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21 February 2012
GREEK PRIME MINISTER “VERY HAPPY” AT BEING HUMILIATED
Until last night Germany had 16 Länder. Last night it got a new Land – Griechenland.
Financial panzers from the German treasury will now oversee the Maximos Mansion, the official seat of the Greek Prime Minister, and tell him what he can do and what he cannot do.
This was all agreed last night, not in Athens, but at the headquarters of the German-dominated European Empire in Brussels.
And how did the Greek Prime Minister Lucas Papademos, an unelected career banker, react.
He said he was “very happy”.
Greece has about 11 million people. Papademos must be the only Greek who is happy at the humiliation that was heaped on his country last night by the financial barons of Northern Europe (the Germans, the Dutch, the Finns and the Austrians).
Papademos added that “today is a historic day for the Greek economy”.
He was right, in a way. It was the day that Greece waved the white flag and surrendered control of its economy to Brussels.
Blogger Zoe Mavroudi tweeted: “Every time Papademos says ‘historic day’, please replace ‘historic’ with ‘black’.”
The terms of surrender handed by Brussels to Papademos last night include the instalment in Athens of a permanent detachment of eurozone commissars with the task of supervising the Greek economy.
Retired nurse Ioulia Ioannou, aged 70, told Reuters news agency in Athens: “For the first time, I’m embarrassed to say I’m Greek”.
Talking of the planned surveillance, monitoring and supervision of Greece, the Dutch finance minister Jan Kees de Jager apparently tried to assuage wounded Greek sensibilities. According to the Guardian website, he said: “Not that the northern Europeans distrust the Greeks, or anything.”
The eurozone finance ministers agreed – in principle – to lend Greece another €130 billion. An earlier bail-out of €110 billion eighteen months ago had proved insufficient to prevent Greece defaulting on its massive debts and crashing out of the eurozone. In exchange for the new bail-out, Athens must impose ferocious new austerity measures, involving €3.3 billion of cutbacks in salaries, pensions, health and defence, on the already-hard suffering Greek population.
The deal also requires private holders of Greek debt, such commercial banks, to agree to a “voluntary” hair-cut (ie loss) of at least 53.5% of the Greek bonds that they hold. However, private bond-holders who refuse to agree to a “voluntary” hair-cut are to be given a “compulsory” one. A bill to that effect is to be tabled shortly in the Greek parliament.
Of course, to any normal rational person a “compulsory” haircut is a default. If Greece forces bond-holders to forgo more than half the money they are owed, that is a default by any definition of the term. The courts are going to have a field day with this one.
The deal is supposed to enable Greece to slash its public debt from 160% of GDP to 120.5% by 202o.
Anastasis Chrisopoulos, a 31-year-old Athens taxi driver, is not impressed by this timescale. He told Reuters: “Things will only get worse. We have reached a point where we’re trying to figure out how to survive just the next day, let alone the next 10 days, the next month, the next year.”
Protesters opposed to the bailout have been rioting in the streets for months.
But one might perhaps have expected the business community to be in favour.
Yet here, speaking about the bail-out to the BBC, is Constantine Michalos, president of the Athens Chamber of Commerce and Industry: “The funds that are coming in are not staying in Greece, are not being invested in Greece, are not here to help the Greeks get out of this crisis. It’s simply to repay the banks, so that they can retain their balance profit side.”
Blogger ‘Bradford’ took the same line in a comment to the BBC: “This is not bailing out Greece. It is saving the Euro project and bailing out French and German banks.”
The deal is expected to be rubber-stamped by tame legislators in the Greek Parliament (Boule) tomorrow.
However, it has also to get the green light next week from the German and Dutch parliaments.
And then the Greek government has savagely to deflate its economy in line with the orders it has received from Brussels.
However, as Antigone1984 said yesterday, most financial analysts appear to agree that the savage deflation imposed on the Greeks as a condition for getting this new bail-out mean that the Greek economy will not be able to grow enough to enable the country to pay off its debts anyway.
According to the Guardian website today, Brian Reading of Lombard Street Research has dubbed today’s deal a “suicide pact”. Sony Kapoor of the economic thinktank Re-Define, is convinced that Greece will soon need a third bail-out.
The eurozone ministers agreed the bail-out last night on the basis of conclusions reached by a troika negotiating the bail-out with Greece – the European Commission, the European Central Bank and the International Monetary Fund.
According to the Guardian website, Luxembourg finance minister Jean-Claude Juncker, chair of the eurozone meeting, announcing the deal, said: “This new programme provides a comprehensive blueprint for putting the public finances and the economy of Greece back on a sustainable footing and hence for safeguarding financial stability in Greece and in the euro area as a whole.”
However, a confidential report by the troika, which was leaked today to The Financial Times, appears to undercut this optimism and make one wonder how the eurozone ministers could have possibly agreed to go ahead with the bail-out.
Again according to the Guardian website, the report paints a dire picture of the Greek economy, warning that it was likely to miss its targets and predicting that Greece’s banks would require a larger recapitalisation programme.
It even admitted that Greece’s fiscal outlook had deteriorated so much that its debt-to-GDP ratio could still be 160% by 2020!
“Given the risks, the Greek program may thus remain accident-prone, with questions about sustainability hanging over it,” it added.
The final word might be given to a blogger called “The Bandit”. Commenting on the BBC website, he said: “Another day and yet another deal! It’s time for the Eurozone and all those connected with Greek lending to call it a day and face up to reality instead of continuing to pile more cash into a dead donkey. All pre-Eurozone countries existed before the Euro and they can exist again.”
The six countries signing the seminal European Economic Community Treaty in Rome in 1957 declared in its preamble that they were “determined to lay the foundations of an ever closer union among the peoples of Europe”.
An “ever closer union” can be interpreted in many ways. To the Greeks today it means a bear hug.
The Northern Bear crushing the life out of the Greek Evzone.