Greece on verge of default as doubt grows over €8bn bailout

From The Guardian UK:

Greek prime minister George Papandreou under fire amid rumours that creditors are about to pull the plug

and, Saturday 10 September 2011

Greece‘s embattled prime minister, George Papandreou, has moved to counter growing fears that Athens is about to default on its debts, saying there was a clear route back to economic health.

Speaking amid high security as protesters converged on the northern city of Thessaloniki for its annual international trade fair on Saturday, the socialist leader said: “There are two paths. One is the path of major change that will lead to a productive and creative Greece.

“The other path, the supposedly easier one, does not look problems straight in the eye and leads to disaster. We insist on the path of change.”

Despite strong denials that the country is heading for a default, rumours have grown that the end game is approaching. Wolfgang Schäuble, the German finance minister, has insisted that a sixth, €8bn (£6.8bn) instalment of aid will not be released unless Greece enacts corrective measures to kickstart its economy and improve competitiveness. Experts from Washington and Brussels will fly into Athens this week to assess whether Greece is sticking to its programme of drastic spending cuts and tax rises, amid fears that its creditors could be ready to pull the plug.

Share prices plunged on both sides of the Atlantic on Friday, as Athens was forced to deny that it would default, perhaps as soon as this week. The Dow Jones closed more than 300 points down, while in London the FTSE100 lost more than 2% of its value.

A team from the so-called “troika” of the IMF, the European commission and the European Central Bank, which bankrolled the Greek rescue deal last May, are due to rule by the end of the month whether it should receive the latest €8bn tranche of the bailout.

The troika left Athens at the start of this month after talks with the government broke down. Papandreou has faced down riots on the streets to pass a series of austerity bills, but the country’s creditors accuse him of dragging his feet over job cuts in the civil service and the privatisation of €50bn-worth of state assets. Greece’s plans have also been blown off course by the worse-than-expected performance of its recession-hit economy, which is now expected to shrink by up to 7% this year.

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2 Responses to “Greece on verge of default as doubt grows over €8bn bailout”

  1. Andrea B. Says:

    I have very little sympathy for the Greeks on this issue and any sympathy I have is reducing every day.

    It is interesting to compare Ireland’s progress with Greece on this issue. Ireland is ahead of ECB, EU and even IMF expectations. The IMF is trying to think of excuses to bring in more asterity in Ireland, but Ireland is paying them back faster than the most optimistic market expectation thought possible, to the point that the IMF can barely keep up, with Ireland bringing in cutbacks on its own so as to reduce all spending and pay everything of as fast as possible. The Irish government has made clear it intends to pay of all debts as the primary national priority. Ireland is also winding up the largest banks instead of bailing them out, which has really angered Wall Street and the London markets. The process of winding up AIB will be complete next year. The Irish government has even started to face down the Vatican, which has shocked everyone in power in Europe. Compare that with Greece, which has made no real effort to sort out its economy, has literally put its banks on corporate welfare and seems to think that all it has to do is make bold statement with no action to back them up.

    The Greeks have made no effort to repay there debts. They have made no effort to combat the national sport of tax evasion by everyone in Greek society, from the richest to the poorest.

    The Greeks have constantly lied through the entire process’s of joining the EU, ERM and the Euro. They got Wall Street banks to perform credit debt swaps so as to give a fraudulent good picture of the Greek economy when joining the Euro, when in fact it was an economic disaster.

    They should not even have been allowed into the European Union in the first place, until they dealt with rampant coruption first. At least the European Union has learned that lesson and brutally attacked Slovenia and Croatia’s coruption. Slovenia is now in both the European Union and Euro with Croatia joining the European Union soon.

    In Greece, the three ruling families need to be arrested, stripped of there assets, citizenship revoked and then deported, to sort those countries out, so as to free up the majority of the countries from corruption. Only then can they start on the road to fixing the mess they are in.

    The banks are major problems in Greece, but tax evasion by everyone from the richest to the poorest, is also a major problem.

    The biggest problem would be getting ordinary Greeks to look in the mirror and realise that they themselves are the biggest part of the problem. The Greeks need to start paying tax and they need to stop living well beyond there means.

  2. Andrea B. Says:

    I forgot to mention.

    Greece got into the Euro because Goldmand Sachs did some very creative accounting, to hide the bad financial situation Greece was in, upon joining the Euro.

    Strangely no criminal charges have ever been brought against Goldman Sachs for this Multi Billion dollar fraud, which was designed to destabilise the Euro before it had even started.

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