Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
WESTERN DIGITAL WDC Stock Trend Analysis - CHIA! - Risk 1 - 23rd Jun 21
AMC Is the Best-Performing Stock in America: Don’t Buy It - 23rd Jun 21
Stock Market Calling the Fed‘s Bluff - 23rd Jun 21
Could Bitcoin Price CRASH Target A Bottom Below $7500? - 23rd Jun 21
Bitcoin and cryptos: Your 'long-term investment'? - 23rd Jun 21
Unlocking The Next Stage Of The Hydrogen Boom - 23rd Jun 21
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Greece forced to swallow EU's bitter pills

Politics / Global Debt Crisis Sep 22, 2011 - 12:55 PM GMT

By: Pravda


There are two noticeable trends in the story of public debt of Greece. The first is the intent of the EU to save the financial system of the country with loans - the only aid of the capitalist economy. The program is accompanied by unprecedented pressure on the Greek government that is forced to take a series of commitments on economic reform.

Another trend is an attempt by the Greek authorities to somehow improve the situation with the budget at the expense of trivial savings, regardless of the growth of the country's social unrest. The long-term effects of the "belt-tightening policy" may be severe.

Technical default is expected in the event that the next (sixth) installment of the international loan is not received. The total amount of promised aid from the EU amounts to 110 billion euros. The allocation of the last tranche is surrounded by a number of tough economic conditions. It is the imposition of additional taxes and charges to the budget and introduction of austerity measures.

The Greek government has repeatedly taken various painful steps aimed at creating budget savings. In particular, it was decided to lay off another 20,000 civil servants. Meanwhile, the unemployment rate is nearly 17 percent. However, in the near future merger and closure of over 100 public sector organizations is planned.

To increase revenues to the Treasury, a new tax on real estate is introduced that will supplement the budget for another two billion euros. Furthermore, privatization of state assets worth about three billion euros must be carried out.

Read article: Russia next on list after Greece?

Despite some steps taken by the Greek authorities, the IMF delegation demonstrated its dissatisfaction with the fact that the originally agreed upon conditions were not met in full. In early September, the European Commission inspectors, the ECB and the IMF broke off negotiations and left Athens, which caused considerable anxiety of investors who are waiting for the results.

Greece has enough money in the budget at a maximum until mid-October. Later, media reported that Greek Prime Minister Georgios Papandreou refused to go to the US for a round of negotiations with the head of the IMF, Christian Lagarde, citing the seriousness of the debt crisis in the country.

While the position of the Greeks is becoming increasingly worse, Western experts continue to puzzle over possible ways to save the euro without destroying Greece. For example, Germany suggested an idea of ​​returning to the country's national currency - drachma. Some German politicians propose to make Athens abandon the euro to avoid the serious consequences of a possible default of the Greek for the Eurozone. The CSU party chief Horst Seehofer is among those who do not rule out this opportunity.

However, the return to the drachma, in the opinion of the majority of Greek experts, would be an economic suicide. In any case, the bulk of investors have no illusions concerning further development of the situation around the Greek debt. Few believe in the ability of Athens to comply fully with the terms of the loans provided by the EU. The economy as a whole does not give much hope for the resumption of growth.

It should be remembered that the membership of Greece in the EU is not only an economic but also a political issue. EU countries will have to continue to save Greece at the risk of worsening their own debt issues. The logic of any union is pushing to its expansion, while Athens' exit from the Eurozone, by contrast, would be a troubling symptom for the entire EU. Therefore, before expanding of the European Union any further, countries like Germany and France will have to make every effort to prevent a collapse of Greece.

In general, the position of the leading European states on the Greek debt issue remains quite rigid. The terms of the next tranche are still clearly related to the observance of austerity measures. Now the Greeks have to participate in a new round of negotiations, during which the European Commission, ECB and IMF will have to decide on a loan.

The insistence on the adoption of the austerity measures continue to be heard against the background of the deteriorating socio-economic situation in Greece. However, the unrest and strikes that gripped the country, no matter how ambitious, did not seem to frighten the Europeans.

In Greece, few people believe that mass layoffs will have a positive effect on the economic recovery. On the contrary, such measures may lead to the aggravation of the crisis. Yet, the logic of the European financial system does not allow "concessions" to the Greeks who live beyond their means. In these circumstances, the Government of Papandreou has no choice but to save on the needs of the population to get another batch of "bitter medicine" from the EU for the country's budget.

Yuri Sosinsky-Semikhat

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.

Pravda Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in