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Subscribe to RSSGreece appeared to have avoided crashing out of the euro currency zone early Monday after political parties in favor of an international bailout deal won a slim election majority – but the region's debt crisis showed no sign of abating. NBC's Stephanie Gosk reports.
Greece appeared to have avoided crashing out of the euro currency zone early Monday after political parties in favor of an international bailout deal won a slim election majority – but the region’s debt crisis showed no sign of abating.
Antonis Samaras, leader of the conservative New Democracy party, said he was confident of forming a coalition as he announced talks with leaders of all parties "that believe in Greece's European orientation and the euro."
Foreign leaders reacted positively to the result, viewed as crucial in holding the joint currency together, and there was a brief rally on Europe’s money markets.
Arriving at the G20 summit meeting in Mexico, Italy’s Prime Minister, Mario Monti, said: “This allows us to have a more serene vision for the future of the European Union and for the eurozone.”
However, fresh worries over debt problems in Spain and Italy wiped out the market gains. Spanish 10-year government bond yields rose to 7.14 percent, pushing the nation's implied borrowing costs to their highest during the euro's lifetime. Italian 10-year bond yields also rose to 6.08 percent. Seven percent is widely seen as an unsustainably high cost of borrowing.
Citigroup analyst Jurgen Michels said on Monday that, even after the election result, the probability of Greece leaving the euro over the next 12 to 18 months remained at between 50 and 75 per cent, according to Business Insider.
Struggling Greece remains deeply divided over whether to implement a harsh austerity package, the price for receiving a total of $300 billion in bailout money from the European Union and the International Monetary Fund to save its near-bankrupt economy.
Right-winger re-elected despite assault trial
The radical left, anti-austerity SYRIZA bloc won 27 per cent of the vote – only 2.7 percentage points less than New Democracy, while the ultra-right wing Golden Dawn party also enjoyed success despite its spokesman, Ilias Kasidiaris, facing trial for assault after slapping a female rival during a live television debate.
Andreas Solaro / AFP - Getty Images
Ilias Kasidiaris, member of Greek Parliament and spokesman of extreme-right ultra nationalist party Golden Dawn looks on during a pre-election rally in Athens on Friday.
Kasidiaris was re-elected in Sunday’s poll, according to Bojan Pancevski, a reporter for Britain's Sunday Times.
"My biggest fear is of a social explosion," a senior adviser to Samaras told Reuters on Monday. "If there is no change in the policy mix, we're going to have a social explosion even if you bring Jesus Christ to govern this country."
Despite pro-bailout parties winning a majority in parliament, actual votes for Greece's anti-bailout parties added up to 52 percent.
Samaras now faces the awkward task of convincing the center-left PASOK movement to join a coalition charged with implementing highly unpopular spending cuts and privatizations, while the economy nosedives.
The streets of central Athens are scarred after repeated waves of protests, some hospitals are running short of vital medicines, thousands of businesses have closed, beggars and rough sleepers are multiplying and suicides are rising.
Under the terms of the international bailout, the new government must fire up to 150,000 civil servants, slash spending by 11 billion euros this month, sell off a swath of state-owned companies, improve tax collection and open closed professions to competition.
A PASOK-New Democracy coalition would be guaranteed a parliamentary majority thanks to a quirk of Greek electoral law which gives the winning party a bonus of 50 extra seats. But that will not win the argument on Greece's streets.
The Greek economy is expected to shrink by 5 percent this year after contracting 7 percent last year and unemployment is running at almost 23 percent. Many economists believe that the harsh austerity measures will only make matters worse in the short term.
'Fight' goes on for leftists
PASOK leader Evangelos Venizelos has previously said he would only formally join a coalition if SYRIZA did so as well, something which is politically impossible, given the radical left bloc's unstinting opposition to the austerity measures.
Greek analysts noted that SYRIZA's charismatic 37-year-old leader, former student communist Alexis Tsipras, conceded defeat quickly in a phone call to Samaras, apparently relieved he was free of the pressure to form a government and make compromises.
"From Monday we will continue the fight," Tsipras told cheering supporters in an open-air square outside Athens university. "...the next government after this one will be a left government."
"We will fight to topple these policies," the youthful crowd chanted back as loudspeakers played World War Two Greek Communist resistance songs.
Filippos Nikolopoulos, a sociology professor at Crete University and SYRIZA supporter, said that Tsipras's fans were jubilant because they had won new force and authority by increasing their share of the vote so much on Sunday.
"We want Europe, we want to cooperate," he said. "But we do not want to be subjugated by (German Chancellor) Mrs. Merkel."
Stathis Stavropoulos, a newspaper cartoonist famous for his drawings depicting German officials preaching austerity at Greece as Nazi taskmasters, said the new conservative government would have the people of Greece against it from the outset.
"Our dream of European Union was very different," he told Reuters. "It was a union of countries and peoples, not a union to serve banks and not a Fourth German Reich."
Financial markets had feared a victory for SYRIZA, and New Democracy’s win prompted a surge in shares in early trading on Monday.
"It's a temporary rally but we're seeing broad gains because the global situation has changed now that the prospect of a 'Drachmageddon' has disappeared," said Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities in Tokyo.
Reuters and msnbc.com's Alastair Jamieson contributed to this report.
More world news from msnbc.com and NBC News:
- Pro-bailout party prevails in Greek election
- In Egypt, little enthusiasm for presidential finalists
- 14 missing off Indonesia after 10-foot wave hits boat
- Questions swirl as Saudi Arabia buries crown prince
- Video: Obama, Putin meeting looms large for Syria
Follow us on Twitter: @msnbc_world
Leave a Comment:
Isn't this like the equivalent of giving a stage 4 lung cancer patient chemo?
