Greece – the Country we should be studying for what NOT to do


Seeing how the International Financial market has led nations to be on one knee and some with seemingly no hopes of getting back on their own two feet; Greece stands out today as THE example of what NOT to do to get yourself out of the hole you were thrown into.

Open you browser and search for Greece and it’s financial woes and you will understand.. A bit ago we posted What happens when a country Defaults on their Foreign Debt or gets a Bailout to avoid Foreclosure? and ‘Meddlers’ upset Greek sell-offs both articles describe the dire situation in which Greece finds itself after being sunk in the mud by International Finance borrowing from the EU, ECB, IMF and other such institutions; add to that the numerous bailouts and debt restructuring that only keep adding on more debt to an already broken State.

Greece is the perfect Example of how Belize or any other nation should NOT be going about fixing their economic issues. As I stated, a quick Google search and an open mind will show you the reality we are all living in and the reasons nations are falling to their knees with little to no hope of standing back up and the light you think you see is just an illusion, a flashlight held in front of you by the same people that put your nation in the financial state of decay it is in today, the world financial groups.

In what happens when a country defaults on a foreign debt you see that Greece has now become a slave nation with outside bodies setting up shop and running the nation, they are literally OWNED by these bodies and the people have no say about it:

The price you pay

  • The EU, ECB and IMF places permanent monitors on the ground, in Greece. Basically they are permanently setting up shop inside of Greece and therefore infringing on the sovereignty of Greece.
  • A separate account will be setup to ensure that priority is placed on paying those debts thereby placing them above the Government working in the best interest of the country and it’s people.
  • The Greek Government will no longer have a say in how it manages its budget and honestly, the country. The parties involved will handle that for them.
  • Minimum wage is to be slashed by 22%, pensions between now and 2015, 150,000 public sector jobs will be obsolete, meaning that many people without jobs.

In Meddlers, we see that the Government was at a point of selling off national assets to make back some money and an analyst saying that “the assets represented potentially worthwhile deals.”

 

Fast forward to a more recent time and you can read for yourself online all the crazy things happening in Greece..  These stories are the most recent ones….

Greek unemployment hit new record in May of 27.6 pct

  • May jobless rate climbs to 27.6 pct, up 16.3 pct vs May 2012
  • Youth jobless rate at 64.9 pct – Data showed that those aged 15 to 24 remained the hardest-hit as the jobless rate for this age group registered.

ATHENS, Aug 8 (Reuters) – Greece’s jobless rate hit a new record high of 27.6 percent in May, official national data showed on Thursday as the country staggers under austerity linked to its international bailout.

Record joblessness is a nightmare for Greece’s two-party coalition government as it scrambles to hit fiscal targets and show there is light at the end of the tunnel after years of unpopular tax rises and cuts to wages and pensions.

Unemployment rose to 27.6 percent from an upwardly revised 27.0 percent reading in April, according to data from statistics service ELSTAT and was more than twice the average rate in the euro zone which stood at 12.1 percent in June.

The latest reading was the highest since ELSTAT began publishing monthly jobless data in 2006.

Greece and Spain have been hit with similar levels of sky-high unemployment, with latest Eurostat data showing seasonally adjusted unemployment in June at 26.9 percent for Greece and 26.3 percent in Spain.

Spain itself does not publish monthly jobless figures directly comparable to Greece’s own data, but Madrid’s quarterly data shows its rate peaked at 27.2 percent in the first three months of this year.

“Increased employment in tourism cannot offset the restructuring in many sectors of the economy and continuing weak demand,” said economist Nikos Magginas at National Bank.

However, he said improving exports and a strong tourism season would help to contain the further rise in joblessness expected this year.

Tourism accounts for about 17 percent of Greece’s economic output and one in five jobs. Revenues are seen rising 10 percent in 2013, to 11 billion euros, on the back of an expected record 17 million visitors.

Data showed that those aged 15 to 24 remained the hardest-hit as the jobless rate for this age group registered 64.9 percent.

With the economy suffering its sixth straight year of recession and 1.38 million people officially without jobs, the pain is felt across the board. Borrowers fall behind on loans and fewer workers pay into pension funds.

A turnaround will take time to be felt in the labour market even if recovery sets in next year as authorities project. The central bank projects unemployment will peak at 28 percent before it starts to decline in 2015.

Scrambling for ways to ease the pain for Greeks, Athens wants to tap about 170 million euros of EU regional development funds to launch job programmes and has asked the European Commission to approve the move.

