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Thread: Greek Prime Minister to Form New Government

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    Greek Prime Minister to Form New Government

    From CNBC:

    Greek Prime Minister George Papandreou will form a new government on Thursday and seek a vote of confidence from his PASOK parliamentary group, he said in a televised address on Wednesday...

    "Tomorrow I will form a new government, and then I will ask for a vote of confidence."
    News Headlines

    IMO, Greece missed its first opportunity to use the time it received from the EU-ECB-IMF package to begin to tackle its solvency issues. Another aid package is probably more likely than not, but Greece faces some stiff political challenges ranging from an opposition that is putting future political advantage ahead of Greece's fiscal welfare and popular discontent with austerity. Were the Greek Prime Minister to fall in his "no confidence" vote, that could undermine prospects for a new round of assistance, particularly if no stable successor government could be formed in a timely fashion.

    In any case, the next aid package might well be the last option before some kind of default event. Default is not yet a foregone event, but a lot will depend on whether Greece addresses its structural solvency issues. A default event would likely have some spillovers across the Euro Zone and, to a lesser extent, globally. One risk might be renewed focus on rapidly growing fiscal imbalances elsewhere, including the U.S. and Japan.

    Things to look for should Greece head for default include:

    1) Desperate capital conservation measures. These might include bank holidays, mandatory exchanges of domestic savings for Greek bonds (to provide finances to the government), restrictions on withdrawals, etc.
    2) Efforts to launch negotiations with foreign creditors for "voluntary" resecheduling/restructuring, possibly by making rescheduled debt senior to other debt.
    3) Intensifying protests that become national in scope and begin to take a material toll on economic activity.
    4) The introduction of "temporary" currency-like instruments to substitute for a lack of liquidity (possibly a prelude to returning to the Drachma?) and to provide leverage in demand for additional EU/ECB assistance (as the step could be a transitory one toward reintroduction of the Drachma)
    5) A broadening of tax measures aimed at capturing income e.g., taxes on export earnings (though Greece's export sector is very small)

    Were Greece to default, reintroduction of the Drachma would not insulate it. The reintroduced currency would plunge in value. With only a very small export sector, the plunge would not significantly boost economic activity. Moreover, Greece would likely be unable to prevent a collapse of its banking system. Even more desperate measures than the capital controls cited in point #1 could be pursued were the banking system to collapse.
    Last edited by donsutherland1; 06-15-11 at 04:42 PM.

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    Re: Greek Prime Minister to Form New Government

    I cant see Greece being able to avoid default

    The culture within Greece is too ingrained to allow for the various self interest groups to work together to see the required changes within the Greek economy, let alone within the government. It will require a default and the collapse of the economy to see the required changes being made. What will benifit Greece (or at least the mobile) is membership in the EU, which will allow many to move to other parts of the EU to seek work in the short term
    Happy Hanukkah Cheerfull Kwanzaa
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    Re: Greek Prime Minister to Form New Government

    A string of parliamentary resignations on Thursday threatened to thwart Greek Prime Minister George Papandreou's plan to reshuffle his cabinet and pass austerity measures needed to save the nation from default.

    The political turmoil raised uncertainty over the Socialist cabinet's five-year plan for tax hikes, spending cuts and state property selloffs demanded by its bailout lenders, spooking investors who fear the problems will infect global markets.

    Analysts said it was increasingly unclear whether Papandreou would be able to form a new governing team and get the deeply unpopular measures approved amid the political chaos, which follows nationwide strikes and violent protests in Athens on Wednesday.

    "It will be very hard now to find good people to form a government now. They don't trust (Papandreou) after all the flip-flops he has made," said former finance minister Stefanos Manos. "Who will make privatisations now in all this turmoil?"

    Two other Socialist deputies stepped down on Thursday in protest and will be replaced by other party members.

    World stocks hit a three-month low, the euro tumbled and government bonds with top credit ratings rose as concerns intensified over the crisis, while the cost of insuring Greek debt against default hit yet another record high.
    News Headlines

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    Re: Greek Prime Minister to Form New Government

    very tense:

    Demonstrators today encircled the Greek parliament in Athens in an attempt to stop MPs voting on even deeper austerity measures for the debt-ridden country.

    They were involved in a tense stand-off with riot police in Constitution Square as a 24-hour strike began.

    The walkouts left hospitals running on emergency staff, disrupted transport and forced radio and TV news shows off the air.

    Prime minister George Papandreou was attempting to push through the measures which will include higher taxes and wider spending cuts.

    The government needs to pass a new 2012-2015 austerity programme worth more than 20 billion this month or face being cut off from continued funding of rescue loans from European countries and the International Monetary Fund.
    Greek fury over deeper cuts vote | News
    Last edited by The Prof; 06-16-11 at 08:53 PM.

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    Re: Greek Prime Minister to Form New Government

    Fears of contagion from political and market turmoil in Greece sent Spanish borrowing costs to 11-year highs, in spite of a deal between the European Union and the International Monetary Fund that reduced the chance of an imminent default in Athens.

    Spanish government bond yields, which move inversely to prices, jumped to highs last seen in September 2000, while Greek yields surged to fresh euro-era highs on Thursday.

    The threat of a Greek default within weeks receded as international leaders overcame a hurdle to ensure Athens received bail-out loans to repay maturing debt in July.

    A failure to repay this debt would trigger a default.