This bailout deal just postpones the inevitable for these deadbeats.
Greece avoids 'Drachmageddon
Change "avoids" into "delays" and you have it about right.
Yea, Just stuff a few hundred billion Euros into the drain, that should keep them circling the bowl for a few months
The Greek bailout is one of the cornerstones of our great world economy built on accounting gimmicks and fraud.
You gotta love fiat money and Keynesian economics... The world can't just keep on printing money that isn't backed by anything. A global financial meltdown is looming. It will make the last 4 years look like a vacation.
"Seven percent is widely seen as an unsustainably high cost of borrowing."
So what happens when the interest rate in the United States gets to 7%?
Our National Debt is now $15.7 Trillion (a 57% increase since the end of fiscal 2008), and at 7% interest the annual interest cost would be $1,100 Billion per year.
In comparison, interest expense averaged $227 Billion per year under Clinton and $199 Billion per year under Bush (yes, it was less).
That $900 Billion per year increase in interest expense will require devastating tax increases - all to pay for that huge increase in debt under Obama.
Actually, this is the result of two entirely different economic philosophies going back and forth so that neither can work as intended. Either would be better than this.
Their economy is going to collapse. There is no stopping it. This is just a finger in the dam solution
Roy, it was less under Bush because interest rates were much lower--this in spite of the fact that Bush increased the deficit. Interest rates are still low here and in spite of all the fear-mongering, the free market global financial markets are willing to lend the U.S. more given the low interest rates they are willing to accept from us. This is a unique opportunity to invest in the future but only if we have a predetermined mechanism for reducing the debt as our economic situation improves. Keep in mind, the last time we had such a high debt to GDP ratio was right after WW2. We never paid that debt off--we just grew the economy around it so that became easier to service it. If you think that austerity measures will save this situation, we will be suffering for a very long time--perhaps the rest of our natural lives.
"Under the terms of the international bailout, the new government must fire up to 150,000 civil servants, slash spending by 11 billion euros this month, sell off a swath of state-owned companies, improve tax collection and open closed professions to competition. "
So over the past 5 years of rapid economic decline, exactly what measures have actually been implemented? See, we hear about austerity measures, but this statement suggests the agreed upon terms haven't been met yet.
Unfortunately, what needs to happen is exactly what needs to happen here in the US and that is structural changes for the future. Obama refuses, and Greece doesn't have the will either. So the snowball gets bigger and in the case of Greece it is probably too late.
What isn't said in this article is that the people aren't paying their bills, such as utility bills, and thus the government was borrowing from Germany to pay these bills. The people aren't paying because they really do not have a government and so nobody to impose the law. Tax collection has been extremely poor and so why do we think now that the Greek government will do better?
This is only delaying the inevitable for Greece. They are in too big of a hole to ever climb out of it. Right now the EU is just throwing good money after bad in trying to prop up Greece. Now that there is a little room to breathe, they need to arrange an orderly default and get it over with. If they do not, they are setting things up for a completely disorderly collapse further down the road. There are simply too many people who rely on government handouts for their existence in Greece. Add to that the fact that tax evasion is their national sport, and it is pretty well hopeless. An unbelievable percentage of taxes that are due each year go unpaid and the government has not taken any serious actions to out an end to this. There is currently over $60 billion euros in unpaid taxes due to the Greek government that they have made little if any attempt to collect. To put this in perspective, this amount represents about one quarter of the country's annual GDP or in terms of the US it would be like the US government having almost $3.8 trillion in unpaid taxes. To put it further in perspective, the actual amount that the US government is owed in delinquent taxes is only about 10% of this amount (it is hard to find exact numbers for the amount owed).
@ Roy Wilson, why do you continue the lie about Bush? He never did put that "Iraqi Oil will pay for the war" on the National Debt" books. That didn't happen until Obama did it, and that is where his "Debt Explosion" came from. While I am no fan of Obama because he continually craps on the Constitution, I do know the difference between lies and the truth. Trying to tell a Conservative the truth, is like talking to a 3 year old who shoves his fingers in his ears and screams, "LA-LA-LA-LA" while you are talking, they just don't want to hear it and burst their fantasy land bubble.
Like a row of dominoes once Greece inevitably crashes the next in line will be hit & on & on
@ truesaid, obviously you haven't seen the stacked market yo-yo up and down because of Greece, or Italy, or Spain. Funny, how the US isn't driving the markets here in America. (And no that is not a typo of stock market, it is correct in its first form, because everyone knows the cards are stacked if you play the stock markets).
@truesaid,
Do you really have such a misunderstanding of the world's economy as to believe European problems won't affect the U.S.? We're already feeling the effects.
...apparently you need to reread the post and then maybe modify your take a little...
Hello folks, the apparent winner of the Greek elections, the New Democracy Party, will try to form a coalition with the PASOK Party and this is what everyone is not betting on. The problem is that the PASOK Party has lobbed a grenade into the coalition discussion, announced by Katerina Diamantopoulou that Pasok will not join into a coalition government with the New Democracy Party unless Syriza also joins the coalition. Syriza stated moments ago it would not do this. The question then comes whether ND can form a government (150+ seats) with any of the other remaining parties including neo-Nazi New Dawn or the communists. The answer is most likely not so Greece again, for the moment, is nowhere. In other words, anyone hoping that Greece will promptly form a pro-bailout government will likely be disappointed. Then the New Democracy Party also campaigned on re-doing the terms of the EU bailout which Germany said earlier today would not be happening.
If you have noticed, there is no more panic in the people about our economic crisis. Why should there be? In other words, Greece is now America, where the vast majority of people also live on credit alone, and have taken up the following motto when dealing with banks: "you pretend to be solvent, we pretend to have money."
