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GREECE’S NEW GOVERNMENT is headed for a showdown with sceptical European partners today as it takes its demands to renegotiate its huge bailout to crunch talks in Brussels.
The emergency meeting of eurozone finance ministers promises to be bruising, with Greek demands for a cash lifeline and a relaxation of austerity facing resistance from Germany in particular.
Markets worldwide are spooked by the renewed threat of Greece crashing out of the euro, with Greece’s massive EU-IMF bailout set to expire at the end of February, leaving it at the risk of a default.
Greek debt prices jumped higher and the Athens stock market plummeted 3% hours before the talks as the two sides seemed far apart.
“I want to repeat today, no matter how much (German Finance Minister Wolfgang) Schaeuble asks it, we are not going to ask to extend the bailout,” left-wing Prime Minister Alexis Tsipras told lawmakers in Athens late yesterday.
The new government is riding a wave of popularity in Greece, emboldened by the 40-year-old premier’s defiance of Germany and austerity, which he has tempered with pledges to keep Greece in the eurozone.
This is the first government that goes to the Eurogroup (of eurozone finance ministers) standing up, not bowed,” said Greece’s new Finance Minister Yanis Varoufakis.
Talks about to start
The Brussels talks, set to begin this afternoon, will see Greece plead its case to the eurozone’s 18 other members, most of whom are loath to give Athens leeway on its mountain of debt, which most analysts believe will never be repaid.
Varoufakis will ask his counterparts to forget the current €240 billion euro bailout, in favour of a new arrangement that would take the plight of ordinary Greeks into account.
The Greek proposal would see Athens stick to 70% of its bailout commitments but overhaul the remaining 30%. Greece also wants a debt swap that will focus on economic growth.
Crucially, the government wants a bridging loan until September to buy time to hammer out new reforms.
At the same time it insists on raising the minimum wage and ditching an unpopular property tax, abandoning key reforms demanded by lenders of previous Greek governments.
Tsipras announced plans today to work on his programme of reforms with the OECD – the economic club of rich nations that has criticised the EU’s embrace of austerity.
The programme will be based “not on what was previously decided but on popular mandate,” he told a news conference after meeting OECD head Angel Gurria.
Greece was first bailed out in 2010 and Athens is still subject to inspections by the troika creditors.
Germany says ‘it’s over’
On the eve of the talks, which will also include the head of the IMF, Christine Lagarde, and ECB chief Mario Draghi, Germany’s Schaeuble dismissed any proposal of ending the current programme.
“It’s over” if Greece doesn’t want to continue the aid programme on the current terms, Germany’s Schaeuble said.
The EU’s Economic Affairs Commissioner Pierre Moscovici said the existing bailout deal was “the anchor” on which discussions should be held.
Moscovici added that while the Greek people’s desire for change should not be “brushed aside” Athens should also be mindful of voters in other European countries suffering from rescue fatigue.
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Look at the panic Greece is causing. Imagine if we would have played our cards that way.
You can bet we would have got a deal.
All of our elected politicians are push overs and are too scared to push back. We need Stephen donnelly
Irish Governtments only look for the pat on the back..shower of bottlers.
The pat on the back and the tasty pay-off KeiKe, don’t forget the pay-off.
Greece got the government we voted for.
Panic for who Martin the Greek people that are taking there money out of Greece
Wait till we see what comes out of the talks before you guys start talking like that. I can only imagine the EU telling Greeks they can get an extension or something like that and the Greeks will fold and try to tell their people they got a deal. After all they are all politicians in that room.
I can see the Greeks winning on penalties.
This is going to be so interesting. I wish that I could be a fly on the wall for this meeting!! Good luck Greece
Greece putting then under pressure! Germany will fold late! They can’t have Greece pulling out of E.U the resulting financial tsunami would be too catastrophic.
All that QE may firewall the rest of the euro zone from Grexit nicely.
Plus Greece has said repeatedly it doesn’t want to leave
They wont fold, cutting Greece lose would benefit the EU long term as their economy was fully built on lies and they have no real industry.
Cooking the books to join the EU is why they are un this mess.
Yes the Greeks want everyone else to pay for their lifestyle
Maybe if they put the reforms in place regarding pay ,tax and pensions they might be in a better position to ask for debt forgiveness
The Greeks are not bluffing. That’s the advantage and disadvantage of having the Euro. The Greeks are telling the Germans “If I go down, I’m taking you with me”
Like Ireland, much of Greece’s debt was imposed on the nation to cover the losses of financial speculation.
“The EU-IMF Troika forced a bankrupt country to take on further loan packages, allowing foreign banks to dump their bonds onto Greek taxpayers and trap Greek citizens in debt servitude. To add insult to injury, this was called a rescue.”
This odious debt of the Ireland, Greece and Portugal etc should be written off immediately. If the ECB wants to reimburse private speculators for their failed gambles on Greek and Irish banks, then they should cover that cost themselves and not impose the debt on member nations.
