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IMF-Troika Draconian Demands Force Greece Towards Debt Default?

Politics / Global Debt Crisis Sep 19, 2011 - 02:53 AM GMT

By: DK_Matai

Politics

Best Financial Markets Analysis ArticleThe Troika -- IMF, ECB and EC -- is demanding draconian new cuts in spending and public employment from Greece as a pre-condition for resuming aid talks, including:

1. 15 austerity measures Greece must take "here and now";


2. 50,000 public-sector to be placed in a special reserve pool at reduced pay immediately and then be dismissed one year later if no jobs become available;

3. Much deeper pension cuts to be implemented than had been planned;

4. Immediate pension cuts to farmers, seamen and telephone workers;

5. Further cutbacks in public sector wages effective from October 1st;

6. Abolition of thousands of jobs in 10 government bodies and the closure or merger of another 65 state organisations by December;

7. Consider retroactively -- and with immediate effect -- rescinding all public-sector hiring that took place in 2010 and 2011; and

8. Government must sack another 100,000 public sector workers over the next two years in exchange for the next tranche of bailout money.

The Troika will not be heading to Athens as planned on Monday, and instead will be doing a teleconference, until their demands are met. PM Papandreou has had to turn his plane around, while en-route to the US, in order to preside over emergency meetings in Athens to identify new savings.

Onus on Greece

1. There is a climate of panic in the ruling socialist Pasok party that has never been seen before according to an elder of the party. He says, "I doubt that Pasok will be able to adopt such measures and the prime minister might be forced to call early elections." Antonis Samaras, head of the conservative opposition New Democracy party, warned that the Pasok government is a 'captive' of its own mistaken policy and unable to attain its targets. He said, "the only solution to today's deadlock is elections!"

2. The onus is on Greece to prove that it is delivering the budget cuts and fiscal reforms mandated by the emergency bailout loans. However, it is becoming increasingly difficult to balance the budget as the economy implodes. Deeper-than-expected recession has cut into tax receipts, leaving a bigger fiscal gap.

3. Contrary to mythical folklore, at the weekend meeting of European finance ministers in Poland Eurozone finance ministers warned Greece that it may NOT receive the next euro 8 billion tranche under its bailout agreement in October, according to senior Greek officials.

4. Germany is increasingly indicating that Greece has an alternative to staying within the Eurozone. Wolfgang Sch�uble, German finance minister, said over the weekend: �Membership in a monetary union is an opportunity, but also a heavy burden. Measures for alignment are very difficult. The Greeks must decide whether they want to bear this burden.�

5. Another round of cutbacks is likely to shift support away from the government. There are fears that further austerity measures could lead to more strikes and protests in Greece. Without fresh aid, Greece will now run out of money by mid-October. Although major bond redemptions are not due until December, lack of funds will make it difficult to pay for government services, public-sector wages and other commitments, thereby sowing mass discontent.

Conclusion

Given the circumstances, it is increasingly doubtful that Greece can meet the demands of the Troika. Will the markets finally understand that Greece has arrived at a financial cul-de-sac or are they still going to wait in vain for a miracle so that Greece can be perpetually rescued from imminent default?

What are your thoughts, observations and views? We are hosting an Expert roundtable on this issue at ATCA 24/7 on Yammer.

By DK Matai

www.mi2g.net

Asymmetric Threats Contingency Alliance (ATCA) & The Philanthropia

We welcome your participation in this Socratic dialogue. Please access by clicking here.

ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The Philanthropia, founded in 2005, brings together over 1,000 leading individual and private philanthropists, family offices, foundations, private banks, non-governmental organisations and specialist advisors to address complex global challenges such as countering climate chaos, reducing radical poverty and developing global leadership for the younger generation through the appliance of science and technology, leveraging acumen and finance, as well as encouraging collaboration with a strong commitment to ethics. Philanthropia emphasises multi-faith spiritual values: introspection, healthy living and ecology. Philanthropia Targets: Countering climate chaos and carbon neutrality; Eliminating radical poverty -- through micro-credit schemes, empowerment of women and more responsible capitalism; Leadership for the Younger Generation; and Corporate and social responsibility.

© 2011 Copyright DK Matai - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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