At the end of the day, it is all just one big global monetary circle jerk, only this time in reverse, as the snake of fractional reserve banking has finally started to eat its own tail. With people spending money they don't have, and in debt to their eyeballs to a banking system that itself is just as insolvent, is there any wonder that nobody really panics any more over daily threats the grand reset is finally coming?
We have convinced ourselves that the road to economic prosperity is to pay off our debt with more debt. The Greek elections may empower the Bernank to implement QE3 or 4 depending on whether or not you think the currency swaps and operation twist (selling short-term debt and buying longer-term bonds) constituted QE3. In any event with economic data signaling stall speed growth for the US, it looks like the Fed will lower its current 2012 growth outlook from 2.7% to 1.8%. This and the risks from the euro area debt crisis will allow the Fed to adopt QE3/4 at the June 20 FOMC (Federal Open Market Committee). It’s been estimated the Fed could extend operation twist by another $150bn, but the expectation is that the Fed will instead allow its balance sheet to expand a further $600bn, with purchases split 40/60% between MBS (mortgage backed securities) and Treasuries. Here we go again folks the purchase of toxic MBSes that will let the banks off the hook even further and another treasury debt bailout that you and I are ultimately liable for.
The fact of the matter remains the same, the majority of the economies are bankrupt and all the Federal Reserve whether it’s their European branch or if they create a “new super bank” knows how to do is print, print, print and then print some more. This allows the bankrupt countries to create all the schemes imaginable to loan money to each other to prolong the inevitable and inevitable it is!
For example: Of the 100 billion dollar Spain bailout, Italy has to provide 20 percent of the loan. Under the deal, Italy has to give Spain the loan for 3% but has to borrow the money on the markets at 7% to do this. You can’t make this stuff up, but this is the bizarro world economics Europe and the rest of the world has succumbed to.
The economic collapse we are witnessing has been brought to you by your friendly Federal Reserve and their fractional reserve banking fraud. It has finally reached the point that even the sheeple can’t deny!
obuma and booshes and other low-lifes are joined at the hip regarding fiat currency. we/they bow to true counterfeit elected and non-elected mafia................"puck the queen...said the king..."
Reality is a cold hearted bitch. Especially if you've just woke up from your socialist day dream.
All the squabbling, all the stonewalling, all the finger pointing isn't going to stop this run away train! Our economy is a house of cards and a mighty wind is heading our way. Get ready for a game of 52 card pick up!
Bail outs are like Pi$$ing on the sun. Self sacrifice is necessary to solve the global economic crisis but no one wants to go first and I don't think there is anyone with the discipline and altruistic attitude necessary to begin.
Who do we answer to? When something unpleasant needs to be done isn't it necessary to have someone in authority to order it be done? Who or what IS that authority today? The economies of the world are like children playing a game of backyard baseball where no one is ever really out. Three strikes? Four? NO, infinity!
This will all come to an end when the next world power steps up and demands it! Leadership, is what we need on a global scale. America used to be that leader. Who leads today? Not us, that's for sure!
Sooner or later the hogs at the trough will find that all the fat they've collected is being used to make a delicious savory gravy! The hungry masses will be only too happy to devour it!
Hello Mike, you do know that the biggest recipient of social welfare in the history of the world is our "Free Market Capitalist" banks and financial institutions, right? Remember the bailouts? The American taxpayers have bailed out the banks to the tune of tens of trillions of dollars. Our banks have enjoyed more socialism than anyone else in the world!
trust2112 ......... The cost of the wars under Bush was included in the national debt figures. All spending and borrowing under every President has been included in the debt numbers, whether through budgeting or continuing resolutions.
How do you figure the cost of the wars have been included in the budget under Obama? I don't know about the first year, but the last three years under Obama the cost of the wars have been off budget because we have had no budget. Makes me laugh when people yell about Bush's wars not in the budget, but they haven't been for at least 3 of BO's 4 years either.
"you do know that the biggest recipient of social welfare in the history of the world is our "Free Market Capitalist" banks and financial institutions, right?"
That's a complete lie. Free market capitalism does not allow too big to fail. That's socialist crony capitalism, picking winners and losers. Obama has consolidated power into fewer banks, changing too big to fail into to humongous to fail.
That's the whole problem with socialism, it punishes success and rewards failure. The banks are a perfect example.
Hello Phil, “that's a lie”? Wow, don't look now but your political party affiliation is showing! While I'm an avowed political atheist I don’t care what political party one wants to attach themselves to it was the previous administrations CEO that instituted the Trouble Asset Relief Program (TARP) when the economy crashed. The new CEO has continued those same policies. Our political system has turned into a two headed one party system serving their masters the banksters/Federal Reserve and Wall Street.
If you are saying that both parties have abandoned a “capitalism” business model than I would agree with you. If you are trying to pin it on one party or the other I don’t!
It has been touted by both parties that the banks are the engine that drive our “Free Market Capitalist” system. If you have a problem with that, take it up with them.
And here I thought the Greek people may have learned that stacking debt upon debt, and thinking more debt on top of it, will fix a problem that has no end in sight, and that it doesn't help get you out of said debt.
Boy, was I wrong. It only goes to show you how political thinking, and political rhetoric will brainwash the masses into believeing that they have the answers for all of their problems.
Interest rates will go up and this country is in deep @!$%# when it does...anyone agree? The hole is deep but we keep digging deeper, will anyone ever wake up from this mess and try to start things in a direction that will help us dig out of the giant debt we have. Both sides of the aisle are deepening the hole for us, I for one am glad I am older and won't most likely see the demise of this country, but grandkids and so on are in for a rough ride....IMHO
Trust . . they may drive more than just our "free market capitalistic system". What if the outcome of the G-20 summit is the massive global coordinated stimulus that some "economists" predict??
