Posts Tagged ‘Greece’

The Greek Vote and the EU Miscalculation

By George Friedman

In a result that should surprise no one, the Greeks voted to reject European demands for additional austerity measures as the price for providing funds to allow Greek banks to operate. There are three reasons this should have been no surprise. First, the ruling Coalition of the Radical Left, or Syriza party, is ruling because it has an understanding of the Greek mood. Second, the constant scorn and contempt that the European leadership heaped on the prime minister and finance minister convinced the Greeks not only that the scorn was meant for them as well, but also that anyone so despised by the European leadership wasn’t all bad. Finally, and most important, the European leadership put the Greek voters in a position in which they had nothing to lose. The Greeks were left to choose between two forms of devastation — one that was immediate but possible to recover from, and one that was a longer-term strangulation with no exit.

The Europeans’ Mistaken Reasoning

As the International Monetary Fund noted (while maintaining a very hard line on Greece), the Greeks cannot repay their loans or escape from their economic nightmare without a substantial restructuring of the Greek debt, including significant debt forgiveness and a willingness to create a multidecade solution. The IMF also made clear that increased austerity, apart from posing an impossible burden for the Greeks, will actually retard either a Greek recovery or debt repayment.

The Greeks knew this as well. What was obvious is that austerity without radical restructuring would inevitably lead to default, if not now, then somewhere not too far down the line. Focusing on pensions made the Europeans appear tough but was actually quite foolish. All of the austerity measures demanded would not have provided nearly enough money to repay debts without restructuring. In due course, Greece would default, or the debt would be restructured.

Since Europe’s leaders are not stupid, it is important to understand the game they were playing. They knew perfectly well the austerity measures were between irrelevant and damaging to debt repayment. They insisted on this battle at this time because they thought they would win it, and it was important for them to get Greece to capitulate for broader reasons.

No other EU country is in a condition as bad as Greece’s. However, a number of EU countries, particularly in Southern Europe, carry a debt burden they would like to renegotiate. They are doing better than Greece this year, but with persistent high unemployment — for example, 22.5 percent in Spain as of May — two things are not clear: first, what shape these countries will be in next year or the year after that, and second, what governments would come into office, and what the new governments’ positions would be. Greece accounts for less than 2 percent of the European Union’s gross domestic product. Italy and Spain are far more important. The problem of restructuring debt is once it is done for one country, others will want to restructure as well. The European Union did not want to set any precedents for future crises or anti-EU governments.

In Greece, Europe’s leaders had a crisis and a hostile government. It was the perfect place to take a stand, they thought. They became inflexible on debt restructuring, demanding prior increased austerity measures in a country where unemployment exceeded 25 percent and youth unemployment was over 50 percent. The EU strategy in the past had been psychological: spreading fear about what default might mean, spreading fear of the consequences of leaving the eurozone and arguing that it was the European Union that lacked the ability to make concessions. In the past, the EU strategy had been to make agreements that it never thought the Greeks would be able to keep in order to kick the problem down the road. Europe’s leaders demanded austerity measures but tied them to postponing repayments. They expected Greece to continue playing the game. They did not realize, for some reason, that Syriza came to power on a pledge to end the game. They thought that under pressure, the party would fold.

But Syriza couldn’t fold, and not just for political reasons. If Syriza betrayed its election pledge, as the European leadership was sure it would, the party would split and a new anti-European party would form in Greece. But on a deeper level, the Greeks simply could not give any more. With their economy in shambles and Europe insisting that the solution was not stimulus but austerity — an increasingly dubious claim — the Greeks were at the point where default, and the short-term wrenching crisis that would ensue, would be worth the price.

The European leaders miscalculated. They thought Greece could be more flexible, and they wanted to demonstrate to any other country or party that might consider a similar maneuver in the future just what the cost would be. The Europeans feared the moral risk of compromising with the Greeks. They created a more dangerous situation for themselves.

New Threats to the European Union

First, in its treatment of Greece, the European Union has driven home — particularly to rising Euroskeptic parties — that it is merely a treaty organization and in no way a confederation, let alone a federation. Europe was a union so long as a member didn’t get into trouble. As I have said, the Greeks were irresponsible borrowing money. But the rest of Europe was irresponsible in lending it. Indeed, the banks that lent the money knew perfectly well the condition Greece was in. The idea that the Greeks pulled the wool over the bankers’ eyes is nonsense. The bankers wanted to make the loans because they made money off of transactions. Plus, European institutions that bought the loans from them bailed out those that made the loans. The people who made the loans sold them to third parties, and the third parties sold them to EU institutions. As for the Greeks, it was not the current government or the public that borrowed the money. And so the tale will help parties like Podemos in Spain and UKIP in the United Kingdom make the case against the European Union. The European Union appears both protective of banks and predatory to those who didn’t actually borrow.

Second, having played hardball, the Europeans must either continue the game, incurring the criticism discussed above, or offer a compromise they wouldn’t offer prior to the Greek vote. One would lead to a view of the European Union as a potential enemy of nations that fall on hard times, while the latter would cost the bloc credibility in showdowns to come. It is likely that the Europeans will continue discussions with Greece, but they will be playing with a much weaker hand. The Greek voters have, in effect, called their bluff.

It is interesting how the European leaders maneuvered themselves into this position. Part of it was that they could not imagine the Greek government not yielding to the European Union, Germany and the rest. Part of it was that they could not imagine the Greeks not understanding what default would mean to them.

The European leaders did not take the Greeks’ considerations seriously. For the Greeks, there were two issues. The first issue was how they would be more likely to get the deal they needed. It was not by begging but by convincing the Europeans they were ready to walk — a tactic anyone who has bargained in the eastern Mediterranean knows. Second, as any good bargainer knows, it is necessary to be prepared to walk and not simply bluff it. Syriza campaigned on the idea that Greece would not leave the eurozone but that the government would use a “no” vote on the referendum to negotiate a better deal with EU leaders. However, all political campaigns are subject to geopolitical realities, and Syriza needed all options on the table.

