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Thread: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    For those who are interested, some key links concerning the agreement between the EU/IMF and Greece in addressing Greece's liquidity crisis are:

    IMF’s Summary of the terms of the agreement concerning Greece’s budget measures and EU/IMF financing:
    IMF Survey: Europe and IMF Agree €110 Billion Financing Plan With Greece

    Join Statement by EU Commissioner Olli Rehn and IMF Managing Director Dominique Strauss-Kahn:
    Press Release: Joint Statement on Greece by EU Commissioner Olli Rehn and IMF Managing Director Dominique Strauss-Kahn

    Prime Minister Papandreou’s Speech:
    primeminister.gr | Meeting of Cabinet | Prime Minister’s speech

    The European Central Bank’s (ECB) assessment of the EU/IMF-Greece financial adjustment program: ECB: ECB assesses the Greek economic and financial adjustment programme

    The ECB’s decision to waive minimum credit requirements for Greek debt used as collateral:
    ECB: ECB announces change in eligibility of debt instruments issued or guaranteed by the Greek government

    It should be noted that it remains to be seen whether Greece will be able to carry through with its obligations tied to addressing its larger solvency issue. As a result of the continuing uncertainty on that issue, the Euro declined in trading today. Such an outcome is similar to one that frequently occurs in the immediate aftermath of a corporate acquisition. Often, the stock price of the purchaser falls following the announcement due to concerns that it overpaid and that such overpayment will lead to a reduction in shareholder wealth for those who own stock in the buyer.
    Last edited by donsutherland1; 05-04-10 at 07:27 AM.

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    To illustrate the point about the uncertainty as to whether Greece will be able to carry through with its obligations tied to addressing its larger solvency issue, CNBC reported today:

    A Moody's Investors Service official said the bailout does not mark the end of the country's fiscal crisis because the key is whether the country can adjust to meet the budget deficit targets it has agreed to.

    IMO, Greek debt ratings should remain unchanged in the near-term. Until Greece demonstrates that it is carrying through with its obligations, in other words beginning to tackle its long-term solvency issue and thereby reducing its sovereign debt risk, its credit rating should not be upgraded.

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    Quote Originally Posted by PeteEU View Post
    It was the conservatives that got them into the problem in the first place.



    Shows how much you know about Europe.



    The US has been massively overspending since Reagan. Blaming Obama for something that started by the Conservatives favorite son is just pathetic.



    Like voting in the very people who got them into trouble in the first place?
    The partisan hackery here is galactic. And you couldn't help yourself again, but trotted in Reagan to blame for spending. This has what to do with Greece? Nothing of course, but you are here to discuss Greece.....what a surprise.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    I'm satisfied with the package of budget cuts they agreed on and I'm satisfied with the harsh conditions of the 'bailout'. We (the dutch) will reluctantly lend Greece roughly 5 billion euros with 5% interest while we have to pay 1,5% to lend money ourselves. If Greece repays in full, we'll make money on this deal.

    There is only thing I can't be satisfied about and that's the time it took to come to an agreement. It shows the weakness of our monetary union and the fact we need the IMF to secure Greece's budget cuts doesn't make it any better. We need to adress this isseu to prepare ourselves for future problems in the eurozone.

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    Quote Originally Posted by American View Post
    The partisan hackery here is galactic. And you couldn't help yourself again, but trotted in Reagan to blame for spending. This has what to do with Greece? Nothing of course, but you are here to discuss Greece.....what a surprise.
    If it is partisan to point out the truth among the misinformation then sure call me partisan. Not my fault you cant admit your hero was a big spender.. the facts speak for themselves.
    PeteEU

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    Back on target now. Sorry PeteEU, you know I'm very pro-EU and I support the Greece bailout. But forget the partisanship and forget whoever is in charge, I have no idea who's running the government in Greece or who has been at varies times since the end of the Junta in '74. What I do know though and what the EU knows is that Greece must get its act together and institute some massive reforms in all level of its society and at the same time pay back its debts, including this EU one.

