they're just waiting for one last bailout before they default...
Posted on 02/14/2012 3:23:54 PM PST by 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
(Excerpt) Read more at telegraph.co.uk ...
From a strategic POV, you strike when your opponent is least able to fight back.
I don’t think the poster was suggesting this, from a supportive POV.
America is in better shape than most other places, except perhaps Canaday or Norway.
But things can change fast enough, that even if you were in great shape, so many things can go wrong very fast.
That’s why it’s important to stay away from the abyss, if possible.
Can Greece (or any country) be ejected from the Euro?
I have been given to believe they cannot be ejected; if they leave, they must leave on their own.
I think we’re right there. We’re 105% of GDP debt and climbing. That’s really, really bad.
If we were to stop overspending AND simultaneously get the economy growing at 4%+ we’d have a path out.
It looks not good.
You’re still in a position to recover. One of the columnists at townhall siggested that growing at less than the inflation rate for about a decade would put the US in a position of being deficit free.
Mind you, that’s getting the politicians to agree to spend at a rate that is less than inflation. That is where the challenge lies.
Thanks. Although it would be ironic if they did that, in the face of their repeated attempts to join the EU (which ought to say something about both the EU and Turkey on its face).
I suppose everyone is in a position to recover - given the right things happen. Even Greece.
As you mentioned, the pols will have to do the right things AND we have to be lucky.
they're just waiting for one last bailout before they default...
Classic debt deflation combined with austerity. Greece is likely to lose 40-60% of it's current living standard before recovery a decade hence.
This is healthy.
The good news is the country truly is a microcosm of what happens when you base GDP and Living Standards on borrowed money. Just like us.
Private borrowing. Public borrowing. Printing. When the bubble pops the change to reality tears apart the very fabric of a nation.
It's AMAZING that Russia and the old Soviet Union were able to take their medicine, rebuild and become somewhat prosperous after the fall of their economic order and to do so without widespread war and destruction.
Of course the Russians never had a sense of entitlement like the West.
Nearly 10% of Greek GDP was borrowed money.
Nearly 10% of US GDP is borrowed/printed money. We too would be in an accelerating depression were it not for the borrowing and printing...7% per year just like Greece.
Unfortunately, we actually ARE in real terms.
Europe is going to melt down first. It will be white hot. When the US Debt Deflation can no longer be masked, the world will end. At least as we now know it.
Yep. We’re headed for it. Much of the noise about southwestern European nations defaulting is for the purpose of fixing currencies like ours. The beginnings of a currency war are behind the propaganda.
Given the trade imbalances in the globalist economy, our dollar cannot continue to be artificially elevated. Exports need a much lower dollar. Another force against keeping a high dollar is the natural course of inflation in trading partners with such imbalances against us. Another is the impossibility of paying debt with a high dollar. And more...
EU financial system would have immediately crashed. Now, after Grease flames out, they have given themselves 5-10 years to slowly melt.
yitbos
Depending on the "there". EU keeps adding requirements. Then central banks have to approve, private holders, EU Comission.
Grease defaults by March 20, that is my "there".
yitbos
Thanks. Yes. EU countries are afraid that Greece won’t come through. And apparently, there’s no deal, yet. I’ll defer to your guess on March.
BTW, Iran cut oil exports to Europe for the time being. India, China and others are hungry for it, and at least some of them are paying in currencies other than the dollar. China also reduced its treasuries here a little more.
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