    But the loans are conditional on the Greek parliament backing new austerity measures. In Athens, George Papandreou, prime minister, was fighting to persuade his own party, let alone the opposition, of the need to pass the measures.
    FT.com / Europe - Greek deal fails to ease contagion fears

    buy?

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    Re: Greek Prime Minister to Form New Government

    Quote Originally Posted by donsutherland1 View Post
    From CNBC:



    News Headlines

    IMO, Greece missed its first opportunity to use the time it received from the EU-ECB-IMF package to begin to tackle its solvency issues. Another aid package is probably more likely than not, but Greece faces some stiff political challenges ranging from an opposition that is putting future political advantage ahead of Greece's fiscal welfare and popular discontent with austerity. Were the Greek Prime Minister to fall in his "no confidence" vote, that could undermine prospects for a new round of assistance, particularly if no stable successor government could be formed in a timely fashion.

    In any case, the next aid package might well be the last option before some kind of default event. Default is not yet a foregone event, but a lot will depend on whether Greece addresses its structural solvency issues. A default event would likely have some spillovers across the Euro Zone and, to a lesser extent, globally. One risk might be renewed focus on rapidly growing fiscal imbalances elsewhere, including the U.S. and Japan.

    Things to look for should Greece head for default include:

    1) Desperate capital conservation measures. These might include bank holidays, mandatory exchanges of domestic savings for Greek bonds (to provide finances to the government), restrictions on withdrawals, etc.
    2) Efforts to launch negotiations with foreign creditors for "voluntary" resecheduling/restructuring, possibly by making rescheduled debt senior to other debt.
    3) Intensifying protests that become national in scope and begin to take a material toll on economic activity.
    4) The introduction of "temporary" currency-like instruments to substitute for a lack of liquidity (possibly a prelude to returning to the Drachma?) and to provide leverage in demand for additional EU/ECB assistance (as the step could be a transitory one toward reintroduction of the Drachma)
    5) A broadening of tax measures aimed at capturing income e.g., taxes on export earnings (though Greece's export sector is very small)

    Were Greece to default, reintroduction of the Drachma would not insulate it. The reintroduced currency would plunge in value. With only a very small export sector, the plunge would not significantly boost economic activity. Moreover, Greece would likely be unable to prevent a collapse of its banking system. Even more desperate measures than the capital controls cited in point #1 could be pursued were the banking system to collapse.
    Don't agree. My sense is that default will look like a structured bankruptcy.

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    Re: Greek Prime Minister to Form New Government

    Sounds like a civil war in the making, to me.

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    Re: Greek Prime Minister to Form New Government

    on charlie rose last nite:

    The chances of Greece defaulting are “so high that you almost have to say there’s no way out,” Alan Greenspan, the former chairman of the Federal Reserve, said on a “Charlie Rose” broadcast, shown on Bloomberg TV on Thursday night. He added that as a result, some American banks may be “up against the wall.”
    http://www.nytimes.com/2011/06/17/bu...debt.html?_r=1

    read the nyt story, you won't learn anything you didn't know yesterday

    but greenspan is right---there is absolutely 100% no way out

    default is inevitable

    and spain and ireland are next, and then beyond...

    hold on, she's comin down fast

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    Re: Greek Prime Minister to Form New Government

    today:

    Greece faced power outages on Monday as employees at the main power utility began 48-hour rolling strikes to protest the company's privatization, part of austerity plans needed to avoid a national debt default.
    Greece Faces Blackouts due to Austerity Strikes

    greece was bailed out 110 billion thirteen months ago, may, 2010

    athens' syntagma square has turned into a permanent protest camp with thousands of indignados, tents, concerts, open mics...

    Athens protests: Syntagma Square on frontline of European austerity protests | World news | The Guardian

    papandreou's desperate attempt to form a unity govt broke down

    FT.com / Brussels / Economy - Papandreou pleads for unity to tackle crisis

    in spain they're marching, like some latter day shepherd's crusade, 300 miles to madrid

    Spanish protesters launch anti-austerity marches - Yahoo! News

    and, of course, everyone's worried about contagion

    Moody's threat to downgrade Italian debt raises eurozone contagion fears - Telegraph

    no wonder mr greenspan "almost" has to say there's no way out

    enjoy, eu enthusiasts
    Last edited by The Prof; 06-20-11 at 02:03 PM.

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    Re: Greek Prime Minister to Form New Government

    Europe faltered in its race to save Greece from default as finance chiefs said further aid hinged on embattled Prime Minister George Papandreou delivering budget cuts in the face of domestic opposition.

    On the eve of a confidence vote that threatens to topple Papandreou, the euro area’s top economic policy makers pushed Greece to pass laws to cut the deficit and sell state assets. They left open whether the country will get the full 12 billion euros ($17.1 billion) promised for July, running into International Monetary Fund criticism for indecisiveness.

    Decisions on the next payout and a three-year follow-up package were put off until next month, prolonging Greece’s fiscal agony and heightening the brinksmanship that has marked Europe’s handling of the unprecedented debt crisis. The stumble negated gains made in markets last week after Germany indicated a second Greek bailout was in the works.
    Bailout Bid for Greece Falters as Europe Insists Papandreou Cut Budget Gap - Bloomberg

    do you think the greek economy is a good investment?

    dollars, even if they're not worth as much, are still pretty rare, these days

    debt ceilings, anyone?

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