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Greek Tragedy

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Greek Tragedy

Postby joe » Fri Nov 04, 2011 10:21 pm

Papandreou’s Call for a Referendum Is No Greek Tragedy: View
November 03, 2011, 7:58 AM EDT

http://www.businessweek.com/news/2011-1 ... -view.html

Nov. 2 (Bloomberg) -- The country that invented drama and democracy is not disappointing the world on either front. Greek Prime Minister George Papandreou on Monday called for two high- stakes votes.

The first asks parliament to say by the end of this week whether it has confidence in his leadership. The second is a referendum in which Greek voters would approve or reject, possibly by year’s end, Europe’s latest debt-crisis workout.

The move blindsided European leaders on the eve of a global summit and rocked lawmakers in Papandreou’s party, some of whom are now calling for him to step down. The next day, stocks tumbled worldwide, the euro declined and Italian bonds plunged.

No doubt, Papandreou’s gambit is extremely risky. He has only a three-seat parliamentary majority. And the referendum, if rejected, could push Greece into default and out of the European Union and the single currency. A doomsday scenario could follow, including financial market mayhem, soaring sovereign borrowing costs and cascading bank failures. Europe and the U.S. could fall back into recession.

Still, it was the right thing to do. Greek citizens deserve a say on one of the most important matters in their lifetimes. Perhaps more important, the move could finally force Europe into the full reckoning required to solve its two-year-old sovereign- debt crisis.

Far Short

Europe’s latest bailout proposal falls far short of what’s needed. Under the deal, private banks holding Greek debt would voluntarily accept a 50 percent write-off on their returns; the European Financial Stability Facility, the EU’s bailout fund, would be leveraged to 1 trillion euros ($1.37 trillion) from 400 billion euros; and European banks would raise 106 billion euros ($145 billion) in new capital by June 2012. As for Greece, it is due to receive 130 billion euros ($180 billion) in public funds on top of 110 billion euros pledged in 2010.

As we have previously pointed out, writedowns of Greece’s sovereign debt should be much steeper. Greek bonds held by the European Central Bank would not be covered, so the writedown is really less than 50 percent. It needs to be closer to 70 percent to make Greece’s debt burden bearable. In addition, the EFSF needs a war chest of at least 3 trillion euros to make sure Europe’s banks are recapitalized and to guarantee the financing needs of Italy and other struggling governments.

Greeks know that this latest bailout proposal will also come with many unpopular strings attached, including further austerity measures. In an Oct. 27 poll for the Greek weekly To Vima, the majority said the deal should be put to a national vote, with 58 percent calling it “negative” or “probably negative.” Deep budget cuts, broken pension promises and heavy government job losses have already led to strikes, street protests and violence.

Papandreou hopes to use the referendum both to improve the terms of the bailout and to win buy-in from voters. To do this, he won’t make the referendum just a question of continued austerity. Instead, he will probably turn it into a vote on Greece’s euro-area membership. In the To Vima poll, 7 in 10 Greeks said they want to keep the euro. In a referendum framed as “stay with the euro, or return to the drachma as an orphan state,” Greeks may very well choose the euro.

The referendum is unpopular with European leaders, but it increases Papandreou’s leverage in negotiations, especially with the Germans. If they don’t offer Greece better bailout terms, the entire EU project could collapse, bringing down the European economy with it. The Greek leader has cunningly avoided naming a date for the referendum, saying only that it would take place after the details of the bailout have been nailed down. He is inviting European leaders to sweeten the pot.

Confidence Vote

Papandreou is also wagering he’ll win the confidence vote, even though he had a difficult time last month passing the austerity measures required to make the latest bailout plan possible. The popularity of his party, the Panhellenic Socialist Movement (Pasok), is in decline. If it spurns him, an early election would be called, and Pasok would probably lose. That leaves his party in the position of having to support him on the confidence vote, or risk losing control of parliament.

If Greek voters support the referendum, Papandreou will win the mandate he needs to continue with austerity measures and thwart the opposition. It could also quiet street protests, and even bring a modicum of political stability to Greece. That would help calm markets and boost confidence throughout Europe.

As Papandreou said in calling the referendum, “Democracy is alive and well, and Greeks are being called to rise to a national duty beyond the regular electoral processes.” Here’s hoping they do.

--Editors: Paula Dwyer, Francis Wilkinson
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Re: Greek Tragedy

Postby joe » Fri Nov 04, 2011 10:27 pm

I'm find the comments blaming PM Papandrou surprising.