The EU leadership was convinced that the Greeks were bluffing, while the Greeks knew that with the stakes this high, they could not afford to bluff. But the Greeks also knew, from watching other countries, that while default would create a massive short-term liquidity crisis in Greece, with currency controls and a new currency under the control of the Greek government, it would be possible to move beyond the crisis before the sense of embattlement dissolves. Many countries do better in short, intense crises than they do in ordinary times. The Greeks repelled an Italian invasion in October 1940, and the Germans didn’t complete their conquest until May 1941. I have no idea what Greece’s short-term ability to rally is today, but Syriza is willing to bet on it.

Greece’s Options in Case of a Grexit

If Greece withdraws from the European Union, its impact on the euro will be trivial. There are those who claim that it would be catastrophic to the euro, but I don’t see why. What might be extremely dangerous is leaving the euro and surviving, if not flourishing. The Greeks are currently fixated on the European Union as a source of money, and there is an assumption that they will be forced out of the global financial markets if they default. But that isn’t obvious.

Greece has three alternative sources of money. The first is Russia. The Greeks and the Russians have had a relationship going back to at least the 1970s. It was quite irritating for the United States and Europe. It was quite real. Now the Russians are looking for leverage to use against the Europeans and Americans. The Russians are having hard times but not as hard as a couple of months ago, and Greece is a strategic prize. The Greeks and the Russians have talked and the results of the talks are murky. The BRICS (Brazil, Russia, India, China and South Africa) summit began July 6 in Russia, and the Greeks are sitting in as observers — and possibly angling for some sort of deal. Publicly, Russia has said it will not give a direct loan to Greece but will take advantage of the crisis to acquire hard assets in Greece and a commitment on the Turkish Stream pipeline project. However, bailing out Greece would give Russia a golden opportunity to put a spoke in NATO operations and reassert itself somewhere other than Ukraine. In Central Europe, the view is that Russia and Greece have had an understanding for several months about a bailout, which could be why the Greeks have acted with such bravado.

Another, though less likely, source of funds for Greece is China and some of its partners. The Chinese are trying to position themselves as a genuine global power, without a global military and with a weakening economy. Working alone or with others to help the Greeks would not be a foolish move on their part, given that it would certainly create regional influence at a relative low cost — mere tens of billions. However, it could come with the political cost of alienating a large portion of the European Union, making Chinese assistance a slight possibility.

Finally, there are American hedge funds and private equity firms. They are cash-rich because of European, Chinese and Middle Eastern money searching for safety and are facing near-zero percent interest rates. Many of them have taken wilder risks than this. The U.S. government might not discourage them, either, because it would be far more concerned about Russian or Chinese influence — and navies — in the eastern Mediterranean.

Having shed its debt to Europe and weathered the genuinely difficult months after default, Greece might be an interesting investment opportunity. We know from Argentina that when a country defaults, a wall is not created around it. Greece has value and, absent the debt, it is a high-risk but attractive investment.

The European leaders have therefore backed themselves into the corner they didn’t want. If they hold their position, then they open the door to the idea that there is life after the European Union, and that is the one thought the EU leaders do not want validated. Therefore, it is likely that the Europeans, having discovered that Syriza is not prepared to submit to European diktat, will now negotiate a deal Greece can accept. But then that is another precedent the European Union didn’t want to set.

Behind all this, the Germans are considering the future of the European Union. They are less concerned about the euro or Greek debt than they are about the free trade zone that absorbs part of their massive exports. With credit controls and default, Greece is one tiny market they lose. The last thing they want is for this to spread, or for Germany to be forced to pay for the privilege of saving it. In many ways, therefore, our eyes should shift from Greece to Germany. It is at the heart of the EU leadership, and it is going to be calling the next shot — not for the good of the bloc, but for the good of Germany, which is backed into the same corner as the rest of the European Union.

Greece's Experiment into Communism Ends In abject Hunger: Starving Greeks Line Up For Food

Queues form as desperate people received food handouts from Crete’s farmers
Antonis Samaras sworn in as prime minister as head of conservative-led three party coalition
New coalition vows to renegotiate crippling bailout agreement to ease burden on debt-crippled country
Greek stocks rose marginally in response to the coalition deal
Greece had been effectively ungoverned after two election in six weeks resulted in political stalemate
Country struggling through a fifth year of recession, with unemployment spiraling to above 22 per cent
Leader of Democratic Left says coalition will ‘lift those measures that have literally bled society’
UK Daily Mail

Starving Greeks queued around the block for free food handouts yesterday as the country’s politicians managed to end a crippling stalemate to form a coalition government.

Young children as well as the elderly waited in line in Athens to collect the parcels of fruit and vegetables donated by farmers from Crete to help ease the devastating austerity faced by many Greeks.

But as hungry people collected food, a few miles away a new conservative-led alliance was formed, vowing to renegotiate the country’s strict European bailout in a bid to breath economic life back into the debt-stricken country.

Conservative Antonis Samaras was sworn in as prime minister and head of a three-party coalition that will uphold the country’s international bailout commitments.
In the hot seat: New Prime Minister Antonis Samaras vowed to rescue Greece’s economy as he spoke for the first time after being sworn in to office at the presidental palace

The move ends a protracted political crisis that had cast grave doubt over the country’s future in Europe’s joint currency and threatened to plunge Europe deeper into a financial crisis with global repercussions.

Samaras, an American-educated 61-year-old economist, was sworn in three days after his party won the second national elections in six weeks but without enough votes to form a government on its own.

His New Democracy party will join forces with the socialist PASOK party, which came in third place, and the smaller Democratic Left led by Fotis Kouvelis.

Discussions on the lineup of ministers were expected to be completed by Wednesday night.

‘I will ask the new government that will be formed tomorrow to work hard so that we can offer tangible hope to our people,’ Samaras told reporters as he left the presidential mansion.

Greek stocks rose marginally in response to the news, with Athens shares closing up 0.5 percent, limiting earlier gains.