 

Greece stuck in recession, bailout targets at risk

(Reuters) – Greece’s recession eased slightly in the second quarter but not nearly enough to boost tax revenues to levels the government needs to meet its bailout targets, figures showed on Monday.

The data follows a magazine report saying Germany’s central bank saw risks to the rescue package aimed at keeping Greece afloat and expects the euro member to need more aid in 2014 after it scraped through the last aid review.

As Europe’s largest economy Germany has funded a chunk of the bailout but there has been resistance from German voters who are also facing tight budgets. The subject of Greek aid has played into the campaign for elections next month.

The Greek data showed the economy shrank at an annual pace of 4.6 percent in the second quarter, according to the country’s statistics agency ELSTAT.

The economy has slumped 23 percent in real terms since 2008, hurting tax revenues and making it hard to meet targets agreed with international lenders who backed the 2010 bailout.

The figure was slightly better than economists’ average forecast for a 5 percent contraction, but that will be cold comfort for Greeks, who are facing a sixth consecutive year of recession in 2013, as austerity measures have crippled private consumption, the main engine of its economy.

The slump, one of the biggest peace-time recessions recorded in history, is undermining the ability of firms and households to pay taxes, separate budget figures showed on Monday.

Gross tax revenues lagged targets by about 1.5 billion euros ($2.14 billion) in the first seven months of the year, hit by record unemployment of nearly 28 percent and a wave of corporate bankruptcies.

The government managed to plug the budget hole by cutting spending, withholding tax refunds, freezing public investment and cashing in a much higher amount of European Union subsidies than initially planned.

But Athens will not sustainably fix its finances unless it boosts tax revenue, the EU and the International Monetary Fund have said.

Greece may fall short of its budget targets this year because a large part of planned tax revenues has not been cashed in yet, lenders warned last month.

Athens aims to have a primary budget surplus, before interest payments, in 2013, to qualify next year for additional debt relief promised by its euro zone partners.

SILVER LININGS

However, economists said the second-quarter GDP figures may show that the worst of the recession may be over.

“Recession will decelerate in the third quarter, helped by tourism, and in the fourth, helped by base effects,” said Dimitris Maroulis, an Athens-based economist with Alpha Bank.

Manufacturing expanded at its fastest pace in five years in June and tourism revenues in May also jumped more than expected.

“That means that recession will not exceed 4.2 percent this year,” Maroulis added.

That would be in line with a current forecast by the government and its lenders, who have provided Athens with about 240 billion euros in bailout funds since mid-2010.

The Greek economy is expected to recover at an anemic pace of 0.6 percent next year and accelerate after 2015.

The forecasts help determine the country’s future finance needs and whether Athens might need even stricter austerity to meet its bailout targets.

Greece, the EU and the IMF will update growth forecasts when they meet for a round of bailout talks in September and October.

The outcome of these talks will determine whether Athens will needs to adopt harsher austerity measures to keep receiving bailout funds — a prospect which its fragile coalition government has repeatedly rule out.

Positive growth rates and a potential primary surplus would allow Athens to return to bond markets, from which it has been excluded for four years, Greece’s finance minister Yannis Stournaras has said.

The Greek statistics service does not provide seasonally adjusted figures or data on quarter-on-quarter changes.

 

Bundesbank sees new Greece bailout in 2014

BERLIN (San Diego 6) — German news weekly Der Spiegel reports that the country’s central bank believes international creditors will have to agree a new bailout for Greece by early next year. The move would come months after Germany’s Sept. 22 general election. Chancellor Angela Merkel’s conservative government has been at pains to appear firm on Greece’s international bailout, which is unpopular with many Germans. Der Spiegel reports Sunday that the Bundesbank told Germany’s Finance Ministry and the International Monetary Fund that a recent 5.7 billion euros ($7.62 billion) payment to Greece was approved “due to political constraints.” The central bank reportedly also described the risks of the current rescue program for Athens as “unusually high” and the performance of the Greek government as “hardly satisfying.” A Bundesbank spokeswoman declined to comment on the report.

 

This actually makes me worry.. If the country is already inundated with debt and keep asking for help, how does more loans or bailouts help? Make you wonder who is actually profiting from this situation no?  I read somewhere the there is more money to be made from default loans than from current loans, will dig around and create a new article once I do.