The ECB should create the necessary currency to extinguish that illegitimate debt from the national balance sheets as an economic necessity and an ethical imperative. There is no practical roadblock to this as the money is simply a matter of keystrokes for the sovereign currency issuer.
40+ years of neo liberal economic propaganda has presented money as a scare resource. This is nonsense. Modern fiat money is created at will by the institutions public (central banks) and private (commercial banks) that are authorized to do so.
The money has no intrinsic value, is created primarily on computer keyboards and so largely exists as electronic account entries. All financial assets are matched by an equal liability and so cancel each other out and ultimately net to zero. What remains is the real wealth of goods and services primarily produced by the working class through their labour. Financial assets (money) is a claim on that real wealth and therein lies its power.
Austerity and deprivation is a policy choice at national government and EU level not an unfortunate economic reality. There are no shortages of any of the real resources (e.g. energy, food, material to build housing etc) to eliminate poverty across the EU. The authorities pretend that there is lack of money to address the poverty of the citizens when in fact there can never be a shortage of a fiat currency like the Euro.
Neither is inflation a concern in the current recession where vast resources (including labour) are lying idle. There is no simple linear relationship between money supply and inflation despite what the establishment vested interests would have us believe. The point at which inflation rises depends on the availability of real resources (goods & services) versus the actual demand for purchase.
So the creation of new money is not in itself inflationary if there is sufficient real wealth (goods & services) to buy with that new money. This is especially true if the new money is directed to the productive sectors of the economy for example through infrastructural improvement which leads to GDP growth and so more availability of real resources to purchase. Another key factor which prevents inflation is large scale unemployment where the productive capacity of the economy is not close to its peak. In this scenario which we currently face in Ireland and across Europe, the labour of the unemployed can be purchased with newly created money with no risk of general inflation. In fact the Eurozone is now facing deflation due to the fall in aggregate demand through 6 years of austerity. The enforced shortage of fiat money which are in reality just keystrokes at ECB level is a political choice, not an economic necessity.
Under the QE program of the past few years, the ECB has created €1.4 trillion in reserves by pressing keys on its shiny computer in Frankfurt and made it available at extremely low interest rates to the parasite banks whose greed and stupidity triggered the economic crisis in the first place. So there are plenty of keystrokes available to shore up the financial system but not enough keystrokes to make sure Greek or Irish people don’t go to bed cold and hungry, that is if they have a bed.
U need to stop copying and pasting everything… And we are not the same as Greece …
Greek reform means they run a small surplus. But debt repayment kill them.
Ah Coddler will you just give it a rest until you have a thought of your own please?
Grexit is no longer the threat it was. Let them go.
Padraig , if you borrowed money you repay it !
Here is how UBS believes a Greek Eurozone contagion will play out:
The contagion risk of a euro exit reflects the fact that there is a meaningful risk that other countries would join Greece in leaving the euro. The euro is patently not an optimal currency union at the moment, which gives economic momentum to the idea of a broader fragmentation.
Whether other countries leave the euro is contingent on two questions with binary outcomes:
Do bank depositors think that their country could leave the euro?
Does the euro area guarantee the integrity of the banking system?
If the Greeks do exit the Euro it will most likely create a contagion which will bring down the Euro as a whole.
Padraig,
The piece above was written entirely by myself but is based on the correct description and operation of monetary system and macro economy as developed by the Modern Monetary Theory school of economics.
If you want to inform yourself instead of sniping from the sidelines, you can see the MMT basics here:
https://modernmoney.wordpress.com/index/
If you can you point to anything incorrect in what I’ve said, please do so. If not, trot along like a good lad. The adults are conversing.
Finner_99, I run a large surplus on my monthly income especially following cutbacks to my lifestyle. Then I have to pay my mortgage and other loans and the surplus vanishes. It’s easy to run a surplus if you won’t pay your debts. Unfortunately people come looking for your assets if you do that. Is Greece different? They might attract more sympathy if they acknowledged that they borrowed, lied and cheated to get into his mess. The difference with Ireland is that the Irish State didn’t borrow our bank debt which is now public debt. The Greek debt is all public debt.
Coddler you are regurgitating theory from a website. If I feel the need to converse on its contents I’d rather do so with the authors rather than an condescending fanboy.
Grand so Padraig. You’re an economically illiterate empty vessel as suspected.
Coming from an AAA supporter, I’ll take that as a compliment.
roy. if you borrow money you pay it back, unless you are bankrupt, and greece is definatly banckrupt
Yanis Varoufakis looks like he’d tear the head off ye.
I hope he rips Angela a new one…
If she has one that is
@ Joe,She has feckin loads of them,kenny/noonan/hogan/bruton etc.
God love him, he does. We could have used a few faces like that going up against the troika for us.
If you aint got noting, you’ve got nothing to loose.
Stick it to them Greece. Fight the skum with everything you’ve got.
Come on Greece, you can play hardball as well as football! Stand up to the Hun!
