http://www.spiegel.de/wirtschaft/soziales/griechenland-ezb-und-iwf-plaedieren-fuer-radikalen-schuldenschnitt-a-869128.html
Hamburg - Still waiting for Greece to the next auxiliary billion. At their recent meeting were able to finance ministers of the euro area countries do not agree on an approach - a cliffhanger for the indebted country . A solution now, the representatives of the euro group to advise on Monday again.
ECB and IMF hold this step, however, is inevitable in order for Greece in the foreseeable future can stand on its own, even if it will not come to a decision this week.
"Everyone needs to check his red lines"
The federal government rejected the proposed waiver. Instead, Berlin sets out the Greeks to reduce interest rates for emergency loans. However, the recent rescue talks of the euro countries have failed mainly because Finance Minister Wolfgang Schaeuble at the behest of German Chancellor Angela Merkel (both CDU) had to withdraw an already committed widespread interest remission again.
Merkel was afraid to push through such a move in the ranks can not, it seems too large, the resistance of the Euro-skeptics in the EU to be. EU Monetary Affairs Commissioner Olli Rehn therefore appeals to the Euro-governments - but Germany in particular - a political commitment to save Greece, also redeem actually: "Everyone needs to check his red lines."
Before the meeting of European finance ministers warned of the FDP parliamentary leader Rainer Brüderle against Athens to meet far. "I am still of the opinion that it is not the time axis may extend arbitrarily," he said, "Welt am Sonntag". With no real progress in the reforms there should be no other help.
Euro crisis countries are catching up
The reforms in the other European states in crisis an impact: The union near Institute of Macroeconomic Research (IMK) in a study analyzing the labor cost, ie how much salary, including wage costs, for a product or a service unit for each country must be paid. Unit labor costs arise if the absolute labor costs are set in proportion to productivity.
After SPIEGEL information shows the IMK-study how much the labor costs declined in recent years: 2.2 percent in Portugal and 3.5 percent in Spain, 13 percent in Ireland. This decline resulted in unit labor costs since the establishment of monetary union in 1999 in the three countries on average zulegten only two percent per year. This corresponds to the inflation target of the ECB.
The study also shows, however, that the increase in Germany was far below the inflation target. "If we want to correct the imbalances within the euro zone, it is not enough that the crisis countries to reduce their costs," says study author Gustav Horn. "Then the wages need to rise sharply in this country."
http://dareconomics.wordpress.com/2012/11/24/sustainable-greek-debt/
Sustainable Greek Debt?
The German-led eurozone’s latest fudge to unlock Greek aid without anteing up more funds is raising the debt sustainability target from 120% to 124% of GDP by 2020.
Whichever number you pick, it is essentially meaningless for two reasons. First, a debt to GDP ratio that high is not sustainable. Greece is a relatively poor country and does not possess the economic power to support such a high debt ratio.
Second, the number is a forecast, and it is based on unrealistic economic growth scenarios created by the troika.
Since the crisis started in 2009, the troika has assumed that the Greek GDP slide has reached the bottom in the current year and forecasts a rise starting immediately at the time of the forecast. Every year, it is wrong, and in order to make it appear that the Greek debt reduction program is on track the troika creates more robust recovery scenarios as evidenced by successively steeper slopes of GDP growth.
If we use a more realistic assessment of Greece’s future growth prospects pushing a return to mere stagnancy by 2016, Greece will never achieve even a 124% ratio by 2020. The numbers are manipulated to promote Germany’s agenda of doing just enough to prevent a Grexit while not actually helping the Greek people.
Sure, the political class is receiving money to hand out to favored classes and the banks are being bailed out, but in the meantime social spending on health, education and public sanitation are being cut.
All you need to know about the current state of the Hellenic Republic is that the suicide rate has increased 37% since the onset of the crisis and malaria has returned after being eradicated in 1974 due to the mosquito spraying budget being cut.
The only reason this disaster is allowed to continue is because the Greek people are more afraid of leaving the euro than they are of the effects of a continued depression. Eventually, they will reach a desperation point where the fear of continuing the present outweighs the fear of the unknown. When that threshold is reached, they will elect one of the parties promising to redo the bailout. Only then, will the country begin healing.
http://www.zerohedge.com/news/2012-11-24/greek-debt-buyback-boondoggle-questions-answered
The Greek Debt Buyback 'Boondoggle' - Questions Answered
- Barclays
- default
- European Central Bank
- fixed
- Germany
- Greece
- Gross Domestic Product
- International Monetary Fund
- Price Action
- Reality
- Reuters
- Sovereign Debt
The last few weeks have seen the market increasingly price in the probability of a Greek debt buyback. Following this week's 'failed' Eurogroup meeting that chance has risen even more as leaked details suggest a debt-buyback is becoming the corner-piece of the 'new' deal. The leaking of details (and anticipation by the market) has driven GGB prices up and reduced much of the benefit of the buyback 'boondoggle' and as Barclays notes, "even if the debt buyback enables the IMF and EU leaders to come to an agreement, leading to a Greek resolution in the near term, in the medium-to-long-term Greek debt is not sustainable on realistic macroeconomic assumptions without notable outright haircuts on official EU loans to Greece. Therefore, a successful debt buyback might resolve the Greek debt sustainability issue on paper in the troika report but it will most likely not resolve it in investors’ minds." While there are 'optical' advantages to the buyback, the four main disadvantages outlined below should be irksome to the Greeks - which is critical since, as ekathermini notes, a senior finance minister commented "God forbid we should not be close to an agreement on Monday."