The new prime minister was to meet with outgoing Finance Minister Giorgos Zanias, PASOK head Evangelos Venizelos and Kouvelis on Wednesday evening.

All three parties broadly back Greece’s pledges to bailout creditors for further austerity and reforms, although they have pledged to renegotiate some of the terms for the rescue loans.

New Democracy and PASOK are also looking for an extension of at least two years in the deadlines for implementing fresh cutbacks worth a total 14.5billion euro ($18.42 billion).

Democratic Left leader Fotis Kouvelis went a bit further today, saying that Greece should eventually ‘disengage’ from the austerity commitments and ‘lift those measures that have literally bled society.’

Greece has been dependent on the loans from other Eurozone countries and the International Monetary Fund since May 2010. In return, it has imposed deep spending cuts, slashed salaries and pensions, and repeatedly hiked taxes.

The measures have left the country struggling through a fifth year of recession, with unemployment spiraling to above 22 percent and tens of thousands of businesses shutting down.

The face of the crippling poverty gripping the country was plane to see as hundreds of poverty-stricken Greeks queued in a central Athens park for free vegetables.

Cretan farmers handed out some 2,700 10-kilo packages of produce, in cooperation with the capital’s municipal authorities.

Among the people lining up was Panayiota Sidera, 31, from Athens. She said she has been unemployed for two-and-a-half years and her husband is also out of a job. The couple is living on a (euro) 250 monthly disability pension and rent from an apartment they own, and has a (euro) 540-a-month loan installment to pay.

‘That’s my predicament,’ she said, adding that the food handout ‘is helping people, and I’m grateful.’
‘The government should have been doing this years ago,’ she said.

Zanias is to represent Greece at an upcoming meeting of Eurozone finance ministers.

The eurogroup talks ‘will be the first big battle on the revision of the bailout agreement, the creation of a framework that will allow us to move to positive growth and to combat unemployment which is the big problem of Greek society,’ Venizelos said earlier in the day.

In Sunday’s vote – and the previous, inconclusive May 6 election – angry voters strongly favored parties promising to end the hardship by tearing up Greece’s pledges for continued austerity and reforms.

However, the anti-austerity standard bearer – the radical left Syriza party – finished a narrow second in Sunday’s election that gave New Democracy 129 of Parliament’s 300 seats.

The development is expected to calm fears that a protracted political crisis in debt-struck Greece could have led to the country being forced out of the joint European currency.

Such an event could have dragged down other financially troubled Eurozone nations and hammered the global economy.


Chancellor Angela Merkel will travel to Germany’s European Championship quarterfinal match against Greece for a game that brings together nations at opposite ends of Europe’s debt crisis, the German government said Wednesday.

Germany, Europe’s biggest economy, has been a major contributor to international bailouts for Greece and was instrumental in demanding structural reforms and hugely unpopular spending cuts in return.

The presence of Merkel, who is not a popular figure in Greece, could add extra political spice to Friday’s encounter – though team officials on both sides have been at pains to stress that it is purely a sporting event.

‘She hopes for an exciting and fair match.

‘This is a football match, and it is exclusively about sport.’ government spokesman Georg Streiter told reporters in Berlin.

PASOK came third in Sunday’s election, which was won by the conservative New Democracy party.

No party won enough votes to form a government on its own, leading to three days of coalition talks.

Greek politicians had been locked in negotiations to form a coalition government throughout the night after the second general election in six weeks.

As an agreement neared, Mr Venizelos’s socialist Pasok party, which came third in Sunday’s elections, said: ‘With [radical Left-wing party] Syriza’s refusal, the only practical solution now is the creation of a government with the support of New Democracy, Pasok, and the Democratic Left.

‘This government must be formed as soon as possible. As now things stand, this can be achieved by midday Wednesday.’

His party, he said, ‘will support this government sincerely and will participate in it in the most beneficial way in order to make it effective and credible’.

There had been hopes the deal would have been done by yesterday. The timetable for negotiations runs out today.

Rival party leaders were today locked in a second day of power-sharing talks, with two potential minority partners voicing hope that a coalition can be quickly formed.

It comes after the debt-crippled country’s second inconclusive election in six wee

At the core of any administration will be Antonis Samaras’ New Democracy party, which came first in Sunday’s vote and won 129 of Parliament’s 300 seats – but not enough to govern alone.

Samaras is seeking an alliance with the third-placed Socialist PASOK and the smaller Democratic Left party.

That would broadly fulfill Greece’s pledges to its bailout creditors for further cutbacks and reforms, keeping the country within Europe’s joint currency.

Otherwise, Greece would run out of cash and the continent could plunge deeper into a financial nightmare with global repercussions.

The main sticking point promises to be how much Greece is willing to tempt fate by seeking a more lenient deal from creditors fed up with missed targets and broken reform pledges.

PASOK leader Evangelos Venizelos met with Democratic Left head Fotis Kouvelis, who told reporters afterward that a three-party deal could potentially be achieved ‘within hours’.

Kouvelis said parties first had to agree on a policy platform, and on who would be appointed to the cabinet.

He said: ‘I believe the process is gathering speed, the country must have a government … and in the next hours, if there is an agreement, it will be possible for us to proceed.’

Kouvelis insisted that parts of Greece’s harsh austerity program must be revised, saying the country ‘has been pulverised by pitiless measures’.

Venizelos, who has pressed for an agreement by tonight, said he was optimistic a deal could be reached.

He added: ‘I am confident after my meeting with Mr Kouvelis, our views are very close. Greece must – and will – have a government as soon as possible. We agreed that the necessary processes must be accelerated.’

Both the conservatives and PASOK have pledged to respect the commitments for further austerity and reforms that Greece undertook as conditions for two massive international bailouts since May 2010

They are pressing for an extension of at least two years in the deadline, which would alleviate the immediate impact of new cutbacks and is seen as a likely concession by creditors.
The Democratic Left is anti-austerity in principle, but wavering.

Austrian Finance Minister Maria Fekter said any changes to the bailout deal would be ‘an adaptation of a pragmatic nature’ after debt inspectors from major creditors visit Athens.

