Greek economy spirals down as EU forces final catharsis

The Telegraph ^ | 2/14/2012 | Ambrose Evans-Pritchard, in Athens

[bruinbirdman]

A Greek default and traumatic ejection from the euro moved a step closer last night after eurozone finance ministers cancelled a crucial meeting, accusing Athens of failing to flesh out austerity cuts.

The escalating brinkmanship came as fresh data showed that Greece's economy contracted by 6.8pc last year and at an accelerating 7pc rate in the last quarter, far worse than expected by the European Union (EU), the European Central Bank (ECB) and the International Monetary Fund (IMF) "troika".

The country appears to be in a self-feeding downward spiral that is playing havoc with budget targets, leaving Greece with a Sisyphean task of ever deeper cuts.

Premier Lucas Papademos called his cabinet together late last night to find a further €325m (£272m) of fiscal austerity demanded by the troika, likely to be defence cuts and lower salaries.

The coalition parties failed to convince the Eurogroup that they would stick to the deal, and the mood has been poisoned by EU demands for an escrow account to seize Greek budget revenues at source.

Blackened buildings set alight by protesters on Sunday were cordoned off on streets around parliament in Syntagma Square, a vivid reminder to Greece's politicians that any misjudgment could push the country towards anarchy.

Approval of EU finance ministers is needed to unlock all parts of the complex €130bn loan package, including a 70pc "haircut" for private holders of Greek bonds, allowing the country to avoid default in March.

Germany and Northern allies seem willing to force Greece out of the euro unless there is total compliance, calculating that the eurozone is now strong enough to stem any contagion.

Luc Frieden, Luxembourg's foreign minister, spelled out the warning in crystal clear terms. "If the Greek people or the Greek political elite do not apply all of these conditions, I

[Oldeconomybuyer]

"The country appears to be in a self-feeding downward spiral that is playing havoc with budget targets..."

Coming to America.

[AnAmericanAbroad]

Looks to me like they’re trying to show Greece the door.

Why didn’t they do this a year ago, when they should have? It was glaringly obvious that Greece was insolvent; the EU should have put it’s foot down, and told the Greeks to leave (the Eurozone).

A sad case of political dreams and aspirations not squaring with political and economic realities.

[BfloGuy]

"We are the cradle of European civilisation and nobody can take us out of our own home."

Dude, you'll still be in your home. You'll just be expected to contribute to expenses now instead of getting an allowance from Vater.

[EGPWS]

The country appears to be in a self-feeding downward spiral that is playing havoc with budget targets, leaving Greece with a Sisyphean task of ever deeper cuts.

Thank God we have a disciplined non political government or this very same thing could happen to us in just a couple of years.

Thank you steadfast, patriotic, sense driven lawmakers for keeping us from going down this same road.

[Lazlo in PA]

a vivid reminder to Greece's politicians that any misjudgment could push the country towards anarchy.

As far as I am concerned, Anarchy is already there. The Govt' is frightened to make any real changes for fear of their lazy citizens. There is no real law and order there anymore. They are done as a country.

[sam_paine]

"We are the cradle of European civilisation and nobody can take us out of our own home."

Then they ought to change their own diapers by now.

[onyx]

Give Jim & FRee Republic Some Love on Valentine's Day!
Donate or Sign-Up to Donate Monthly!

Give Jim & FRee Republic Some Love on Valentine's Day!
Donate or Sign-Up to Donate Monthly!

[Jonty30]

A year ago, the structure wasn’t yet in place to socialize the losses.

Now that those losses have been socialized, Greece is useless and can go.

[tgusa]

Brought to you by The Massaiah and his Congressional Stooges, courtesy of Cloward and Piven.

[Uncle Ike]

” There is no real law and order there anymore “

Or, perhaps —

There is too much law, not leading to any semblance of good order...

Just a thought...

[mykroar]

"We are the cradle of European civilisation and nobody can take us out of our own home. There is no legal mechanism for this. If they try, others are going to die economically with us."

Unfortunately, the EU will find the last part of that statement to be painfully accurate.

[Truth29]

Now would seem to be the time for Turkey to make a move on the Greek Islands near the Turkish coast and on Greek Cyprus.

[Olog-hai]

If they were "trying to show Greece the door", they wouldn't have appointed their new prime minister. Nor would the insistence be on paying the bills for all the tanks and other weapons of war that they were induced to buy, before paying off anything else related to all the loans disbursed to Greece (they're not grants, remember).

And think about what you're saying. You're insisting that the EU, whose government is patterned on the Soviet Union's government, should "put its foot down". The more power that government gets, the more unwieldy it will get. They've already substituted their own prime ministers for Greece and Italy in lieu of the ones that the people elected, thus destroying the republican systems in those countries. What follows in the wake of that, when they get what they insist on?

[Hugin]

I saw a Brit anti-Euro pol on Cavuto earlier, talking about how the only way out for Greece (and the rest of Europe) is to dump the Euro. Asked why nobody in the EU was seriously considering this, he had a great line; “It's very difficult to make someone understand something, when their lively hood depends on not understanding it.” The unelected, unaccountable EU apparatchiks will do anything not to lose their power.

[luvbach1]

We are the cradle of European civilisation...

Greece was the cradle of civilization 2,400 years ago.

[Olog-hai]

You’re not suggesting that Turkey actually do that and turn those lands Islamic, I hope?

[wolfman]

The inference is that America is in far better fiscal shape than Greece. Nothing could be further from the truth.

[Travis McGee]

Yeah, that could NEVER happen here!

[Truth29]

Not suggesting it, but pointing out that European weakness is an opportunity for Muslim predators.