The full piece is worth a read (and Bulo/Rogoff's details on sovereign debt buybacks) but for those pressed for time between holiday shopping stores - read sections 4, 6 (Optics), 7 (The Disadvantages) & 8 (Reality).
Via Barclays:
1. Why has the buyback programme gained traction recently?
There have been months of discussion between Greece and the ‘troika’ (the European Commission, IMF and ECB), aimed at adjusting the current Greek programme such that the next €44bn disbursement could occur. Furthermore, all of the troika’s additional reform requests have been approved by the Greek parliament. As such,the focus is no longer on the relationship between Greece and the troika, but rather, it has shifted to disputes within the troika, between the IMF and European leaders, on how to fill the financing and more importantly the debt sustainability (DSA) gap. A debt buyback is now expected to form an important part of the latter.
2. What progress is being made on the dispute between the IMF and European leaders?
The primary disagreement between the IMF and European leaders is on how to fill the DSA gap. Under the new 2y extended Greek programme, the IMF still wanted to see Greek debt reduced to 120%, with additional adjustments from 144% of GDP in 2020 without any adjustments. In the absence of outright haircuts on EU loans to Greece, this is a very difficult task to achieve.However, European leaders, particularly in Germany, insist that politically and legally, outright haircuts are impossible to accept at this stage. After this week’s troika meetings,it seems that the dispute between the IMF and EU leaders has eased somewhat. Reuters reported on Friday morning that the IMF has increased its debt-to-GDP target for Greece to 124% by 2020. Moreover, recent comments from Schaeuble and Weidmann have not ruled out future compromise in the form of haircuts on EU loans, depending on the progress of the Greek government reform implementation. In the meantime, EU leaders are aiming to hit the new IMF DSA target level by 2020 with a mix of measures, such as the ECB giving up profits on its SMP and investment portfolio holdings, reduced interest on EU bilateral loans to Greece and a debt buyback programme. We summarise in Figure 1 ourbest estimates of how the troika is expecting to fill the financing and DSA gaps under the new Greek programme. Note that some DSA gap still remains to be filled, according to our estimates.
3. What size of buyback programme is under consideration?
This week’s Eurogroup meeting on Greece implied that Europe is willing to contribute a further €10bn from the EFSF to the extended Greek programme. And the cash needed for the buyback is planned to be the same amount. This suggests to us that this new EFSF money will most likely be used for the buyback execution. While these new funds should constitute the bulk of the buyback cash needed, some of the ECB profits can also be used to contribute too. The outstanding size of the post PSI bonds is €63bn. An average purchase price of 25, 35 and 50 cents on the euro implies €40bn, €29bn and €20bn of nominal purchases with 15pp, 9pp, and 5pp of GDP debt reduction, respectively.
4. What form will the buyback take, and is it feasible to accept a 10pp of GDP debt reduction from it?
So far, there has been no official information on the debt buyback. It could be a fixed price offer or a competitive reverse auction. The fixed price offer should give all investors the same price on a voluntary basis. In order to achieve a reasonable level of debt relief, we think this price should be no more than 35cents on the euro. Currently, we estimate around €20bn of the €63bn outstanding post PSI Greek bonds are held by the Greek banks and other domestics. These domestic investors, particularly the banks, will most likely have an agreement with the government and fully participate. The rest of the Greek bondholders are probably international investors such as banks, hedge funds, real money managers, insurance and pension funds. The current Greek strip average price is 28. While some hedge funds might still not find a 35cent fixed price deal attractive, as long as domestic investors fully participate, it is quite possible that nominal purchases ultimately come close to €30bn.
Alternatively, the Greek Treasury might hold a reverse competitive auction, in which domestic investors and banks are indirectly encouraged to accept a 30cent price whilst international investors would sell their holdings of up to €10bn at prices up to 45cents on the euro, which can still achieve an average purchase price of 35cents on the whole auction.
However, we think this competitive reverse auction might lead to political issues later on, as there could be questions asked over fair treatment, in the sense that domestic private investors would have to compromise to the benefit of other investor groups, As such, we believe the probability of a competitive reverse auction is very low, making the former fixed price option much more likely.
