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THE GREEK GOVERNMENT has warned that the country will almost certainly have to leave the euro if talks on securing its second bailout – which will include a major write-down of its national debt – do not result in a deal.
The second €130 billion bailout, agreed in principle last October, requires Greek bondholders to accept a 50 per cent ‘haircut’ on the value of their investment.
This is so that its mountain of debt – which is the largest in the eurozone, relative to the size of the Greek economy – can be brought under control, though it would remain high.
Talks between Greece and its creditors – who could risk being left with nothing if Greece was to default completely – are continuing, but today a government spokesperson underlined the urgency of the talks.
“This famous loan agreement must be signed, otherwise we are outside the markets, out of the euro and things will become much worse,” government spokesman Pantelis Kapsis told Skai TV.
Kapsis added that further austerity packages could be required in order to rein in government spending:
We will see what the shortfall is and it is very likely that measures will be required [...] I also don’t believe it is easy to impose new taxes, but what does cutting spending mean? To close down the public sector? There is no easy solution.
The talks are hastened by the relatively short tenure of the new prime minister Lucas Papademos, whose five-month tenure is due to expire in April.
The clock is also ticking because Greece is due to repay a €14.4 billion bond at the end of March – an obligation it cannot afford to meet unless it secures the €130 billion in new funds.
Separately today, a spokesman for the prime minister of Lithuania said the country remained determined to adopt the euro by 2014 – after its president shared concerns that the 2014 deadline was not realistic.
“The most important thing are stable finances [to meet the standards laid down by the EU] and the prime minister is sure that our country will meet them,” the spokesman said.
“We can only hope that EU will solve the problems of common currency by that time,” he added.
Additional reporting by AP
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An encouraging, if small, first step out of the shadows
Encouraging, come on get real. We take one small step forward and powers that be in europe punches us right in the face and knocks us 3 steps back against the wall.
can anyone explain to me why it is seen as an overwhelming national objective to return to the bond markets?
Do you want to live with your mom for the rest of your life. Basically
Bit like a hungover alcoholic getting into an early house.
Taking your question at face value…
The idea is that if we can get back to the bond markets, then we don’t have to borrow from the EU or IMF – and we therefore don’t have to follow their terms and conditions for it.
Naturally it would be best if we didn’t have to borrow from ANYWHERE, but in the climate we’re in we have to borrow from SOMEWHERE, and the reason we have to live under the Troika’s thumb is simply because they won’t give us the money unless we agree to follow their rules on how we can spend it.
We need to get back to spending less.
It means a hit to our lifestyles though.
Are people willing to take that?
No, they have gotten too soft.
Recent exuberance of bond markets, which has seen bond yields decline in periphery nations, would appear to be driven by Draghi’s looser monetary policies. The danger here is this inflationary approach could take on a life of it’s own and herald a new phase in the crisis.
http://mobile.bloomberg.com/news/2012-01-22/draghi-makes-euro-favorite-for-most-profitable-carry-trades-with-rate-cuts
Just posted this on another thread but I think its probably as relevant here. For those confused and distracted heres a documentary on whats actually happening : http://youtu.be/hEw7p5W-hM8
So much for the scaremongering by the dame & it’s bitchs . Bond dealers would eat chips out of anybody’s knickers, so to speak, Irrelevant of the wearers past.
i think you’ll find that this comment makes no sense! of all days today is when we prove that we will repay debt?! and the market then opens up to us…… but this somehow proves your point how??
I agree Rob your comment makes no sense at all.
Obama is sending a trillion dollar note to bail out Europe, monty burns will deliver it in the spruce goose.
did you ever see the film million pound note 1950 s explains it all
It’s a sad thing when having to borrow money is seen as good news.
We HAD to borrow before this. The news is that we CAN borrow now. I thought the article made this very clear.
:)
lol, maybe by the time those bitches mature the euro will be worth fu*k all so we will pay them back in 10000 euro notes
Kicking the can down the road. We’ll have the same problems in 2015, only difference is we’ll be deeper in debt.
How can we borrow we are shafted until 2031 we will be sold out yet again
Does that mean the department has lost that 3.6 billion AGAIN they found down the back of the sofa a while ago?
Ireland should start doing the lotto.
Love it Cairo pmpl
No, you’re hilarious Eileen.
This is very good news. Amazing how all the burn everybody crew aren’t in here denouncing the NTMA for making a deal with bondholders.
Ha ha ha …You are hillarious Donal.
So we swapped 1 bond for another , so what ! We were sold out yesterday and every day ,
I still say we should stand tall on our own take or knocks and build ourselves up as an independent
nation and not as one of the islands off the coast of Europe .
We are no way near being solvent.
Enda is just licking up to his puppet masters.
have your say