These analysts seem to think that this may be sufficient "sugar" to move the global economy out of it's doldrums. That would prove that these global money sources do have the power to manipulate and grow the world economy! In their mind, what is the downside?? In fact . . if it works then maybe there is no downside?
P.S. I'm not from the financial world. Is it standard succession in the profession that all bankers are also "economists"?? For example, all the people like Jamie Diamond and other bank executives eventually become de facto "Economists" and Analysts (kind of like all good dogs go to heaven)?
(P.S. I do agree with Phil that "too big to fail" seems like more of a Socialist construct)
Hello Testacle, the way I see it we won't witness the new world order but the old world order disintegrating. The old consume and spend paradigm is collapsing in front of our eyes. You know the one where we pay off our debt with more debt, it ain't working no more. They will try to prolong the inevitable but the inevitable it is! The ruse is up and the third world war they are trying to start so that we can renege on our debt isn't going to happen either.
The elephant in the room is humanity in that the people of the planet who make real things in the real world are no longer paying homage to the financial beast that Wall Street and the City of London, together with their Vatican brain-washers and Washington D.C. bully boys have morphed into.
Too big to fail was a construct designed to consolidate and take over the world but the snake of fractional reserve banking has finally started to eat its own tail. We have nothing to fear and only opportunity as the Federal Reserve and its fractional reserve banking system goes by the wayside. We can implement a system that benefits the 100% not only the 1%. It's going to be up to us how this plays out.
What we are witnessing is the last Act of a nightmarish play but in the end, the good guys and gals win!
Trust . . I must admit that I don't quite understand. . .
1. Why won't we witness the new world order? Where will we be?
2. What will this new "system" look like?? You know the "sheepie" cannot agree on anything.
3. How can this collapse happen if governments will not allow it to occur? Unless the governments collapse also .. that is anarchy. Is this what you predict??
I cannot quite picture what you are predicting will look like TV, but you say I won't witness it, where will I be??
The bigger story is Egypt and what is happening there. The Egyptian elections could bring about real change. The Greece elections, I fear, in the long run will not make a difference in outcome at all.
Glenn, you are right.
Greece is really on non-event in the long term. The Arab Spring (false starts and all) will bring together hundreds of millions of young Arabs/Muslins into the 21 Century (I know, religious fanatics and all). This election is one the way to something else. It's not an end in itself. The Middle East will become a sizable economic entity in the next 10-15 years. Europe will be the big beneficiary.
Agreed
As their oil slowly drains away, the middle east will fade from the stage.
The bailout helps the big banking cartel though, now they can extract what last little bit of wealth is left in Greece and further drive down the global economy. Screw the euro and the amero and all other counterfeit money. Mass arrests are imminent.
They've only agreed to take the European equvalent of TARP. The next, and harder, step will be getting them to agree to pay it back. Don't get your hope and change up.
"You're too far in debt... you're going to need a loan."
Don't forget these are CONSERVATIVE Europeans forcing everyone into debt slavery. Not "liberals". The liberals are against the bailouts. The right believes money creates a higher standard of living. The left knows work creates a higher standard of living. Greece isn't experiencing a shortage of productive land or labor. They've got a bad case of right wingers who think an investor creates wealth rather than the talent and labor of the people they use money (and debt) to exploit.
Jason,
Kinda ironic then, that the far-left (socialist/communist leaning) countries are the ones contributing the most to the EU crisis, huh? "Conservative" Germany was doing just fine before Greece, Spain, Protugal, Italy, and Ireland started piling on the debt, and now they have to serve as a crutch. I think the difference between the two political philosophies is pretty clear.
Not quite Noryc. Germany wasn't really "doing just fine" before the euro came along. Just 10 years or so ago Germany had very high unemployment and was considered the sick man of Europe. The euro helped them tremendously by lowering the cost of their exports. Economic highs and lows are cyclical. Today Germany is doing well and Greece is not. Ten years from now, as in the past, it may be very different.
You forget it was just about 24 years ago when West Germany had to absorb a bankrupt East Germany .
The Germans have done well in overcoming that and are hard working and industrious , retiring a 67 years of age , the highest retirement age in the EU !
How do you save lazy , incompotent governments ?
A sad outcome for the Greek election. In the long run, both Greece and the euro would be better off if Greece would just return to managing their own currency and economy sooner than later.
Eventually the euro will be down to only Germany and France, and the Germans will balk at a bailout for France. Thus will end the great experiment of a common currency. The UK and Switzerland look smarter every day.
What did I tell you. International means the U.S. taxpayer gets to support another country who's liberal spending has run them broke.
This is one of these issue that Congress and the President should NOT be aloud to participate in without a vote from the taxpayers.
The taxpayers DO UNDERSTAND what is at stake here. Its is more of our hard earned money going to yet another country that do not deserve it.
We are so far in the sh*thole and Obama and the liberal Democrats are going to be first in line to take OUR tax dollars throw it at the failing Euro.
THEY wanted the Euro so let the EURO counties bail them out. This is the direction that Obama and the liberal Democrats are taking this country. This everyone is entitled to welfare, like the illegals, that pay no taxes, can not stand anymore of what the liberals are dishing out.
Obama and the liberals are of the mind set, "oh whats another billion here, and another there. The American taxpayer can pull another couple of billion out of their butts."
Can't get it from the corporations because they don't pay their fair share of taxes and Congress does NOTHING to change that.