A European Union official said the terms of Greece’s bailout will be renegotiated because worsening economic conditions have made the old agreement an ‘illusion’.

He said that the goals of the agreement would still be to reduce Greece’s debt and reform its economy to make it competitive.

But how they are achieved would be up for discussion, the official said on condition of anonymity, citing policy.

The second-placed, anti-bailout Syriza radical left party has refused to join in a coalition.

Party leader Alexis Tsipras campaigned on a strong anti-bailout ticket, vowing to scrap the country’s pledges and play tough with creditors – Greece’s European partners and the International Monetary Fund.

His message resonated strongly with an austerity-weary electorate, which propelled Syriza from 4.6 per cent in 2009 to nearly 27 per cent and gave anti-austerity parties more than 50 per cent in total. The reasons are visible around the country.

As more than four years of recession and dwindling incomes take their toll, tens of thousands of businesses have closed, unemployment is above 22 per cent and many Greeks see emigration as their only hope for a decent life.
In order to pass most laws, a government needs a simple majority of 151 seats.

But to have any chance of success, it would require considerably more than that, especially amid the social turmoil of the past two-and-a-half years of harsh austerity in Greece.

Together with PASOK and the Democratic Left, Samaras’ party would have 179 legislators, enjoying a strong majority of 28 seats.

Hopes that a deal can be struck boosted Greek share prices, with the battered Athens stock exchange gaining 2.9 per cent in afternoon trading.

Greece’s short-term borrowing costs declined slightly today, with the interest for a new 13-week treasury bill issue reaching 4.31 per cent, down from 4.34 per cent last month.

The total sum raised was €1.3billion, with the auction 2.2 times oversubscribed.

Samaras’ three-day mandate to form a government expires on Wednesday. If it fails, Syriza would get a chance to form a government, followed by the Socialists.

But Tsipras has said he will not even try to create a government. Venizelos has advocated circumventing the mandate process and proceeding straight to a meeting of party leaders under President Karolos Papoulias.

Venizelos has insisted that Syriza should participate in any coalition government, in what appears more an attempt to show the left-wing party up as intransigent rather than a realistic effort to drag it into governance.

Setting apart their bitter rivalry stemming from four decades of what was effectively a two-party system, New Democracy and PASOK took part in a brief coalition government earlier this year.

Greece election vote leaves Euro in balance

The fate of the euro was hanging in the balance after a rerun of the Greek elections failed to produce a strong government with a mandate to deliver the country’s austerity programme.

By Robert Winnett, Alex Spillius in Athens and Bruno Waterfield in Brussels9:57PM BST 17 Jun 2012161 Comments
Although the New Democracy party won the largest share of the vote, it will have to rely on its discredited socialist rivals Pasok to form a coalition government to accept the bail-out, keeping Greece in the single currency.
Both parties, which have ruled Greece for 38 years, are widely blamed for a crisis that has taken the country to the brink of economic collapse. Between them they won only about 40 per cent of the vote. By contrast, parties that opposed the bail-out increased their share of the vote to over 46 per cent, with Syriza, the radical Leftist coalition that wants to discard the agreement, almost winning outright.
Last night, Syriza insisted it would not join any kind of national unity government and promised to provide strong opposition to any pro-bail-out coalition.
Alexis Tsipras, the Syriza leader, said he would help the government if it took measures to alleviate the burden on the people. “But it must understand that austerity measures and the selling off of public wealth cannot be imposed,” he said. “Anti-austerity is the only viable solution.” Any New Democracy-led government will be under intense pressure to renegotiate the terms of Greece’s bail-out to stave off another political collapse and civil unrest.
Financial markets are expected to react to the tight election results, with speculation mounting that Greece may yet be forced out of the single currency. A weakened government will struggle to implement the austerity measures demanded by its EU and IMF creditors.
Central banks across the world are thought to be ready to pump billions of dollars, euros and pounds into the global economy today if it becomes necessary.
David Cameron, who left for the G20 summit in Mexico late last night, is today expected to warn that global leaders must now “fight for the future of our world economy”.
European leaders including Angela Merkel, the German chancellor, and François Hollande, the French president, delayed leaving for the summit as they assessed the impact of the Greek result last night in a conference call. France said the discussions had been “intense”. They will both come under strong pressure from Mr Cameron and Barack Obama to develop a coherent and agreed plan to stop the eurozone crisis spreading to bigger economies such as Italy.
Germany may have to provide billions of euros for a new rescue package.
Senior German figures indicated within minutes of official Greek exit polls last night that they were prepared to renegotiate the terms of the bail-out with Greece. However, the fragile nature of the Greek government means this strategy could threaten the crisis dragging on and continuing to undermine other economies. Antonis Samaras, leader of the New Democracy party, vowed to create a pro-euro unity government and said Greece would honour its bail-out commitments.
An indication of the difficulties he faces came last night when Pasok insisted that Syriza should join a coalition.
Democracy may also need to look to the Democratic Left, a party that talks about “gradual disengagement” from the austerity drive.
In his victory speech, Mr Samaras said Greece had “voted to stay in the euro”. He said: “We will not be reigned by fear, and espcially the sacrifices the Greek people have made will be realised.”
Greek voters returned to the polls after elections last month and days of negotiations failed to deliver a government.
However, despite dire warnings from European leaders, official exit polls suggested that the Left-wing Syriza party, which has pledged to block the austerity programme, received 27.1 per cent of the vote. In total, the share of the vote for other anti-austerity parties appeared to have risen to more than 46 per cent.
Golden Dawn, a neo-Nazi party with squads of thugs, was predicted to win seven per cent again and enter parliament for the first time.
However, the official exit polls suggested that the New Democracy party would be given the opportunity to lead a new coalition government after receiving 29.5 per cent of the vote. It receives a 50-seat bonus for coming first, giving the party the initial opportunity to form a government.
Mr Tsipras last night ruled out joining a New Democracy-led coalition, suggesting his party would better serve the country to “ensure the government acts in the best interests of the Greek people”.
He said: “The Greek people condemned the memorandum twice in six weeks so other parties should accept it is non-viable. Our rejection of the memorandum is the only solution, not only for us but for the rest of Europe.”
Germany last night offered to allow a New Democracy led coalition a longer period to make spending cuts so long as it stuck to credit agreements with the EU and IMF.
Guido Westerwelle, the German foreign minister, said: “There cannot be substantial changes to the agreements, but I can well imagine talking again about timelines.”
Angela Merkel, the German chancellor, said she expected Greece to stand by its “European obligations”. Didier Reynders, the Belgian deputy prime minister, said: “We can negotiate with the Greeks, there is space.” A Greek government must agree 77 austerity measures and sack 150,000 civil servants to get the next instalments of a €240 billion EU-IMF bail-out by the end of the summer.
Germany and France are prepared to give Greece a “breathing space”.
Herman Van Rompuy, president of the EU, and Jose Manuel Barroso, president of the European Commission, said they saluted the courage and resilience of the Greeks.
The White House said it hoped a new Greek government would make “timely progress” on the economic challenges.

