.BERLIN: Chancellor Angela Merkel is urging German legislators makers to approve aid for Greece worth E22.4 billion ($32bn) over three years, warning that "the future of Germany in Europe" is at stake.
Ms Merkel's cabinet this week agreed on the German contribution to a three-year E110bn EU and International Monetary Fund bailout for Greece.
It was introduced to parliament yesterday and the Chancellor said she wanted it fast-tracked for passage by both houses by tomorrow. It is not expected to meet significant resistance.
Ms Merkel said the bailout needed to be passed for "the future of Europe, and with that, the future of Germany in Europe"
The German people, who have a strong work ethic, are not happy at having to bail out the irresponsible Greeks. But they have made their bed and now have to lie in it.
The Greek crisis should have dealt a blow to those who still cling on to this harmonious ideal of European integration. If Greece has demonstrated one thing it is the fact that ‘ever closer union’ cannot effectively conceal economic discrepancies and national interests.
Many European leaders would, however, draw the very opposite conclusion. Instead of recognising the failures of the European project, they call for even more of the same. For example, French President Nicholas Sarkozy has repeatedly advocated a joint economic policy for the whole continent – blissfully ignoring that the EU is an institution in which even an agreement on the definition of chocolate can take 15 years
ITs a rediculous situation
Lending Greece money will not fix the problem it will delay the inveitable.
Having highly productive and efficient econmies and rediculous mismanaged un productive economies under the same currency is rediculous. The exchange mechanism is what stops low production companies going broke. Thie currency devalues, makes them more competitive, they sell more goods, import less and the problem gets better.
But now they cant just go kick them out unless the other EU countries take on most the debt. If they did kick them out with no remedy, the greek currency would devalue so far, so quick they would have no chance of repayment, as the debts in euros would become comparitavily massive.
So theres imo a very valuable lesson for the EU. If the remain 100% under the euro, they will have no choice for the productive countries to continue to subsidise the unproductive.
The only long term solution i see is to stop lending to the greeks. Take over thier debts and restructure the debts. Then either kick them out with a very manable debt under thier own currency, or heaqvily police thier spending and others to ensure no one goes over an agreed deficit.
But the solution is take over part of the debt, not lend money. It may be politically unpalatable, but its the only acceptable solution that will appease global markets.
It seems however that politically they are to scared to acknowledge this, or economically they are too inept to do so.
Oh so close to GFC#1 market bottom for Greece stock market. Next stop??
Oh so close to GFC#1 market bottom for Greece stock market. Next stop??
Does anyone know of any companies worth buying there?
Surely this would be the time to buy
Haha!
You sure have a wicked sense of humour billv.
haha
I'm trying to think outside the square.
Do you believe that the floor is the limit?
You could be right but I'm thinking there would be some companies of value.
Ofcourse I'm not talking about their banking sector
Greece's main industries are tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum. Greece's GDP growth has also, as an average, since the early 1990s been higher than the EU average. However, the Greek economy also faces significant problems, including rising unemployment levels, inefficient bureaucracy, tax evasion and corruption.
In 2009, Greece had the EU's second lowest Index of Economic Freedom (after Poland), ranking 81st in the world. The country suffers from high levels of political and economic corruption and low global competitiveness relative to its EU partners.
Extending the maturity of outstanding debt -- re-profiling -- would relieve some of the pressure surrounding the 40 billion euro repayment of maturing Greek debt and coupons in 2012, buying time for Athens to stabilize its finances, but without reducing the eventual burden.
"Re-profiling private sector obligations, i.e. Greek government bonds, buys them time but doesn't obviate the fact that they are fundamentally insolvent," said Rabobank strategist Richard McGuire.
NEW YORK, May 13, 2011 (BUSINESS WIRE) -- International investors view a sovereign default by a euro-area nation as more likely than not with more than four-fifths (85%) betting Greece will eventually fail to pay off its debt.
Eighty-five percent of those surveyed this week said Greece probably will default, with majorities predicting the same fate for Portugal and Ireland, which followed Greece in seeking European Union-led bailouts, a new Bloomberg Global Poll shows. The outlook for all three countries deteriorated since January.
Greece owes $110b to banks which it can't repay. The banks want the government to basically slash and burn the the economy and sell off the remainder at bargain prices to get their money. The people and the country can go hang.
The Greek people don't want to be slashed burned and sold off in the fire sale. They simply want to write off the debts and live happliy ever after... If they do that the effect on the European bank system and then the world economy would be at least as bad as GFC 1 and probably much worse. Given that almost all governments are up to their ears in debt (particularly after rescuing the banks after GFC 1) it's hard to see how our financial system could continue in it's current form.
For the longer explanations check out The Guardian article referenced and the other stories that come up on the page.
http://www.guardian.co.uk/world/2011/jun/15/greece-prime-minister-george-papandreou?intcmp=239
http://www.guardian.co.uk/business/2011/jun/16/greek-debt-crisis-key-questions-answered?intcmp=239
The real question in my mind is how will this all affect the australian share market?
Is it time to bail on all shares and let things settle down?
I've been through the GFC and am still holding some wounded stocks, i don't wish to go through a similar thing and be nursing my wounds for years to come...
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