1. He came, he saw and he found out after coming to power that the Greek economy and political system are run by deeply entrenched vested interests
2. He is known to have gone on record saying that he never knew what a Credit Default Swap was till Greek started acknowledging repayment problems during early 2010.
3. He knew that he inherited a system which gained entry into Euro by fudging all key economic parameters.
4. He knew, year after year, Greece went on selling bonds, with full knowledge of "system" that economy was nowhere near the risk reflected by the bonds
5. He is asking for aid (not loan), and in return has to effect austerity cuts through out the employment landscape -being fully aware that the groups suffering the most had no part to play in fudging the numbers, while gaining entry into Euro
6. New Democracy, was always snapping at his heels, trying to reject each and every deal he brought from the troika.
7 He did pull his party through in ensuring that at least his his party supported the austerity deals made this year
8. Opposition, as it happens in most Democracies, just wants to scope points, and they were doing it
9. If Papandrou, would have played the role, exactly as scripted by the troika, and delivered on getting the latest austerity deal through, New Democracy would have harped and plastered his and his party's name on every pain, every frustration experienced by Greek citizens, for eternity
10. Papandrou, played a master stroke. He put New Democracy, in the spot light and asked them to stand up and get counted. It was like, "alright if you think I should not have accepted the bail out deal, what alternatives do you have for Greece? Be clear as the stakes are perhaps the highest ever for future of Greece. Referendum - are you ready. The you can go to the streets and cry hoarse that the bailout is unfair" Expectedly, the opposition, for the first time the opposition has buckled and for the first time are "committing" something concrete.

Worried Eyes on Greece Ahead of Confidence Vote
By RACHEL DONADIO and NIKI KITSANTONIS
Published: November 4, 2011
http://www.nytimes.com/2011/11/05/world ... .html?_r=1
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Re: Greek Tragedy

Postby GreekIslandGirl » Fri Nov 04, 2011 10:38 pm

After Cameron's cowardly dalliance with an EU referendum, several days ago (now long forgotten, he hopes), we finally have the prime example, in Papandreou, of a Democratic leader. Too right he should put it to the Greek people. The terms were unacceptable. Too right he should use leverage - he succeeded there with the timely ECB drop in interest rate; but does anyone acknowledge Papandreou for that? No, shamefully.

If there's one thing a Greek can recognize, it's a Trojan horse. And this 'bailout package' was just that!

The only thing crippling Greece is the interest rate brought on, mostly, by Britain scapegoating and stereotyping the Greeks in the most unfortunate display of racism, for a long time (since they scrambled for Africa).

The credit-ridden western-European countries have been milking Greece for too long!

[Germany, pay up for your WWII crimes!]
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Re: Greek Tragedy

Postby wyoming cowboy » Fri Nov 04, 2011 11:26 pm

The biggest fear of the usa is that this goes through as planned, with China buying up european bonds, the dollar will lose its value dramatically. since Papa's announcement, the Chinese have backed away from the european bond, and now the europeans will be forced to bring out the euro machine and create euro's.just like the usa was force to bring out the dollar machine and print dollars..which in the end will stabilize the euro versus the dollar...maybe even bringing it down to 1.25 or less to the euro.
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Re: Greek Tragedy

Postby Maxx » Sat Nov 05, 2011 12:19 am

Oh, this is one of those threads where ottomans get together and start feeling sorry for themselves. :(

Someone get me a knife.

George did the right thing by cancelling the referendum. Declaring one was also quite smart. :wink:
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Re: Greek Tragedy

Postby kurupetos » Sat Nov 05, 2011 12:45 am

It's really a tragedy. :cry:
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Re: Greek Tragedy

Postby Maxx » Sat Nov 05, 2011 12:49 am

kurupetos wrote:It's really a tragedy. :cry:


Not for Cyprus! :wink:

Turkey next.... :lol:
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Re: Greek Tragedy

Postby yialousa1971 » Sat Nov 05, 2011 1:16 am

Maxx wrote:Oh, this is one of those threads where ottomans get together and start feeling sorry for themselves. :(

Someone get me a knife.

George did the right thing by cancelling the referendum. Declaring one was also quite smart. :wink:


Here you go GR:-

Image[/quote]

:mrgreen:
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Re: Greek Tragedy

Postby bill cobbett » Sat Nov 05, 2011 1:25 am

Is anyone actually running Greece at the mo ??? ... other than the Germans.
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Re: Greek Tragedy

Postby Maxx » Sat Nov 05, 2011 1:25 am

Thanks. The way you lot are behaving, I will have no choice but to use it when shaving. :lol:
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