Greeks Withdraw $1 Billion a Day Ahead of Vote

Greeks pulled their cash out of the banks and stocked up with food ahead of a cliffhanger election on Sunday that many fear will result in the country being forced out of the euro.

Bankers said up to 800 million euros ($1 billion) were leaving major banks daily and retailers said some of the money was being used to buy pasta and canned goods, as fears of returning to the drachma were fanned by rumors that a radical leftist leader may win the election.

The last published opinion polls showed the conservative New Democracy party, which backs the 130 billion euro ($160 billion) bailout that is keeping Greece afloat, running neck and neck with the leftist Syriza party, which wants to cancel the rescue deal.

As the election approaches, publishing polls is now legally banned and in the ensuing information vacuum, party officials have been leaking contradictory “secret polls”.

On Tuesday, one rumor making the rounds was that Syriza was leading by a wide margin.

“This is nonsense,” one reputable Greek pollster said on condition of anonymity. “Our polls show the picture has not changed much since the last polls were published. Parties may be leaking these numbers on purpose to boost their standing.”

The pollster said there was some consolidation, with voters turning to New Democracy and Syriza from smaller parties but the pool of undecided voters remained unusually large so close to the election and the result was impossible to predict.

Both parties say they want Greece to remain in the single currency but Syriza has pledged to scrap the bailout agreement signed in March which has imposed some of the toughest austerity measures seen in Europe in decades.

The European Union and International Monetary Fund have warned that Greece, which has only enough cash to last for a few weeks, must stick to the conditions of the bailout deal or risk seeing funds cut off.

Euro Or Drachma Dilemma

New Democracy has been telling voters they must choose between the euro or the drachma, while Syriza promises to end the austerity measures imposed by Greece’s international lenders, such as salary and pension cuts, that have driven many Greeks into abject poverty.

Fears that Greece will collapse financially and leave the euro have slowly drained Greek banks over the last two years. Central bank figures show that deposits shrank by about 17 percent, or 35.4 billion euros ($44.4 billion) in 2011 and stood 165.9 billion euros ($208.1 billion) at end-April.

Bankers said the pace was picking up ahead of the vote, with combined daily deposit outflows from the major banks at 500-800 million euros ($625 million to $1 billion) over the past few days, and 10-30 million euros ($12-36 million) at smaller banks.

“This includes cash withdrawals, wire transfers and investments into money market funds, German Bonds, U.S. Treasuries and EIB bonds,” said one banker, who spoke on condition of anonymity.

Retailers said consumers were stocking up on non-perishable food while almost all other goods were seeing a huge drop in sales as cash-strapped Greeks have no money to spare in the country’s fifth year of recession.

“People are terrified by the prospect of returning to the drachma and some believe it’s good to fill their cupboard with food products,” said Vassilis Korkidis, head of the ESEE retail federation.

“It’s over the top, we must not panic. Filling the cupboard with food doesn’t mean we will escape the crisis,” he said.

The headlines still focus on Greece.

The headlines still focus on Greece. It is broke. Here is Lucas Papademos, describing what an orderly default would mean. In the Telegraph:

“The savings of the citizens would be at risk. The state would be unable to pay salaries, pensions, and cover basic functions, such as hospitals and schools, and…the country — public and private sector alike — would lose all access to borrowing and liquidity would shrink.

“The living standards of Greeks would collapse. The country would drift into a long spiral of recession, instability, unemployment and prolonged misery. These developments would lead, sooner or later, to exit from the euro.”
Sounds good to us! The Greeks have been living beyond their means. Living standards must fall. Best to get on with it.

But the efforts of a whole class of over-paid meddlers have been directed at trying to avoid this outcome. They’ve hesitated…prevaricated…vacillated…and generally fornicated up the situation.

They’ve swept so much dirt under the rug that there’s now an Everest in the middle of the room… It can no longer be ignored.

But Greece isn’t the only country to live beyond its means. And the Greeks aren’t the only ones to suffer. In Britain, the economy is holding its own…but only by loading the young with debt in order to continue supporting the old in the style to which they’ve become accustomed.

Here, The New York Times reports:

Perhaps the most debilitating consequence of the euro zone’s economic downturn and its debt-driven austerity crusade has been the soaring rate of youth unemployment. Spain’s jobless rate for people ages 16 to 24 is approaching 50 percent. Greece’s is 48 percent, and Portugal’s and Italy’s, 30 percent. Here in Britain, the rate is 22.3 percent, the highest since such data began being collected in 1992. (The comparable rate for Americans is 18 percent.)

Classified by statisticians as NEETs (not in education, employment or training), they number about 1.3 million, or one of every five 16-to-24-year-olds in the country.
Lower incomes…unemployment…fewer benefits… Get used to it.

There have always been booms and busts. There were years of good harvests…and years of bad ones. The prudent farmer saved some grain…just in case.

But in the 20th century real money — gold — was replaced by paper money and ‘just in case’ became ‘just in time.’

