


From Elstat, the Hellenic Statistical Authority:

blog-greece

While Greece’s retail trades, the bulwark of the middle class, have continued to fall since the start of the Great Recession, the lenders of the Troika continue to battle over terms of the next round of bailout cash, even though Greece has already sold much of its public holdings [rail and transit systems, ports, and even islands] while imposing draconian pay and pension cuts while downsizing its civil service.

From Greek Reporter:

The “serious disagreement between the IMF and European institutions” puts the chances of Greece’s economic recovery at risk, said Bank of Greece governor Yiannis Stournaras on Monday.

Stournaras spoke about the Greek economy at the American-Hellenic Chamber of Commerce conference and talked about the crucial negotiations on the second bailout program review. He warned that “a possible failure to reach an agreement could halt the upward trend of the economy, resulting in the return to uncertainty and would undermine confidence.” He said that the disagreement between euro zone partners and the International Monetary Fund on debt relief measures is pushing back decisions.

The central bank chief urged Greece’s European partners to make decisions on the measures that will ensure the long-term sustainability of the state debt and reduce the target for the primary surplus to 2% of GDP from 3.5%, in order to enhance the prospects of growth.

Stournaras said that,  Despite the mistakes and setbacks, despite the significant economic and social costs of the crisis, Greece has made significant progress over the last six years in terms of budget adjustments and external imbalances.”

However, he said, the harsh measures Greek governments have implemented and the burden Greek people have shouldered are at serious risk. “Despite positive forecasts for the second half of 2016 and 2017, serious risks for the Greek economy still lurk. The main danger is a possible failure to reach an agreement for the second evaluation of the program and delays or setbacks in the implementation.”

More from To Vima:

The head of the Eurogroup Jeroen Dijsselbloem argued that European lenders should be “realistic” in the fiscal targets they set for Greece after 2018, when the program of financial aid will end.

“We need to be realistic” Jeroen Dijsselbloem told the economic affairs committee of the European Parliament, saying that the International Monetary Fund has a point when it says “running a primary surplus of 3.5 percent for a very long time is a huge thing to ask”.

Dijsselbloem’s remarks come a few days before a Eurogroup meeting in Brussels on 5 December, when Europe’s Finance Ministers are set to decide for how long Greece should maintain a primary budget surplus – which excludes debt servicing costs – of 3.5% after 2018, when its current program of financial aid expires.

Even Barack Obama, who has otherwise shown himself a faithful apostle of neoliberal “reforms,” is calling for the banksters to back off and give the beleaguered Greeks some measure of debt relief.

And well he should, considering that it was the avarice of Wall Street banksters who caused the crash in the first place.

Troika demands another pound of Greek flesh


Greek’s debt crisis, brought about by a combination of the Wall Street-greed-created Great Recession and expensive military contracts, most with German companies [many won with hefty bribes], the fragile Greek economy has relied on loans to keep marginally afloat.

The loans, from the neoliberal Troika of the International Monetary Fund, the European Central Bank, and the European Commission, came with draconian demands, including massive public sector layoffs, pension and pay cuts, imposition of more taxes on those least able to afford it, and severe cuts to the national healthcare system, also mandated the sale of public assets, including ports and public transit systems as well as the sale of major shares in national power systems.

And now they want more, including additional impositions on workers and a further selloff of the public energy grid,  if they’re to fund another round of bailout loans.

Meanwhile, unemployment remains at staggering levels.

First up, the latest hitch from To Vima:

The latest talks between the Greek government and the representatives of the institutions on the second bailout review, which concluded at 5:30am on Tuesday, did not result in an agreement between the two sides. As the representatives leave Athens, to continue talks via teleconference, a series of critical issues remain unresolved.

Greek officials commented that the two sides were closed on the fiscal gaps for 2018 and out-of-court settlements for non-performing loans. Technical talks on the gap will continue, as well as on energy and financial issues. As for the primary surplus targets after 2019, they will be discussed at the 5 December Eurogroup in conjunction with measures to be taken for the Greek debt.

Some progress was achieved in the joint collection of taxes and contributions, which will later be refined based on the road map that must be agreed upon between the Ministry of Labor and the General Secretariat of Public Revenue, as well as implementing the OECD’s “toolkit”.

A high-ranking Finance Ministry official estimated that the timetables have not changed and that the goal of reaching a political agreement by the Eurogroup remains. The same official noted that the government intends to reinvest a portion of the one billion euros above the surplus targets towards social benefits.

Some particulars from Kathimerini:

Finance ministers of core European Union countries are expected to meet later this week in Berlin to discuss the possible concessions Brussels could offer to secure the participation of the International Monetary Fund in Greece’s third international bailout, paving the way for debt talks.

Government officials suggest that the IMF, which has yet to decide whether to join Greece’s third bailout, is to blame for the slow process of talks between Greece and its creditors.

In a media briefing on Tuesday, government spokesman Dimitris Tzanakopoulos acknowledged that the differences between Greece and its creditors remain too great for an agreement on all prior actions to be reached by the December 5 Eurogroup meeting and said that Athens was aiming for a political agreement by that time.

There is enough time until December 5 for agreements to be reached in talks on labor laws, fiscal issues and the overhaul of the Greek energy sector, Tzanakopoulos said, noting that the government has shown the political will necessary to achieve a breakthrough by the deadline.

Latin America begins spiraling into depression


We strongly suspect that the world is heading rapidly into yet another depression.

Much of the world’s economic growth has been fueled by debt, the debt of consumers who are increasingly stressed by frozen incomes, shrinking benefits, and the sense that something is deeply wrong with the global economy — factors which have fueled the rise of populism in most of the world’s developed nations.

When debt levels become intolerable folks will stop buying all that stuff, and recession, followed by depression, become inevitable.

Now comes a strong indication from Latin America that the economic downturn has already begun.

From MercoPress:

Following two years in a downward trend the value of Latin American exports fell 14.8% in 2015, and 8.5% in the first seven months of 2016, according to the Trade and Integration Monitor 2016 of the Inter-American Development Bank. Services exports, which had partially compensated the fall in merchandise trade in previous years, contracted 2.4% in 2015, the first time since the 2009 financial crisis.

The report shows that the export slowdown in Latin America and the Caribbean, which is even more intense than in the rest of the world, resulted from significant price reductions, particularly of commodities and oil, coupled with the most severe recession in recent decades.

The contraction in the value of regional exports in 2015 was due to declines in the external sales of virtually all countries and sub-regions, although with different intensities. South American and Caribbean countries were the most affected, both registering reductions of 22.8%, while the rate for Mesoamerica was 4.2%, driven by a fall of 5% in Central America and of 4.1% in Mexico.

According to Paolo Giordano, Principal Economist of the IDB Integration and Trade Sector and the report’s coordinator, “the intensity and the duration of the export decline indicate that global trade has entered a new normal characterized by low growth. This, in turn, will require a change of gear in the policies that support the international insertion of Latin American and Caribbean countries.”