Today i woke up and not only has Greece yet to decide on an interim Prime Minister but that the front runner was steam rollered.
The obvious choice of Papademos was vetoed at the last minute by current deputy PM and Finance minister Eleftherios Venizelos. (He denies it but sources close to him confirm it.)
Papademos was insisting that the interim PM not only sign cheques and get the loans, but stay on to actually implement the reforms that accompany the money tranches that are being sent here to Greece to bolster the corrupt public servant based economy.
He was also rejected because there was a fear that he would actually succeed in carrying out the reforms. "Him" (and i quote the source again) "a mere technocrat actually doing the job when he isn't even trained as a politician."
(Yes - people here think that a politician is a career that one can actually train for)
This concept - implementing reforms - is anathema to the political system. They have based their whole political careers at playing 'the big man in town' dispensing favours and jobs to those whom they deem worthy enough or just want to sleep with. This is how Greece's public sector was built. Its not uncommon to find accountants in the tax office who don't know accountancy, but only got the job because they turned up to political rallies. If reforms are carried out - where will they work? All they know how to do is to go out on the streets and protest. There is another job that also demands that the worker goes out onto the streets which they are also accustomed to, but the hours are a lot later and longer.
The corrupt political system is once again digging their heels in and those on the left and the right are jubilant at the prospect of returning to the drachma. What left or right. The blancmange of political parties under the rainbow are ecstatic!
No longer will they have oversight as to where and how they spend money. In the drachma they can throw as much money as they want around. The economic situation will be so bad that people will sell their sons and daughters to a politician just so they can survive - just like they used to before Greece entered the Euro. And in the drachma, politicians can once again make people millionaires! Here have a million drachma - so what - it will only be worth 40 Euro.
But remember that. All the politicians and the political parties remember the good old days of the drachma - it was not that long ago.
Which was one of the 'good' things of the euro. It started to accustom a whole nation that there was another way to live their lives without this corruptocracy. Unfortunately the other reforms that were needed to accompany closer integration - such as reforming the Justice system etc were not implemented, not did the EU do anything about - other then sending a letter and posting it on a website to voice their disapproval.
So here i am. A graduate in economic development, having worked on EU projects promoting innovation in the developing regions of Europe and the world, having helped promote Greek businesses abroad, watching my own country being deliberately led into economic ruin because of a few politicians. I see the chasm opening up before me. I know that two years ago i opposed the bailout saying that things have to get worse before they can get better - but i never advocated a removal from the euro. Under the drachma things will be worse, but the bad practices will be reborn again - something that under the euro were slowly being done away with.
Showing posts with label Greek Debt. Show all posts
Showing posts with label Greek Debt. Show all posts
Wednesday, November 9, 2011
Wednesday, July 27, 2011
Rescue package for Greece - How about a Greek one?
By now of course you know of the rescue package that has been created for Greece. Though large, there is still a lot of work that needs to be done and Greece cannot breathe easy. Many changes - structural ones still need to be done.
While Europe dithered and bickered, economists, policy-makers and dinner ladies all came up with their own solutions. Mr Economides from the Stern Business School New York, highlighted 7 key aspects that a rescue package should cover. He writes...
"A national strategy for Greek sovereign debt needs to achieve the following:
1. Convert present debt to long term debt to avoid a default in the next two years. No matter how successful the reforms are, Greece will default if it does not convert its short term debt to long term debt.
2. Reduce the size of the total Greek debt. To pay the total amount of debt, Greece needs very fast sustained growth year after year over a fifteen years – not impossible but very unlikely. Otherwise, Greece requires a significant reduction of the total debt burden and has to focus on the way that this can be done best in the national interest.
3. Keep Greek banks afloat, liquid, and with sufficient trust to them. Greek banks have been subject to a prolonged bank run for over a year, as depositors have withdrawn large amounts. Every day that the debt problem is not solved, there is a chance that the bank run will become acute with truly disastrous consequences for the banks and the Greek economy. Such events may be triggered by the idiotic remarks of prominent Greek politicians that Greece is leaving the Euro, a Spiegel story, or practically any rumor in the Greek or foreign media or the Internet. The danger to Greek banks alone is sufficient to require the immediate solution of the Greek debt problem.
4. Improve the quality of Greek debt to be able to achieve lower interest rates. The present market rates for Greek sovereign debt, from 11% to 26%, are prohibitive for Greece. Greece cannot afford to borrow at interest rates above 4-5%. It will achieve these interest rates only if it increases the quality of the bonds. That can be done by either by buying high quality liquid collateral such as Eurobonds or by a guarantee from the European Stability Mechanism (ESM).
5. Be based on the true reality of the situation and should not expect Greece or its partners to do the impossible. In their attempt to please voters, politicians in Greece and the EU with very short horizons have often agreed on terms that are unfeasible. For example, the first aid agreement said that Greece would come back to the financial markets in 2012, even though no one believed this to be feasible.
6. Should be a comprehensive solution and not an attempt to kick the can further down the road.
7. It would be useful but not absolutely necessary for any refinancing not to create a 'credit event' that would lead the rating agencies to declare Greece in default."
His full article can be read here
While Europe dithered and bickered, economists, policy-makers and dinner ladies all came up with their own solutions. Mr Economides from the Stern Business School New York, highlighted 7 key aspects that a rescue package should cover. He writes...
"A national strategy for Greek sovereign debt needs to achieve the following:
1. Convert present debt to long term debt to avoid a default in the next two years. No matter how successful the reforms are, Greece will default if it does not convert its short term debt to long term debt.
2. Reduce the size of the total Greek debt. To pay the total amount of debt, Greece needs very fast sustained growth year after year over a fifteen years – not impossible but very unlikely. Otherwise, Greece requires a significant reduction of the total debt burden and has to focus on the way that this can be done best in the national interest.
3. Keep Greek banks afloat, liquid, and with sufficient trust to them. Greek banks have been subject to a prolonged bank run for over a year, as depositors have withdrawn large amounts. Every day that the debt problem is not solved, there is a chance that the bank run will become acute with truly disastrous consequences for the banks and the Greek economy. Such events may be triggered by the idiotic remarks of prominent Greek politicians that Greece is leaving the Euro, a Spiegel story, or practically any rumor in the Greek or foreign media or the Internet. The danger to Greek banks alone is sufficient to require the immediate solution of the Greek debt problem.
4. Improve the quality of Greek debt to be able to achieve lower interest rates. The present market rates for Greek sovereign debt, from 11% to 26%, are prohibitive for Greece. Greece cannot afford to borrow at interest rates above 4-5%. It will achieve these interest rates only if it increases the quality of the bonds. That can be done by either by buying high quality liquid collateral such as Eurobonds or by a guarantee from the European Stability Mechanism (ESM).
5. Be based on the true reality of the situation and should not expect Greece or its partners to do the impossible. In their attempt to please voters, politicians in Greece and the EU with very short horizons have often agreed on terms that are unfeasible. For example, the first aid agreement said that Greece would come back to the financial markets in 2012, even though no one believed this to be feasible.
6. Should be a comprehensive solution and not an attempt to kick the can further down the road.
7. It would be useful but not absolutely necessary for any refinancing not to create a 'credit event' that would lead the rating agencies to declare Greece in default."
His full article can be read here
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