Even John Maynard Keynes, the architect of modern government meddling in the economy, suggested that governments should save money so they would have something to spend when the private sector cut back.

But the feds didn’t save. They spent. And when times got tough, they spent even more money. Trouble is, without savings, they had to borrow the money to spend…which means taking it out of the very economy that is short on money already.

The only other option is to print up extra money — in effect, creating it ‘out of thin air.’ But if you could just print ‘money’ and make yourself better off, everyone would do it. People are not made richer just by printing up pieces of paper with green ink on them. They get richer by having real purchasing power…and real resources at their command…and by being able to produce goods and services that people want.

No Money Left as Athens Burns: Greek Communists Pathetically Outraged at Their Own Excess

The Greek parliament approved a deeply unpopular austerity bill to secure a second EU/IMF bailout and avoid national bankruptcy, as buildings burned across central Athens and violence spread around the country.

Cinemas, cafes, shops and banks were set ablaze in central Athens as black-masked protesters fought riot police outside parliament.

State television reported the violence spread to the tourist islands of Corfu and Crete, the northern city of Thessaloniki and towns in central Greece. Shops were looted in the capital where police said 34 buildings were ablaze.

Prime Minister Lucas Papademos denounced the worst breakdown of order since 2008 when violence gripped Greece for weeks after police shot a 15-year-old schoolboy.”Vandalism, violence and destruction have no place in a democratic country and won’t be tolerated,” he told parliament as it prepared to vote on the new 130 billion euro bailout to save Greece from a chaotic bankruptcy.

Papademos told lawmakers shortly before they voted that they would be gravely mistaken if they rejected the package that demands deep pay, pension and job cuts, as this would threaten Greece’s place in the European mainstream.

“It would be a huge historical injustice if the country from which European culture sprang … reached bankruptcy and was led, due to one more mistake, to national isolation and national despair,” he said.

The chaos outside parliament showed how tough it will be to implement the measures. A Reuters photographer saw buildings in Athens engulfed in flames and huge plumes of smoke rose in the night sky.

“We are facing destruction. Our country, our home, has become ripe for burning, the centre of Athens is in flames. We cannot allow populism to burn our country down,” conservative lawmaker Costis Hatzidakis told parliament.The air in Syntagma Square outside parliament was thick with tear gas as riot police fought running battles with youths who smashed marble balustrades and hurled stones and petrol bombs.

Terrified Greeks and tourists fled the rock-strewn streets and the clouds of stinging gas, cramming into hotel lobbies for shelter as lines of riot police advance.

According to Richard Hubbard of Reuters London

Tortuous negotiations over a second bailout for Greece are set to come to a head on Wednesday, putting fragile market confidence to the test on the same day data is tipped to show the euro zone is entering a mild recession.

U.S. retail sales and the release of minutes from the last Federal Reserve rate-setting meeting, data on UK inflation and unemployment, more corporate earnings and a Bank of Japan policy meeting also stand on the market’s radar.

But it is Greece and a March 20 deadline, when the country must find 14 billion euros ($18.6 billion) to meet debt repayments or face the prospect of a chaotic default, that will hold the market’s attention.

Euro zone officials have said February 15 marks a cutoff points for agreement on a new bailout deal, without which Greece will have no funds to cover the March repayments.

“We have a very stretched timetable, so if there’s no agreement on Wednesday any Greek deal would be in dangerous territory,” Thomas Costerg, European Economist at Standard Chartered Bank said.

“Although a disorderly default is not our central scenario, risks are definitely rising and we think this would have huge consequences potentially on confidence, on financial markets and on the banking system.”

If a Greek deal is agreed, the focus will likely switch to the pace of economic recovery in developed markets and the ongoing effects of policy stimulus from some of the world’s major central banks.

In Europe, demand at a second 3-year loan tender (LTRO) by the European Central Bank at the end of the month will be closely monitored after the first in December was widely credited with having eased financial pressures and supported a big move into riskier assets.

U.S. dollar-based investors who moved into 10-year Italian government bonds after the first LTRO have seen gains of over 15 percent for the year to date, and the big funds are taking notice.

“We continue to assess the level of yields of Italian and Spanish bonds over Germany as there are opportunities for shorter term yield pick-up in those markets as we watch for economic improvement,” said Kevin Anderson of State Street Global Advisors.

Anderson, who is global chief investment officer of fixed income and currency, says his views are not conditional on a Greek debt deal.

“The market has pretty much priced in a significant restructuring in Greece, which probably removes the contagion effect were we to see a disorderly events in Greece in the next weeks and months.”


Most of the economic data due in the coming week is not expected to shake markets out of the view that a mild global recovery is under way, led by China and the U.S, even as the euro zone struggles.

The revival play has seen the MSCI’s All Country World Index .MIWD00000PUS rise over 9 percent this year and it is up more than 20 percent from its October lows.

The first estimate of fourth quarter economic performance in the euro zone, due on February 15, will likely show a contraction of 0.4 percent after growth 0.2 percent in the previous quarter.

According to a Reuters poll published last month, a majority of economists expect the euro zone to contract further in the current quarter, which would formally signal a slump.

“We think that will mark the start of the recession, including even for Germany,” Standard Chartered’s Costerg said.

However, both the euro zone and Germany will post growth for the year as whole and markets will also keep a close eye on the more forward-looking German ZEW sentiment index for February, which is seen showing another monthly gain.


In Europe, with the fourth quarter reporting season now about midway through, companies have been fairly evenly split in terms of upwards and downwards surprises, but risks of 2012 earnings downgrades remain, Societe Generale analysts said in a report.

“Disappointment is due in particular to raw material price volatility, price pressures and also the beginning of a slowdown in emerging markets – especially China for some capital goods companies.”

Despite this, the FTSEurofirst 300 index .FTEU3 of top European companies is up more than 20 percent from lows it hit in September 2011.

Elsewhere the European Union, the ECB and the International Monetary Fund, known as the Troika, will be reviewing Portugal’s progress on meeting the terms of its 78 billion euro bailout package, with Germany already indicating it is ready to accept changes to the plan.