Steven100 read this:
The odd couple:
Democrats = Tax and spend
Republicans = Tax cut and spend
The gullible:
The American taxpayers
U.S.A. soon, if not already, to be United Stupids of America, and I am being a hypocrite (sarcasm).
Leave it to a Republican to think Obama is bailing out Greece. Where'd you hear that, Fox? Rush? Some other right wing propaganda factory?
@Jason
You might want to google "International Monetary Fund"...and look at where their money comes from
Yeah, you guys are right. The U.S. contributes a fairly hefty amount of money to the IMF and the article did say that the IMF (along with the EU itself) were contributing to the bailout. So it sounds like, technically, some U.S. tax dollars are going to the Greek bailout.
Well that sucks. I thought it was just the ECB and Eurozone countries (like forcing Italy to take out an expensive loan to help bail out Spain just before getting bailed out themselves, if I understand right).
You still can't pin it on "liberals". It's right wing governments that are pushing for austerity and bailouts. It's left wing governments fighting them. But then... by historical and world standards, Obama is center-right on economic issues. In any case, if you think a Republican in the white house would change anything, you're wrong. Angela Merkle and Sarkozy (now gone) are conservatives, not liberals. Syriza and Hollande of France are left wingers who understand the people create the wealth, not banks and their printing presses.
Jason i think the bigger point of what is happening we could learn from is to not get yourself in their kind of shape to start with. When you are as bad off as Greece i don't think much of anything is going to help. Austerity or massive govt loans. You can go all austerity, all stimulus/loans or a hybrid and it probably won't matter because they got themselves in a mess.
The root of the problem is they promised to much in payouts to people that is not possible to pay. Even with good economic conditions they didn't have the resources to pay out what they had agreed to, just a matter of time. As debts start to get upside down people are going to want much more for buying bonds and the problem will compound itself. Just like what will happen here as we have now topped 100% debt/gdp if something isn't done to curb it.
Only someone to the left of Marx would think Obama is center right on the economy. Merkle's country is the one with the money, all the leftists countries have their hands out, what does that tell you! Of course when liberal politicians lie and promise the gravy train will never run out, idiot voters will continue to vote them in.
Greece is beginning to wise up. France has dumbed down. Hopefully we'll continue to wise up from 2010 as well.
At 16 Trillion dollars in the hole, and the threat of another credit rating cut, we are soon to be Italy, Spain or Greece. The only thing that saves America is we are the biggest exporter of Food for the world. If not for that, we would be in our own austerity measures.
Great, the Greeks have voted themselves to agree to take on more debt to help them pay for their debt. This is like trying to drink one's self sober.
Well, that's why the loan is supposed to be contingent on the Greeks adopting austerity measures. Who knows what they'll actually do, though...
I see so many comments on here that have nothing but speculation and clear misunderstanding of what is really going on here. First and foremost No this fund is not coming from the USA it is coming primarily from China and Russia and then the USA we are the smallest contributor to the international world fund right now for reasons everyone knows. Our money is tied up in false wars to keep us thinking about that instead of your own government driving us closer and closer to being completely bought by the Chinese. The regular people of Greece have resorted to bartering...if you are too young or stupid to know what that is go look it up. It will have more of an impact on the world then you might imagine if Greece goes belly up, keep thinking they are insignificant and we will all see in 2 years how that domino effect takes effect on you personally.
William,
What Greece needs is the ability to weaken their currency so they can begin to create jobs and hopefully manage their debts. Tied to the Euro, this is impossible because the Euro is relatively strong because of Germany. Greece staying tied to the Euro and taking on more debt only means the debt hole is deeper, the interest on debt higher, and Greece will be less likely to even service the old debt, let alone service the new levels of debt. Austerity simply means cuts in government spending and cuts in government and private sector jobs in a country with 25% unemployment. Whether in Greece or in the US, austerity means more unemployment, reduced benefits, cuts in services, etc. all of which bring about a marked decrease in discretionary income which is the bedrock of any economy. You cannot spend that which you do not have, and the current model to save Greece only guarantees that discretionary income will be sacrificed. How that is a plan to save Greece is beyond me and my 40 plus years in business, accounting, and management. With a strong currency (the Euro) and higher unemployment, and higher taxes, and the spreading use of barter, just how is it that Greece is supposed to recover. This is a fool's plan put together by the fools at the central banks that only care about saving the banks. Everything done to date has been aimed at saving banks. Nothing has been done towards saving Greece. If you want to save Greece, debt has to be restructured and that means written off. Short of that, Greece is doomed and the Euro with it. Greece should leave the EU as soon as practicable.
Glenn, you hit the nail on the head! I just got back from Greece. One out of Three store fronts are vacant. These were small business. One man's spending cuts are another man's lost income. Once Greece gets tax revenues to equal the new level of expenditures (before debt service/interest payments) they will dump the euro. 23% unemployment among young works is too high. Some income in drachmas is better than no income in euros. The Greeks need some time to implement their plan and the Germans needs some time to insulate themselves. That is what this election is about.
Hmmm... maybe I'm reading this wrong, William, but the IMF website seems to indicate that the U.S. is contributing a lot more money than both China and Russia... combined. But I'm basing that off of the quota of millions of SDFs. I'm sure you can enlighten me on the subject.
What a bunch of nonsense games. Whether you give Greece 0 pieces of colored paper or a trillion you change nothing about Greece itself. This is all just manipulation of fiat to control the labor and resources of others. You're telling Greeks they can't raise goats or program computers unless this magic fuel source enables them. Wrong. Ore does not appear in the ground and fish do not appear in the sea the moment someone prints enough cash. These central banks and conservative governments are nothing but exploiters and parasites. It's funny how right wingers accuse left wingers of being deadbeats while trying to pass laws that favor lazy gluttons sitting on their piles of cash and dismantle the bargaining power of the American worker so they can be more easily exploited. And idiot working Americans vote for the same right wing bull@!$%# here. The stupidity makes me sick.