    Greece, the rest of PIGS, and the EU as a whole, along with the United States( no 'et tu' arguments) needs to get their finances in order. I don't think this economic crisis is going to break the bank in the US or most of the EU, but it should serve as a warning. Its no surprise that the smallest, weakest, and most debt ridden and least important economies were the first to go in this crisis, Iceland was the first. But no economy is invincible, governments should learn from this.

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    Quote Originally Posted by Wiseone View Post
    Back on target now. Sorry PeteEU, you know I'm very pro-EU and I support the Greece bailout. But forget the partisanship and forget whoever is in charge, I have no idea who's running the government in Greece or who has been at varies times since the end of the Junta in '74. What I do know though and what the EU knows is that Greece must get its act together and institute some massive reforms in all level of its society and at the same time pay back its debts, including this EU one.
    Oh I agree, Greece needs to step up and fix its problems. It cant rely on devaluation and defaults anymore. That was the whole point of the Eurozone.

    But Spain, Portugal, Ireland, Italy or even the UK are not Greece by any means and yet the first 4 are being lopped into the same basket as Greece and that is highly unfair and totally motivated by speculation and greed.

    Greece, the rest of PIGS, and the EU as a whole, along with the United States( no 'et tu' arguments) needs to get their finances in order. I don't think this economic crisis is going to break the bank in the US or most of the EU, but it should serve as a warning. Its no surprise that the smallest, weakest, and most debt ridden and least important economies were the first to go in this crisis, Iceland was the first. But no economy is invincible, governments should learn from this.
    This where we differ big time. If we take Greece out of the equation the "PIGS" dont really exist other than in the greedy speculators minds. The countries in question are in the deficit spending because we are just coming out of a recession. That is what happens during recessions, governments need to up spending big time. When the good times are back, spending will be drawn back and a surplus will happen. Of the countries named in the "PIGS", all conform to this with the exception of Greece of course. Spain had a surplus for over a decade before this crisis, I can not state this enough. Same for Ireland and many other European countries. When was the last time the US had a budget surplus?

    So the point is, yes the governments are spending a lot of money and ramping up debt, but that is what they are suppose to be doing during a recession.

    This hair brain kitchen economics crap many people are pushing is just not sustainable when we are talking about a country not to mention realistic.

    Countries have tax income that does not go away entirely where as if you loose your job, your income goes poof. Hence you ability to pay your debt goes away but when it comes to a country that does not happen in the same way. On top of that your debt is far far far higher than that of any country in % of your yearly income.

    But this of course does not mean that countries can continue to spend like drunken sailors (unless you are the US of course), and no one in their right mind would agree to doing so. But during a recession, spending will go up and income will go down and that results in deficits.. that is a fact of life. Calling it a problem now, is frankly pathetic, because why was it not a problem after 9/11 or a problem in the recessions of the 1970s, or 1980s or 1990s. Why now?
    PeteEU

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    Ya I think we agree on the important issues, like what needs to be done. Also I enjoyed your comment about if PIGS didnt have Greece, and I thought it would be awesome if it was called PIS. And I know PIGS is kind of an unfair assessment for the countries involved, some EU countries are running higher deficits than PIGS, like France for example. But F doesn't fit nicely into PIGS I suppose.

    Anyway...
    I think its always been a problem, just because the symptoms aren't being immediately felt or haven't led to this kind of crisis in past recessions doesn't mean over spending isn't a problem. Also past recessions were smaller than this one, and didn't last as long, as this is first time since the 30s the entire global economy went into recession at the same time.

    Long term over-spending is a problem, counting on constant and continuous growth is a problem, which is what Greece did. Now I'm sure Greece, just like most countries, had some wiggle room where they can tolerate some decrease in growth while still being able to pay their debts as they mature. Which is why this problem is coming up in the last few months and not when the growth stopped back in 2006-2007. However its just speculation on how big that wiggle room needs to be, and quite frankly it would make me uncomfortable thinking the future of the country is based on some guy's ability to guess decades into the future. Plus I'd know that politicians would likely be willing to sacrifice some of that room for more gain now, after all they can predict 5 years ahead better than 30. So if the next 5 looks good, forget about the 25 after and push that new budget through and collect your votes for throwing more money out to the people.