In Asia, pressure is mounting on the Bank of Japan to respond to the U.S. Fed’s dovish stance, though analysts expect the coming week’s policy decision to be a close call.

The Failure Of Extreme Socialism In Greece: Children Being Abandoned On The Streets

Children are being abandoned on Greece’s streets by their poverty-stricken families who cannot afford to look after them any more.

Youngsters are being dumped by their parents who are struggling to make ends meet in what is fast becoming the most tragic human consequence of the Euro crisis.

It comes as pharmacists revealed the country had almost run out of aspirin, as multi-billion euro austerity measures filter their way through society.

Abandoned: Children are being dumped on Greece's streets by their poverty-stricken families who cannot afford to look after them any more (file picture)

Abandoned: Children are being dumped on Greece’s streets by their poverty-stricken families who cannot afford to look after them any more (file picture)

Athens’ Ark of the World youth centre said four children, including a newborn baby, had been left on its doorstep in recent months.

One mother, it said, ran away after handing over her two-year-old daughter Natasha.

Four-year-old Anna was found by a teacher clutching a note that read: ‘I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.’

And another desperate mother, Maria, was forced to give up her eight-year-old daughter Anastasia after losing her job.

She looked for work for more than a  year, having to leave her child at home for hours at a time, and lived off food handouts from the local church.

She said: ‘Every night I cry alone at home, but what can I do? It hurt my heart, but I didn’t have a choice.’ She now works in a cafe but only make £16 per day and so cannot afford to take her daughter back.

Sold out: Greece is quickly running out of medicines as austerity measures start to filter through society

Centre founder Fr Antonios Papanikolaou told the Mirror: ‘Over the last year we’ve had hundreds of parents who want to leave their children with us. They know us and trust us.

‘Over the last year we’ve had hundreds of parents who want to leave their children with us. They know us and trust us.’

– Fr Antonios Papanikolaou

‘They say they do not have any money or shelter or food for their kids, so they hope we might be able to provide them with what they need.’

Further evidence of Greeks feeling the pinch of austerity measures is the lack of aspirin and other medicines now available in the country.

Pharmacists are struggling to stock their shelves as the Greek government, which sets the prices for drugs, keeps them artificially low.

This means that firms are turning to sell the drugs outside of the country for a higher price – leading to stock depletion for Greeks.

Mina Mavrou, who runs one of the country’s 12,000 pharmacies, said she spent hours each day pleading with drug makers, wholesalers and colleagues to hunt down medicines for clients.

And she said that even when drugs were available, pharmacists often must foot the bill up front, or patients simply do without.

Meanwhile, talks about private sector creditors paying for part of a second Greek bailout are going badly, senior European bankers said tonight.

That raises the prospect that euro zone governments will have to increase their contribution to the aid package.

‘Governments are mulling an increase of their share of the burden,’ said one banker, while another said ‘Nothing is decided yet, but the bigger the imposed haircut the less appetite there is for voluntary conversion.’

A third senior banker told Associated Press: ‘Private sector involvement is going badly.’

There are suggestions in euro zone government circles that ministers are coming to the realisation they may need to bolster Greece’s planned second bailout worth 130 billion euros if the voluntary bond swap scheme, which is a key part of the overall package, falls short of expectations.

Stumping up yet more money would be politically difficult in Germany and other countries in the northern part of the currency bloc.


Germany 'won't give more to EU bail-out fund'

German Finance Minister Wolfgang Schaeuble ruled out Germany contributing any more money to the beefed-up EU bail-out fund than the 211 billion euros approved by parliament, in an interview published Saturday.
“The European Financial Stability Facility has a ceiling of 440 billion euros ($590 billion), 211 billion of which is down to Germany. And that is it. Finished,” he told the magazine Super-Illu.
He also suggested the European Stability Mechanism, which is due to replace the EFSF by 2013 at the latest, would be smaller.
“Then it will be only a matter of 190 billion in total, for which we will be guarantors, including interest,” he explained.
Germany’s lower house of parliament, the Bundestag, on Thursday approved the beefing up of the eurozone bailout fund, which cleared its final hurdle on Friday when it was rubber-stamped by the Bundesrat (upper house).
The vote had been seen as a crucial test of Chancellor Angela Merkel’s authority amid fears of a backbench rebellion. However she secured an overwhelming majority of her own deputies to back the move.
A majority of Germans (58%) consider it was a mistake to boost the EFSF, according to a poll to be published Sunday in the weekly Bild am Sonntag.
German Foreign Minister Guido Westerwelle said he wanted the debt-ridden countries put under tighter surveillance in an interview given to Saturday’s Sueddeutsche Zeitung.
“A right to scrutiny and make recommendations isn’t enough. The states, which in the future will benefit from the solidarity of the rescue fund, should give the European authorities the right to intervene in their budgetary decisions,” the minister said.

Bilderberg conference 2011: agenda overview



According several inside sources, the Bilderberg 2011 agenda included a number of critical issues at the top of the elite’s to-do list.

These breakdown as follows:

Arab Spring:

The elite are concerned that the American Congress may soon turn against the illegal and immoral invasion under humanitarian cover by NATO and the UN against the north African dictator Muammar Gaddafi.

Congress is rising in opposition to bogus wars launched by the executive branch in violation of the Constitution. More than a third of House Republicans voted to pull out of the NATO coalition attacking Gaddafi’s forces, in essence forcing a NATO withdrawal from the color revolution engineered civil war in that country.

The elite behind closed doors in Switzerland are pushing for a wider war and incalculable suffering in the Middle East. The money masters have long profited from war and mass murder: Nathan Rothschild made a financial bet on Napoleon at the Battle of Waterloo  while also funding the Duke of Wellington’s peninsular campaign against Napoleon. The House of Rothschild financed the Prussian War, the Crimean War and the British attempt to seize the Suez Canal from the Frenchand also financed the Mexican War and the Civil War in the U.S.