Glenn - Greece cannot issue new currency, because if they do, it will immediately become near worthless. The fact is that there needs to be austerity and fiscal discipline, either by staying with the Euro and being directed by the Germans; or by issuing the own currency and living with the immediate loss of wealth and buying power. None of the above is not an option.
We should watch this closely.
Keynesians believe that governmental 'stimulus' deficit spending has a multiplier effect, sometimes referred to as the 'Keynesian multiplier'. They believe this multiplier effect has a value of 1.4 to 1.5, depending on which Keynesian economist you talk to. In other words, for every $1.00 of borrowed federal money, spending it results in $1.40 to $1.50 of sustainable added GDP growth. If that were only true I would be a huge fan of Keynes. Unfortunately, it is nowhere close to 1.4. Recent data (for the US economy) suggest it is closer to 0.4 (i.e., for every $1.00 borrowed and spent, it returns only $0.40 in sustainable GDP growth--a negative return). If Greece's multiplier is similar, they will need to cut $1.67 for every $1.00 of deficit spending they wish to eliminate. After all, the Keynesian multiplier is not zero. Part of the 'failure' of austerity measures is not taking into account the partial 'success' of Keynesian deficit spending on GDP.
The multiplier does not directly relate to debt repayment. It has an impact on income. Austerity negatively impacts income. It then makes debt repayment as a percent of income much larger and more difficult to pay off. Do you known a home? Do you owe a mortgage? Imagine if your income was reduced to the level of your first job in how school but your mortgage stayed the same and you were told that you still had to pay off your mortgage. What would you do? Probably toss the keys (euro) to the lender and walk. On the other hand, assume you got a new job and your income doubled. Your payment would be relatively smaller and your banker would be happy. That is the difference between austerity and a growth strategy. That is why its better to look at short term strategies to increase growth, reducing deficits later. If you don't, be prepared for a lot of "tossing back of keys" with foreclosed assets being increasingly concentrated in the hands of the wealthly.
This is just delaying the inevitable. They have no intentions of becoming responsible.
Greek population - 11 million
Greek workforce - 5 million
Unemployment rate - 23% (knowing how government understate this rate it is probably much higher)
Total debt - 447 billion dollars
With these statistics how in the hell can they pay back the loans?
Maybe they'll spend their way out of their hole...just don't tell them that plan failed in the United States.
Greece doesn't payback loans...they have never paid back loans. They just know how to make the world look like idiots by supporting them after screwing them over time and time again.
How can the states pay back theirs do the math
It really says something about the Socialist European mindset when they are on the verge of collapse and yet there are people who are unwilling to cutback government spending. It's like refusing to pull the chord on your parachute while skydiving....as if the ground mind not continue to approach you.
DietrichtheKaiser:
We're heading for the same disaster here......we're not ready to cut all of these "entitlements". Sprinkle in the committed socialist we have in the WH and hence you have a pretty sad situation.
Guess the days of a limited government are over...Sad
Greece didn't avoid anything, they just became the endentured servents of Europe. They just traded poverty for slavery.
Greece is actually making less austerity cuts with the bailout than without it. If they turn it down, they would have to raise taxes or reduce spending to make payroll, even if they default on all their debts. And yes, returning to the drachma and accepting inflation is the same as taxing wealth and reducing government salaries.
Merkel is giving them very low rates, which they don't deserve, in an attempt to prevent their economy from collapsing. And all she is asking is they make most of the cuts they would have to make anyway.
Merkel is giving them money because she does not want the euro to collapse. Germany has been a major beneficiary of the euro essentially be dethroning the dollar and the English pound. She does not care about Greece itself.
Let's see Greece goes bankrupt in 1893...goes bankrupt in 1932....and headed for bankruptcy in 2012.
This is just a sign of the Eurozone getting what they paid for by having Greece join them and the, for some reason, joining the world in being surprised that they are still constantly irresponsible.
People feel entitled. Politicians don't want to tell them "NO" and "LIFE IS NOT FAIR" because politicians want to get elected and re-elected more then anything else.
The fact that the Greeks are now bartering and trading goods and services for other goods and services is actually a step in the right direction. This is what it all comes down to. Thank the politicians, people who feel entitled to have what their neighbor has, and other financial parasites for putting us in this position.
The American People need to realize that what is happening over there WILL happen here!
When are you people going to learn that it is actually the ILLEGAL Federal Reserve System (Private Bankers, ie; Rothschilds, Rockefellers, Shiffs, Warburgs, etc.), and their CRIMINAL "Usury" system that is breaking, not only the US, but the world?
Hell even Jesus CONDEMNED "Usury"! For those of you that are Christian, etc. look it up in the Bible! See who he codemned for this, and you will see who is also the real problem now, ie; Wallastreet, Media, Hollywood, Dual Cits in US Gov, etc.!
Why the hell do we allow "Private Bankers" to print OUR money, and then charge US interest to even use it? And that's not even OUR money they ILLEGALLY loan out to "friends" without ANY oversite, and that we're supposed to pay back! Wake up people!
Ever wonder where that "interest" money actually goes after the "Prviate Bankers" get it! Look to that "special friend" in the ME, and what PAYs OFF our so called "Elected Officials"
Stop worrying about being Politically Correct, and learn to call a spade a spade before it's too late!
Do you know that The Federal Reserve Act of 1913 WAS NOT ratified by enough states to even be legal, and that the Congressional vote for it was done purposely when MOST of Congress was on Chrisrtmas Vacation?