IMF Says Greece Needs More Money

(greece.greekreporter) Two bailouts of $325 billion haven’t been enough to slow Greece’s economic decline, even with big pay cuts, tax hikes and slashed pensions so the country will probably need more money and debt relief from European countries, according to a report by the International Monetary Fund staff.

The IMF, along with the European Union and European Central Bank makes up the EU-IMF-ECB Troika that is putting up the money. The report resurrects the idea that Greece will yet have to impose losses on the lenders the same it did when it hit private investors with 74 percent cuts in their bond holdings two years ago.

In a report discussed by the IMF board this week and released on July 31, the fund’s staff said 4.4 billion euros ($5.84 billion) of financing has yet to be identified next year under the rescue package it finances with the Eurozone. If Greece walks away from some of its public debt, the bill will have to be picked up by the taxpayers in the 16 other Eurozone countries.

In addition, a December commitment by Europeans to provide further debt relief for Greece may require agreeing to measures as early as 2014-2015, provided Greece meets its budget targets, the IMF staff said.

“If investors are not persuaded that the policy for dealing with the debt problem is credible, investment and growth will be unlikely to recover as programmed,” according to the report. “The commitment of Greece’s European partners to provide debt relief as needed to keep debt on the programmed path remains, therefore, a critical part of the program.”

The IMF’s reminder to Europe comes as Greece’s financial fate has become entwined with German politics, with Chancellor Angela Merkel campaigning for a third term on the promise Germany won’t write off any of the loans made to Greece since the debt crisis broke out almost four years ago. Most of Greece’s debt is now held by the Europeans and the IMF after investors took part in the biggest debt restructuring in history last year.

Under the December agreement, the target is for Greek debt to fall to 124 percent of Gross Domestic Product in 2020, from a peak the fund now sees at 176 percent of GDP this year, but none of the previous targets have even been close to being met and are constantly revised.

“It’s not possible to speculate right now on what the actual amount will be, but it’s true our projection right now implies that there will be a need for some relief in order to get to 124 percent,” Poul Thomsen, the IMF mission chief to Greece, said, raising the specter that the lenders may yet have to give in and write off more of Greece’s debt which has been in a freefall for years.

According to the report, that relief could be equivalent to 4 percent of GDP in 2014-15, based on current projections. While budget tightening is advancing and the fund sees Greece’s economy returning to growth next year, IMF staff expressed worries about the “piecemeal implementation of structural reforms” in the country. A privatization program is behind schedule as is progress in liberalizing regulated professions, they said.

The fund’s board of directors earlier this week approved the release of 1.7 billion euros ($2.25 billion) under the second joint bailout with Europe, helping replenish the country’s coffers through the German elections in September. European creditor countries approved disbursement of a 2.5 billion-euro ($3.32 billion) installment last week.

The fund requires seeing a 12-month guarantee of Greece’s financing to continue its own lending. While that’s the case now, a gap will open in August 2014 and a response on how to fill it should be identified by the time Greece’s creditors do the next review of the program, according to the report.

“Awareness of the risks of the program going off track seems to be increasing and one cannot but notice an undertone of despair in staff’s repeated calls on the Greek and the euro-area authorities to stand by their commitments,” Paulo Nogueira Batista, who represents Brazil and 10 other countries on the IMF board, said in a statement prepared for the meeting. He said he abstained on the proposed measures this week, including the disbursement.

Poul Thomsen, the IMF’s mission chief in Greece, said he was confident the recession would end soon and that Eurozone countries would make good on their pledge to provide Greece with additional debt relief after Athens balances its state budget.

“I have no doubt we will see a bottoming out of recession next year, early next year. I am still confident,” Thomsen said. The IMF also predicted the bailout program would fall short of Greece’s needs by 4.4 billion euros ($5.84 billion) next year and by 6.5 billion euros ($8.63 billion) in 2015.

The IMF — describing the expected shortfall as a “test of European support” — said that finance ministers from the 17 euro countries have already begun discussions on plugging financing gaps.

The Greek government, meanwhile, said it was finalizing a credit system for its new transfer-and-firing mobility scheme in the public sector — taking qualifications, work assessment and experience, as well as family status and other “social factors” into account — to meet its target of firing 15,000 workers on the state payroll by the end of next year.

 

Enhanced by Zemanta

About FiWeBelize

FiWeBelize is dedicated to providing quality information to our visitors. We aim to provide an open forum where people can have a voice without censorship while maintaining respect for the opinions of others. Find us on Google

Share your thoughts ...

This site uses Akismet to reduce spam. Learn how your comment data is processed.