Monday, February 13, 2012

Nigel Farage on Greece. O Farage για την Ελλάδα.

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ΝewsIt.gr: Οδόφραγμα Πανεπιστημίου

The eurozone crisis explained in 5 simple graphs

Governments have collapsed. Bailouts have run into the hundreds of billions of euros. Greece is drowning in debt, Italy ousted longtime leader Silvio Berlusconi in a bid to claw its way out, and Spaniards rejected the ruling Socialists, hoping that political change might spare them the woes of their neighbors. Still, the two-year debt crisis builds. How did the eurozone get here?
The graphics below paint part of the picture: untaxed shadow economies, low productivity, and deficit spending. While deficits have been curtailed significantly since 2009 due to austerity measures, some see deeper systemic problems.
Take Greece. "For 10 years, investors basically believed that Greece was Germany," says Jacob Kirkegaard, of the Peterson Institute for International Economics in Washington. But, he says, Greece is "fundamentally a corrupt, dysfunctional government that is unable to raise enough tax revenue to pay for all of its expenses." Then there's Spain. The size of its debt relative to its economy is a manageable 67 percent, but sluggish growth undermines investors' faith that it can repay loans. Those who lost money in Greece are in no hurry to lose more in Spain.
- Ariel ZirulnickStaff writer

The Greek debt conundrum, explained

The Greek parliament will vote on further austerity measures Sunday – the latest effort to alleviate a crisis that has careened between an EU bent on austerity and a resistant Greek public.

 

Protesters shout anti-austerity slogans outside the Greek Parliament in Athens, Friday, Feb. 10. Thousands took to the streets of Athens as unions launched a two-day strike against planned austerity measures on Friday, a day after Greece's crucial international bailout was put in limbo by its partners in the 17-nation eurozone.
Petros Giannakouris/AP



Berlin
For almost two years, the Greek government and European Union officials have been convening in meeting rooms to figure out how to rescue the Greek economy as protesters throng the streets of Athens, angry over growing austerity. Meanwhile, the possibility of a default looms.
Why is the Greek economy in trouble?
Greece has very high sovereign debt – in 2011 the state owed around €350 billion ($461.6 billion), or 160 percent of GDP, the highest rate in Europe. It has also lost the trust of private investors – it can’t borrow anymore to meet its obligations.
When Greece joined the eurozone in 2001, it misreported its real level of public borrowing in order to meet the entry guidelines. It got access to cheap capital, because the euro offered  much lower interest rates than the drachma. Money poured into the country and wages, particularly in the public sector, rose significantly, although at the same time tax evasion and corruption were endemic.
In 2009, newly elected Prime Minister George Papandeou revised the budget deficit figures, implying that his predecessors had "cooked the books." Greece's credit ratings started to slide. In the same year, the Greek government estimated the size of the black market, the untaxed economy, to be about 30 percent of the declared economy.
In 2010 Greece’s debt rating was lowered to “junk” status and the interest rates on Greek bonds rose to a level that made borrowing unsustainable, requiring Greece to seek international help from the European Union and International Monetary Fund. The country was told that it had to undergo severe budget cuts and tough austerity measures – a cure, some critics say, that has become part of the problem.
“Greece is trying to massively reduce its public borrowing without anything to offset these measures, like [devaluing] the currency,” says Simon Tilford, Chief Economist at the London-based Centre for European Reform. “So the cuts in spending become self-defeating because the economy is contracting faster than they can implement cuts.”
Could Greece go bankrupt?
In a sense, it already has. “Under no plausible scenario could Greece service its public, and, for that matter, its private debts,” says Mr. Tilford. “It is fair to say that, yes, Greece is insolvent.”
For months now, the Greek government has been negotiating with its private creditors about the size of a "haircut," a debt forgiveness that the EU, the European Central Bank (ECB) and the IMF have demanded before they give more financial aid to Athens. A restructuring of Greek debt – the deal negotiated at the moment foresees a write-off of about 70 percent – amounts to what is referred to as an orderly default.
But the deal hasn’t been finalized yet. Some private banks and hedge funds oppose it, possibly in hopes of getting back a larger share by holding out or on cashing credit default swaps, insurance policies against default.
On March 20, Greece needs to pay back €14.5 billion ($19.1 billion). If it does not get fresh money until then, it will have to declare bankruptcy – a “messy” default.
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OWS plans massive spring demo

Hundreds of thousands rally in Portugal against austerity

Hundreds of thousands protested in Portugal Saturday against austerity measures ahead of next week's talks with international creditors, with unions vowing to keep up the pressure.


Officials from the so-called Troika -- the European Union, European Central Bank and the International Monetary Fund -- will next week evaluate progress on the country's bailout programme.
Demonstrators arrived in Lisbon from across the country in the rally described as one of the country's biggest in three decades.
Many were brandishing banners such as "The struggle continues" and "No to exploitation, no to inequality, no to impoverishment."
The CGTP union which called the march estimated 300,000 people took part, while police would not give any figures, in line with their usual practice.
"We are convinced that it is one of the biggest demonstrations in the last 30 years," said Armenio Carlos, general secretary of the CGTP, in a speech at the end of the protest in the landmark Praca do Comercio (Commerce Square).
He launched sharp attacks against the bailout conditions, calling them "a programme of aggression against workers and against the national interest."
"Austerity did not create wealth. The country needs the rope around its neck to be removed so that it can breathe, live and work," the unionist said, calling for a revision to the minimum wage of 485 euros gross.
"Net salary is at 432 euros, while the poverty line is at 434 euros, and that concerns currently ... 400,000 workers" in Portugal, he said.
He vowed that protests will continue in coming weeks, and that fresh demonstrations will be held across the country on February 29.
In exchange for a loan of 78 billion euros ($103 billion) from the EU and the IMF last May, Portugal agreed to sell public companies as well as implement labour reforms such as introducing shorter holidays.
However, many complain their lives have got worse.
"My purchasing power has fallen, young people are unemployed, companies are closing one after another. I don't see a way out," said a Lisbon retiree.
A former textile worker who has been unemployed for three years said: "Today I have to live with a pension of 419 euros, but I pay rent of 150. It's unsustainable."
Separately, about 50 people from northern Portugal's Valadares ceramic industry also demonstrated before the Prime Minister Pedro Passos Coelho's official residence on Saturday.
"Yes to jobs, no to unemployment," chanted the workers, who handed a letter detailing their complaints to a policeman guarding the property.
"We cannot continue to work without pay," they shouted.

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