Internet Censorship:

In addition to worrying about Congress waking up to the Libyan scam, the global elite is also concerned about a diverse liberty movement that has grown exponentially with the help of an open and free internet. In response, the pocketed pawns in Congress have introduced a raft of bills over the last few months designed to take down the internet and blunt its impact as a medium for alternative news and information.

On the international front, the European Commission gave a nod toward implementing the Anti-Counterfeiting Trade Agreement (ACTA), a draconian measure that will subvert national sovereignty, trash Net Neutrality, consumer privacy, and civil liberties. In the United States, the corporate media has virtually ignored ACTA, but then key players in the Mockingbird media are often Bilderberg attendees and privy to aspects of the agenda.

The above represent a small sampling of legislation and treaties that will be used to shut down the opposition under the cover of protecting copyright and preventing terrorism.

The globalists are not opposed to the internet, especially as a corporatized money-making instrument. They are, however, opposed to an open, free, and unregulated by government internet where alternative media opposed to their globalist devices are allowed to thrive. In addition, we can expect minions of the global elite who parade around as our elected representatives and appointed government officials to continue their propaganda efforts to convince the people that the internet will be used as a terrorist weapon of mass destruction and as such needs to be tightly regulated – for our own safety, of course, and that of the children.

Prolonging the economic crisis:

Finally, the Bilderbergers will work on an effort to continue into further fantastic debt producing bankster bailouts, specifically for Greece, Ireland, Portugal, and other member EU nations sliding toward bankruptcy and social disruption on a monumental scale.

Oil prices will skyrocket – a faith accomplished with gas prices at the pump now at historically high levels – as the global elite work behind the scenes to take take down national economies. New revelations also deal with the death of the dollar, exploding energy prices, and the engineered onset of order out of chaos revolution worldwide.

Because the plan is to take down national sovereignty, impose drastic austerity measures, hold fire sales on national assets, consolidate wealth and power, and use an endless economic crisis as an excuse to usher in world government, a one-world currency, and a sprawling high-tech police state.

New head of the IMF decision:

It was reported that the new IMF head would be decided at the Bilderberg meeting. A prominent attendee to the elitist gathering has been entered into the race to become the IMF head at the eleventh hour.

Bank of Israel Governor Stanley Fischer, an insider favorite of Bilderberg and multiple time attendee, announced his intention to bid to become the replacement managing director of the IMF, taking the position previously held by Dominique Strauss-Kahn, himself a former Bilderberg attendee. Fischer is also a member of The Council on Foreign Relations and The Trilateral Commission.

Strauss-Kahn stepped down from the position after it was alleged he attempted to rape a hotel maid. Some believe Strauss-Kahn was set-up in order to remove him from the IMF.

A three way race is now in place between Fischer, Mexican central banker Agustín Carstens and French Finance Minister Christine Lagarde.

Both Carstens and Lagarde have embarked on tours to promote their bids and will be joined now by Stanley Fischer.


Jim Tucker’s anonymous steering level Bilderberg inside source told him war in the Middle East is at the top of the elite’s agenda.

The long time Bilderberg sleuth said the elite believe the world is over-populated and war represents a partial solution.

“They are unified on their war project,” said Tucker, citing his Trilateralist-Bilderberg source, “their rationalize the world is too crowded anyway, they have to limit the population growth, the one way to do it is with wars. They have been emphasizing that all day.”

Bilderberg Conference awareness and coverage:


Tucker also said the elite are outraged by the patriot movement and the alternative media’s coverage of the Bilderberg meetings and the release of information by moles and insiders. He said the elite attempted to get media magnate Rupert Murdoch to convince The Guardian in the United Kingdom and the Irish Times to scale back their reportage on the Bilderbergers, but he was unable to do so.


Tucker’s sources also said the Bilderbergers are stunned about the presence of demonstrators and alternative media.



George Soros Says EU May Disintegrate, Again


The European Union is at risk of disintegration unless Ireland is allowed to restructure its bank debts, and Greece is allowed to restructure its government debts.

That’s the moderately apocalyptic message George Soros has chosen to bring to this year’s Davos boondoggle.

It’s not the first time Soros has delivered this warning, but it comes at a time when euro-zone policy makers appear to have had some success in convincing nervous investors that the currency area can deal with its debt problems.


George Soros, speaks at the Seehof hotel on the sidelines of the World Economic Forum in Davos, Switzerland on Wednesday, Jan. 26, 2011.

Soros doesn’t disagree, telling the BBC that, narrowly defined, “the euro crisis is on the way to being solved.”

But he argues that the way in which euro-zone policy makers are addressing investor concerns is sowing the seeds for a future crisis, one that threatens the European Union. For Soros, the burden of repaying very large debts will be so great for Ireland, Greece, Portugal and others that it will create a “two-speed Europe,” and political tensions that could at some point force some of those countries out of the bloc.

It has to be said that a small number of small countries leaving a group of 27 nations, many of which are very large by comparison, isn’t exactly disintegration. It’s more like a slight shrinkage in something that has already grown way beyond anyone’s imaginings.

After all, the EU started with six members in the 1950s, and had only managed to rise to 15 by the time of the big expansion in 2004.

But it’s also unclear why nations facing debt problems would leave the EU, rather than the euro zone. They might have to drop the euro to gain some competitiveness in export markets and default on their debts without doing too much damage to the currency area as a whole, but leaving the EU wouldn’t help, and would hurt a lot. That doesn’t mean that Soros is wrong about the need for debt rescheduling, just that he’s conjuring up an excessively gloomy scenario if that isn’t pursued.

As they prepare for a general election on February 25, Irish voters are likely to make their preference for a renegotiation of the nation’s bank debts very clear. And many economists believe that Greece will be unable to stabilize its finances without a debt rescheduling.

For now, euro zone policy makers don’t want to contemplate either possibility, because that might spook investors and make it even harder for Portugal and Spain to borrow in the international bond markets. But there’s little doubt that the burden or repaying and servicing their debts will act as a drag on some euro-zone nations for a very long time, and that it might be better to find a negotiated way of easing that pain.

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