Do you also know that the "Income Tax" used to pay the interest on the so called "National Debt" from this "usury" system, "fiat money" is not only against the US Constitution to wage a direct tax on our earnings, but also there is NOT even an actual LAW stating we have to pay it? Don't believe me? Ask your "Elected Officials", or the IRS to show you the ACTUAL LAW! They can't because there is NONE! WAKE UP PEOPLE!
See "The Money Changers", and Aaron Russo's "America, Freedom To Facism" to see that I am ABSOLUTELY CORRECT about these things!
Then see how criminals like the Rothschilds/Redshields actually "made" their money after "The battle of Waterloo"! FRAUD!
Please Wake Up People!
Remember The DELIBERATE Attack On The USS Liberty, The Lavon Affair, etc., etc.! FALSE FLAGS!
WHat about the 53% that pay taxes in this country while the 47% pay nothing.....,aybe we need to crack the whip there and get the 47% inline with the rest of us
bravesfan4life
GET RID OF THE FED, and there won't be a problem with paying a personal "Income Tax"!
See the Doc's/Films I recommended in my first comment to understand better!
Personally I would have NO PROBLEM paying a fair "income tax", if it actually went towards the US (infrastructure, schools, etc.), but it DOES NOT! It goes directly to these CRIMINAL " Private Bankers"!
And I'm a 100% Disabled American Veteran that does not have to pay an income tax now!
Dear "US Army Vet" - maybe now that you have all this free time you could educate yourself in economics. Or take up bowling.
MikeBC
I've done my research!
Learn to call a spade a spade!
Hell we can BARELY pay interest charges alone for this CRIMINAL "usury" system!
Think what we could do with the money we saved from just the interest charges alone!
Not to mention print and regulate OUR OWN MONEY
WAKE UP!!
I agree Vet, it is time for the gool ole usa to end the nightmare of the federal gov't and reserve. The 1% that have control over both these institutions need to be held accountable for what they have done to us and our wealth with their illegal printing, if we printed money like they do, we would go to jail. When the interest rates go up, the gov't will become desperate to hang on to it's power and authority over us. This Nov, I will be voting for obama because he has put the fed in hyper drive towards bankruptcy, so make sure when you all vote, be careful who you elect to your own State Houses, because when the fed's come, we will need strong States to stand up to them to protect us from them. State Rights. There is no law that holds We The People or the States responsible for that federal debt, yes the vast amount of that debt is owed to social security and the american people, guess we sholud have been more resistive to them taking it, but it doesn't matter now, that money is long gone and spent on things that, in hindsight, were not pratical. There are only 2 ways out, either they quietly close the doors to these institutions, or they come for all of our wealth and resourses. Which do you think they will do? We all know (or should), what more borrowing and printing will get us, thats why I support obama. Bankruptcy would be better over another war between the States. Try 7-14% interest on 25 Trillion $$, Kiss it all good-bye. Don't be one of those people sitting on the curb infront of your house waiting for "someone" to come help you, we are all fixing to learn a lesson. We and our States would be just fine if we didn't have to send all that wealth to D.C. and kept it in our own communities.
Those damn Germans. How dare they work hard and be responsible. No wonder the lazy asses in Greece don't want to play by Germany's rules.
I think the fact that they could not take over Europe militarily in WW-I and WW-II the German people have decided to do it peacefully by just BUYING it. :)
thats the way to do it Vet:) Hitler must be getting a kick out of this, except for the part that a WOMAN is running the show lol.
Merkel would slap him down like a snivveling simp.
lmao, yes she would. Heil Angela!
Merkel has the same title as Hitler; Chancellor of Germany. Interesting. Also, Hitler was essentially a Keynsian. He invested in infrastructure to get Germany out of the Depression of the 1930s. His highway system, which still exists today, so impress Eisenhower that when he became president he used the German highway experience to develop the interstate highway system we have today. Unfortunately, it was Hitler's defense and racial policies that got him in trouble.
What I don't hear via what Bill Mair state is your vast stupidity . What the insulting writers of these stories is how we , the US People fit in . Where does 80% of the IMF AND OR THE World Bank money come from . Guess who ? The United States . is the spin ans. The correct answer is the PEOPLE OF THE UNITED STATES . WITH THE SIZE OF THE ECONOMY OF US BEING ABOUT 1/4 OF GLOBAL GNP THIS IS THE FEE THE UNITED STATES HAS TO PAY OR 1/4 OF THE IMF FUNDING . ( What is not known is the US has made up shortfalls in members who don't pay anything in . So the real amount is close to 1/2 of the funding . )
The world bank is almost 100 % financed by the US who have had US executives since the beginning of this org. . As to the responsible party in Europe it is not the US people . The German people are balking about making any loans to Greece from the pocket of German people . Why ? it is an endless pit . As to the European Unions there is no way we should be supporting anything about Greece or the European Union . The European Union makes money by selling goods within it that are made in the EU and not outside of this union . In effect , the cause the US to lose jobs and money for exports . A number of years ago I owned Del Monte stock . Del Monte had it main corporate office in Coral Gables for year in florida Del Monte used to sell Europe with Dole and Chittea Brands or companies bananas . The EU put a tariff on all three companies so that these companies would have pay into the EU a tariff . The reason was that they told others they were trying to equalize prices and make any export by US or SA countries to be equal to EU companies that grew Bananas in Africa. The point is that this was a tariff . As the big three in our hemisphere actually charge more money than was allowed this was not called breaking the EU rules and the EU developed a process where they charged only one company these fines that went to the EU and not all three. This turned out to be Del Monte . So , even though we are paying into an IMF to bail out Greece and this support the EU somewhere the " dumb " USA people who according to BM are stupid , to in effect be victims of our government . Anyway I had to hold Del Monte stock for about 2 years to get even . due to the EU actions . I understand that Del Monte has sold their business to the Chinese who allow Del Monte executives to run it and now work for the Chinese . I sure the Chinese do a much better job of not losing money of the themselves or pay tariff's than the US did . I am not sure how many USA jobs disappear but BM is correct in that he and our government doesn't tell us how there jobs are to foul over the American people . So now when you eat a Del Monte product , the Chinese run it . More importantly the EU is a tariff org that we are going to support with USA taxpayer dollars.