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    Quote Originally Posted by Wiseone View Post
    Ya I think we agree on the important issues, like what needs to be done. Also I enjoyed your comment about if PIGS didnt have Greece, and I thought it would be awesome if it was called PIS. And I know PIGS is kind of an unfair assessment for the countries involved, some EU countries are running higher deficits than PIGS, like France for example. But F doesn't fit nicely into PIGS I suppose.
    France has a 7.8% deficit. So no it is not worse than Spain, Portugal or Greece. Then again Spain and Portugal and Greece are not much worse if at all worse than the budget deficits of the UK and US.

    Problem with the PIGS acronym, is that it was brought forward by especially US based media. CNBC has been really bad even today, promoting rumors instead of facts, promoting Euro skeptics and speculators over unbiased sources. Just now, CNBC USA is spreading a rumor that Spain is going to ask for a bailout.. wth, how about sticking to facts?

    Yes Greece was bad, but Spain and Portugal are so far from being Greece that it is laughable. The US is way closer to Greece than these two countries. And this has been my point from the start, this rush against Greece and now the rest of the Eurozone is motivated by populist kitchen economics, greed and speculators and not facts.

    Anyway...
    I think its always been a problem, just because the symptoms aren't being immediately felt or haven't led to this kind of crisis in past recessions doesn't mean over spending isn't a problem. Also past recessions were smaller than this one, and didn't last as long, as this is first time since the 30s the entire global economy went into recession at the same time.
    The recessions I am talking about were global, but yes not as bad as this one, but the late 1970s oil crisis was bad.. very bad, but often forgotten now days. The oil crisis of the 1970s forced the UK to the IMF.. funny how that is not reported much on anymore. It almost bankrupted Denmark and other European countries.

    But since then the US has been deficit spending, and not a peep about it.

    Long term over-spending is a problem, counting on constant and continuous growth is a problem, which is what Greece did.
    No that is what the US did. What Greece did was much different. This was a combination of corruption, lack of tax collecting methods, and over all lazzie faire attitude, but the biggest problem was.. they lied to the markets. It is the last part that is the critical part.. they lied. So we can trust the Greek numbers, which drives up the risk.

    Now I'm sure Greece, just like most countries, had some wiggle room where they can tolerate some decrease in growth while still being able to pay their debts as they mature. Which is why this problem is coming up in the last few months and not when the growth stopped back in 2006-2007. However its just speculation on how big that wiggle room needs to be, and quite frankly it would make me uncomfortable thinking the future of the country is based on some guy's ability to guess decades into the future.
    Greece could pay its debts no problem if it was not for the run on the country, and that is the problem! Speculators pushed up the yield on the debt, and that made it much more expensive to lend money. The markets panicked basically.

    Sure the Greeks were to blame for a lot of it, because they lied about their economic figures and that meant the trust in what the Greeks said was gone, but a huge majority of the problem comes from speculators being able to earn money on a Greek default, just as they earned on the Asian crisis in the mid 1990s and pushing the UK out of the ERM or what ever it was called. It is not the first time speculators have done this and it has got to stop in my opinion.

    Plus I'd know that politicians would likely be willing to sacrifice some of that room for more gain now, after all they can predict 5 years ahead better than 30. So if the next 5 looks good, forget about the 25 after and push that new budget through and collect your votes for throwing more money out to the people.
    You cant predict that far in the future (the 30 year). It is unrealistic. That is why budgets are 1 to 2 years maximum.
    PeteEU

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    Re: Greece Accepts Terms of EU-Led Bailout, ‘Savage’ Budget Cuts

    YEP... ol' Glenn Beck called it again.. sorry... I know... It's GOTTA HURT!

    WORSE: He's still going to be right when it all comes tumbling down.. sorry...

    .....It's GONNA HURT!

    Since nobody is listening and too busy calling him names........ you don't know what's coming and you won't be ready...

    NOT TO WORRY!!! .... I'm sure Obama will take good care of you and your children!
    CROUCH DOWN AND LICK THE HAND THAT FEEDS YOU; MAY YOUR CHAINS WEIGH LIGHTLY UPON YOU; AND MAY PROSPERITY FORGET THAT YE WERE MY COUNTRYMEN. -SAMUEL ADAMS

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