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Thread: Contagion hits Portugal as Ireland dithers on rescue

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    Re: Contagion hits Portugal as Ireland dithers on rescue

    The downgrade is appropriate and deserved. The Greek government has missed its deficit reduction targets by about 1% of GDP. As a result, its commitments lack credibility.

    What had been pointed out when the Greek debt crisis first erupted was:

    1. Greece had enormous long-term structural imbalances that warranted junk status well before the debt crisis erupted.
    2. Typical austerity programs understate the amount of economic contraction involved. If so, Greece's fiscal consolidation would need to be more aggressive to meet its commitments on account of less revenue in-take than anticipated.
    3. The rescue package provided Greece with liquidity. That added liquidity was aimed at buying time for Greece to enact necessary structural reforms. Whether those reforms would be enacted and implemented would determine whether Greece overcame its fiscal woes.

    Recently, the Greek government has been increasingly critical of those pointing out its continuing failures. The criticism is well-founded and deserved in the context of Greece's failing to deliver, to date, on its commitments. Rather than taking on its critics, the Greek government needs to adopt the measures necessary to deliver on its commitments. Otherwise, its commitments will continue to lack credibility and its fiscal woes will likely persist.

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    Re: Contagion hits Portugal as Ireland dithers on rescue


  3. #113
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    Re: Contagion hits Portugal as Ireland dithers on rescue

    Quote Originally Posted by PeteEU View Post
    I see.. and yours is all roses and peachy right?
    Pete... we (on the right) realize the troubles we face, and have a structure and history to escape the idiocy if we could only put the Libs in the minority for a good long time. Obama just might do it for us for a while... that's a start.

    The EU (this doesn't include the Brits) has no such structure, and the populous is pretty much fork-in-brain dumb... despite their arrogance.

    .
    Last edited by zimmer; 05-09-11 at 03:04 PM.
    The Clintons are what happens...
    when you have NO MORAL COMPASS.

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    Re: Contagion hits Portugal as Ireland dithers on rescue


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    Re: Contagion hits Portugal as Ireland dithers on rescue


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    Re: Contagion hits Portugal as Ireland dithers on rescue

    today: EU open borders scaled back after influx of migrants | World news | The Guardian

    the changes in europe are revolutionary, and they're social as well as political and economic

    there's no stopping the wave, all the way from athens to sacto

    it's as physical as reaction

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    Re: Contagion hits Portugal as Ireland dithers on rescue

    Quote Originally Posted by The Prof View Post

    Maybe if they hold more riots more wealth will be generated and the government will then have all the the money they need to pay all the people.

    It's fun pretending to be European.

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    Re: Contagion hits Portugal as Ireland dithers on rescue

    Aside from a more severe than expected economic contraction in Greece (typically contractions are worse than projected during fiscal consolidation), Greece also faces social problems that could undermine its ability to overcome its long-term solvency challenges. From The Washington Post:

    Already struggling to avoid a debt default that could seal Greece’s fate as a financial pariah, this Mediterranean nation is also scrambling to contain another threat — a breakdown in the rule of law.

    Thousands have joined an “I Won’t Pay” movement, refusing to cover highway tolls, bus fares, even fees at public hospitals. To block a landfill project, an entire town south of Athens has risen up against the government, burning earth-moving equipment and destroying part of a main access road.
    In Greece, austerity kindles deep discontent - The Washington Post

    In societies where fissures exist, be they social or ethnic, economic crises, painful austerity measures, shocks, etc., can all lead to complex political challenges. Those challenges can sometimes cause governments to retreat from the challenges facing them. In a worst case, governments can fall.

    With respect to Greece, the EU-IMF package provided liquidity to buy time for Greece to begin to address its solvency challenges. The sharper economic contraction has contributed to Greece's falling behind the package's targets. Such a development could lead to even more severe austerity measures being required. At the same time, the rising social unrest could present a substantial barrier to Greece's near-term prospects for addressing its enormous fiscal challenges.

    As Greece has a democratic political system, new leaders could be elected who would reverse course. Parliamentary elections fall in 2013. Hence, if Greece is not emerging from its current recession, its fiscal situation remains gloomy, and if unrest has grown more widespread, 2013 could mark one potential turning point for Greece. Of course, one cannot rule out an earlier restructuring of debt, but that does not appear to be Greece's present intent. Things could change after the 2013 election.

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    Re: Contagion hits Portugal as Ireland dithers on rescue

    It's in a state of collapse.

    No matter how much people may want to believe it seems there are always truths that every generation has to relearn.

    European project is unravelling | The Australian

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    Re: Contagion hits Portugal as Ireland dithers on rescue

    today:

    The central Spanish region of Castilla-La Mancha is “totally bankrupt”, according to the incoming administration of the rightwing Popular party (PP), an accusation that will deepen concerns about Spain’s budget deficit.

    The claim has prompted angry denials from the Socialist government.

    Spain’s 17 autonomous regions and its more than 8,000 municipalities, with €150bn ($220bn) of accumulated debt between them, have become the latest worry for investors in Spain and its sovereign bonds.

    Although the amount is less than a quarter of total public sector debt, regional debt has doubled since 2008. The 17 regions collectively exceeded official budget deficit limits in 2010, and appear likely to do so again this year despite repeated demands for compliance from the central government.

    Catalonia, an economy the size of Portugal, says its deficit will be double the target.

    Vicente Tirado, a senior PP politician in Castilla-La Mancha, said the region was “totally bankrupt”; owed suppliers such as pharmaceutical companies that provide drugs for hospitals a total of €2bn in unpaid bills; and would have trouble finding the money to pay the region’s 76,000 civil servants next month.

    Mr Marín [the pp's economy coordinator in the region] said the PP, which won the region from the Socialists in elections two weeks ago, would shut between half and three-quarters of Castilla-La Mancha’s 95 government owned companies because they duplicated the work of other organisations and were staffed mostly by Socialist party members.

    At the national level, Socialist leaders have accused the PP of undermining Spain’s credibility in financial markets for domestic political ends and have noted that several PP-run fiefdoms have also exceeded their deficit limits.

    Official data show, however, that Socialist-run Castilla-La Mancha was the worst-performing region last year, recording a deficit of 6.5 per cent of gross domestic product, compared with the limit for that year of 2.4 per cent.

    Two opinion polls published on Sunday, meanwhile, predicted that the PP, led by Mariano Rajoy, would win national elections with a 13.8 percentage point advantage over the Socialists, under their leader in waiting Alfredo Pérez Rubalcaba.
    FT.com / Bankrupt Claims Heighten Spanish Debt Fears

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