Dittos Chuck --- glad you're pointing out the inconvenient truth.
If more people were educated on this matter, perhaps there would be more outrage.
Of course, there's no doubt most of the voters in the USA are somewhat ignorant -- just look at who they elected as president!
Let's hope the American people come to realize what is going on -- less funding for the IMF and less subsidies at the UN level would be great !
A disaster for the European taxpayer.
Lots of generalization and ignorance of this complex situation. The importance of yesterdays election in Greece is not being realized by so many around the world. Greece needs to stay in the Euro - anything less would be catastrophic for the rest of Europe and, yes, it would eventually hurt the US economy as well. Loans always need to be repaid but the severe austerity currently being imposed on the Greek people is the biggest problem. Ordinary and hard working Greek citizens are being forced to pay for the mistakes of a corrupt government and banking system. This will do nothing but drive the Greek economy into the toilet and they'll never be able to repay the loans in the first place. So why does Spain get a bailout with minimal austerity and not Greece? The ND/Pasok coalition would be wise to use that as leverage to renegotiate some terms of the memorandum to allow a level of growth in the Greek economy. This is the only chance that will allow Greece to repay these loans. Germany, the Eurozone and the IMF alluded to this before the elections if a pro-bailout coalition was formed and it now looks like that may be happening. Time for Germany and the Eurozone to hold up their end of the bargain.
In reality there is no practical way of dealing with this problem other than for Greece to default ( essentially declaring that those who invested made made decisions, and have lost - just as one can loose on/in any stock market ). The same is probably true for Spain. Know one knows the extent to which US banks are leveraged in those countries through the various rather underhand devices of credit default swaps and other instruments - but probably more than they would like to admit. So - a slow moving train wreck, but almost inevitable at this point. Seemingly we may as well get it over with, as the chances of economic recovery ( with our generally useless leadership ) in this climate is nil - regardless of what any politician says. Assume it happens - all countries involved default, take their lumps ( including US ) and move on. I suspect this will also hone peoples attention - and perhaps we will get a sweeping out of government hacks/opportunists/exploiters at all levels, perhaps new parties and people that are actually interested in serving US national interest, and the elimination of lobby-ism.
Reguardless of how they voted it was a easy choice. A gimmie grab free lunch bail out money or go under the bus sooner. They will still fail just a little later. The euro is doomed as long as there are over spenders and waiting for the savers to bail them out. The Germans are no fools. The German people will say enough all ready with the free lunches. Just watch the running to the banks to take out money. It will continue. Untill that stops then there is no trust by the people in Greece or other euro countries. They have no trust in there governments to save there monitary systems. It is to come of what will be happening in the United States. There will be run on banks here too in time. So pull up the bootstraps and get ready. There is more deep Cr*p to come. Put your money is something solid. Do not rely on someone telling you the recession is over, economy is improving, job stats are better. We have been sold down the river.
Yes bailed out again! I wonder how much money the USA gave in that package from the euro bailout this time. Remember that Obama gave a few million or so just not too long ago!
I can't get over the protests and whining. They dug this hole and now it is time to pay the fiddler,. What did they think, it is just going to go away?? You can't spend $500 a week when you only have $400 coming in!!!!! Suck it up Greece the free ride is over. The rest of the world has spent far too much time on this little corner of the world.
Its also coming to a town near you and everyone else too
I hate to tell you brainwashed people but the Euro has already unofficially crashed. You have about 6 months and then the Euro is done! Get a clue and stop watching the CNN and Fox News propoganda machines.
Shows you how crazy the world is when stocks go up because of something they are all not smart enough to fix its all coming down greed will bring this world to its knees the governments of this world and everything in it has become so corupt and no one is doing anything about it maybe its for the best. All countries will never pay their debts makes you wonder who is loaning the money i guess the interest must pay off
According to Global Finance in 2011 the Greek GDP was $310 billion. Their interest rate is now 7.14% according to this article. If we do the math, the annual interest payments are $22.14 billion. If Greece invests its principal payment into a sinking fund using low risk corporate bonds (from other countries) at 4% their principal payments will be $6.2 billion per year. The total debt service will be $28.35 billion per year. This is just over 9 of Greece's total GDP to repay national debt.
Hopefully, Greece will work on growing their economy. If they do not, they will remain in a recession for the length of time (30 years) it takes to pay off this debt service.
Greece is still not out of trouble.
When is the Western world going to start understanding the that the solution of countering a trade imbalance by taking on debt to replenish the money supply does not work? Look at the healthy countries and they running a trade surplus. Look at the debt ridden countries and they're running a trade deficit. Fill a bucket with water and drill a hole in the button. The only way to keep water in the bucket is to add water (borrowing). Stopping the borrowing will only lead to an empty bucket if you insist on blindly clinging to a faulty ideology (globalization) that cannot be made to mathematically work. When more money leaves a country than comes in, the way a country avoids crushing deflation is to borrow replacement money. It that measure becomes a chronic condition, then you get Greece, Spain, Portugal, Ireland, and even the USA.