Greece is most fortuitous in having a highly capable finance minister, not only is he intellectually competent but he retains a deep sense of self belief in what he is doing. I certainly hope he and Greece succeed in their dual with the ECB and the other principal player, Germany. There is never only one approach to dealing with problems, if imagination and will are applied and the openness to entertain other views/opinions, another path can always be taken. As an Irishman, I only wish our own weak and subservient political figures could have acted with such a zealous love of their own country.
Agree completely! There are many ways to solve this problem of debt.
Noonan also retains a deep belief in what he is doing – selling out his entire country for a pension.
The plan that the greeks have been showing to economists is a pittance in comparison with the debt writeoff that Germany received less than ten years after the horrors it inflicted on the world. That they should now renege on their debts to greece and refuse to help them manage their debt is a disgrace.
Ding Ding!
Well let’s hope the Greeks aren’t expecting any favours from our subservient frightened little poodles of a Government.
They have a ballbreaker of an economist, we have a schoolteacher who seems to be able to pull folksy anecdotes out of his rear in order to excuse whichever financial hardship he is inflicting on our people that particular week.
Hopefully they will be lent a lot more money so the Greek guys can sit around in street cafes all day in their shades drinking their ellinko. It’s a shame not to fund such a cool lifestyle. In fact let us Irish work harder and throw them more money too.
On the East and in Asia people call Greeks a lazy nation!
Greece needs to solve its massive tax evasion problem. Half of self employed professsionals in wealthy regions report about 10k per annum earnings.
And now Greece wants to renege on its lenders?
True on the tax evasion but I still hope they get something, just Because our government is spineless doesn’t mean others shouldn’t try
Good on the greece stand up to them. This government or the people didn’t cook the books . previous governments did. The ecb knew this but did nothing. This government or people didn’t make the decisions or the tax laws previous governments did. Pathetic blaming the people of Greece when its governments that make the decisions and the laws not the people. People may have enjoyed the the lax tax laws but they did not make them. Why should people suffer for decisions made by governments .
Debts that can’t be paid won’t be. Simple. Default is the only option and not the worst by a long way. Our horrendous blanket guarantee screwed us.
If Angela puts on that cute little number that she was spotted swimming in Greece will agree to anything. Imagine that for an image
Thx a lot Johny!!!
Sorry Fran. Hope your lunch still in your tummy
“Ve have vays of making you pay”
Funny that the German footballer in the picture is Carsten Janker. Janker rhymes with w@nker which is a perfectly good word to describe the people that caused the bail outs in Greece as well as Ireland.
One would think that Schaeuble should maybe wait to see what is on offer and also what his other collogues have to say during the council meeting before laying down the law.
Vast majority of debt repayments for Greece over the next decade are to the IMF and the ECB, not the Eurozone or Germany, u know the actual institutions that really call the shots so it would be nice if the media would call it like it us and stop playing the aul Germans trying to take over Europe card…pretty pathetic.
92% of the money Greece owe is to the other European countries as far as I know!
Who is the bald German?
Looks like Carsten Jancker, but I can’t be sure…..
Hon Greece!!!!
You are correct UndercoverGarda, gold star.
Rattled the bar in the 99 Champions League Final against United… Could be late drama here as well!
@undercovergarda . The bald German is Angela in her early teens
I think his name is michEl Noonan.
If ever there was a reason not to vote for the left wing parties in this country it is Greece. All the policies advocated by SF & AAA have been implemented in Greece and look at the outcome.
What outcome are you talking about? There hasn’t been an endgame just yet. All I’ve seen is the Greeks raising the minimum wage and fighting their own corner. It’s admirable and a hell of a lot more than the current shower tried in (almost) 4 years.
I’m probably going to vote Independent in the next election (less a certain cap wearing fellow in my constituency) btw in case some folks think I’m biased.
27% unemployment, failing industries, flight of FDI out of the country, borrowing rates of 10%+ etc etc. You think that is ok?? Get real, the socialist policies have been shown again to lead to failure.
The unemployment in Greece, Portugal and Ireland is down to austerity even most conservative commentators agree with that. Nothing to do with socialist policies.
Fair play to these guys.
They have intent, direction, conviction and courage.
They have a lot more leverage than we see in mainstream media.
THE EU blew a lot of money on renewables that could have been used to write off Greek and Irish debts :
Aren’t we paying for that as well with a pso on our energy bills?
Krauts out.
If Greece go, bye bye private pensions.
Germany jack boot economics is everyone’s f#*#ing problem
Our government is an embarrassment to the Irish people
Why does the concept of prudence only apply to the borrower? Surely credit is a two part responsibility and the lender has a responsibility to be prudent too. The cost of Europe’s unassessed Renewable energy plans would cover the cost of the Irish and Greek bailout with some to spare. Renewables do not work. Hopefully we are seeing a process to get rid of the whole EU band wagon and return to a free trade agreement. The EU is a laggard industrially, Everything going into wind farms, Our freedom is gone, lets get it back.
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