5. Can the collective action clauses (CACs) be used as part of the buyback?
With the aim of achieving the highest possible debt relief for Greece, it seems that politicians have also discussed using CACs as part of the buyback offer to force a low price deal on all private investors. Given the PSI involving private investors early in the year,we believe a second coercive debt buyback could have a very negative impact on sentiment. Indeed, this option seems to have quickly lost favour with officials. As such, we see the probability of coercive debt buyback via usage of CACs as very low. In any case, a credible threat from using CACs will be much lower now as the PSI bonds are under international law, whilst pre-PSI bonds were under domestic Greek law.
6. What are the benefits of the debt buyback?
Optically, the debt buyback provides debt relief, in the order of 10pp of GDP if an average purchase price of 30cents on the euro can be achieved. It will also provide very limited financing relief of €2.4bn over the new programme period (until end of 2016) via the interest payment cancellation on the potential €30bn nominal debt bought (the coupon on this debt is 2% flat across the Greek strip). Most importantly, if executed successfully it will most likely help to form some common ground between EU leaders and the IMF to move on with the Greek issue in the near term.
7. What are the disadvantages?
Previous debt buybacks show that secondary market prices rally significantly up to the actual debt buyback offer. As a result, by the time the buyback occurs, debt relief due to price action is much lower than originally expected. As such, we think a large part of the rally in Greek bonds that has occurred since the end of the summer is due to debt buyback anticipation-related buying, which resulted in average Greek strip price appreciation of 75% since mid August. The average market value of €63bn of Greek debt was €10.2bn in mid August; however, at 35cents on the euro, the post debt buyback market value of €30bn of nominal debt will still be around €10.5bn. Therefore, this typical price appreciation in anticipation of the debt buybacks in most cases makes debt buybacks a creditor-subsidising experience.
Secondly, even if an average 35cent purchase price is achieved in the debt buyback operation, as we mentioned above, up to €20bn of the participation has to come from domestic banks, which would mean up to €15bn recapitalisation needs for the Greek banking system, which has to come from EU loans. Unless officials have a way to handle additional recapitalisation needs of the Greek banking system as a result of the buyback, the optical debt relief might even be cut further.
Third, as highlighted in “The Buyback Boondoggle” by Bulow and Rogoff, when a corporate spends resources on a buyback operation, it typically uses assets that otherwise could be seized in the event of default, which makes the deal more attractive to the borrower. However, €10bn of money that will be used by Greece for the buyback could otherwise be used for investment and other growth-generating measures, which might well have been more helpful for Greece in the medium to long term.
Lastly, even if the debt buyback enables the IMF and EU leaders to come to an agreement, leading to a Greek resolution in the near term, in the medium to long term Greek debt is not sustainable on realistic macroeconomic assumptions without notable outright haircuts on official EU loans to Greece. Therefore, a successful debt buyback might resolve the Greek debt sustainability issue on paper in the troika report but it will most likely not resolve it in investors’ minds.
8. Where does the debt buyback leave Greece and Europe from a medium- to long-term perspective?
A successful debt buyback will most likely pave the way for a resolution of the disputes within the troika and lead to the disbursement of the next tranche of around €44bn. However, as mentioned in the previous answer, even a successful Greek debt buyback wouldn’t come close to achieving a sustainable Greek debt position. And, as long as the debt sustainability issue remains outstanding, private investment will be limited, and the tax evasion and capital outflow situations are unlikely to improve. All of which will have negative growth implications. The longer growth remains weak, the more fiscal consolidation will probably be demanded of Greece by EU leaders, which might at some stage lead to further social unrest, potentially even followed by collapse of the already troubled existing government. While Germany’s plan is probably to delay any outright haircut on loans until after German elections in 2013, delaying to deal properly with Greek debt sustainability might create the above mentioned scenario before then. Therefore, it is even questionable whether the debt buyback would even buy the time that European politicians are hoping for before deciding on the end-game for Greece.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/11/2012_471489
Eurozone continues with talks on reducing Greek debt
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There was no immediate statement after the teleconference, which was part of the continuing discussions that took place over the weekend, including further technical work from the Euro Working Group, aimed at striking a formula that is likely to reduce Greek debt from a projected 189 percent of GDP next year to 124 percent in 2020.
Prime Minister Antonis Samaras returned to Athens on Saturday from the European Union leaders’ summit in Brussels, where the 27 politicians discussed the EU budget. Samaras used the opportunity to speak in person to 12 of his counterparts, including German Chancellor Angela Merkel, French President Francois Hollande and Italian Premier Mario Monti. Sources said Samaras attempted to stress to fellow leaders the economic difficulties faced by Greece, describing the “post-Hiroshima” fallout of the crisis.
Eurozone finance ministers failed to reach a conclusive agreement on how to deal with Greek debt on Tuesday and are to hold their third meeting in two weeks in Brussels this Monday. The solutions that are likely to be on the table are lending Greece money to buy back its bonds at a reduced rate on the secondary market, the European Central Bank returning the profits it made on Greek bonds and Greece’s partners reducing the interest rate on their bilateral loans to Athens.
Kathimerini understands that German Finance Minister Wolfgang Schaeuble had been in a position during last week’s Eurogroup to advocate a drastic reduction in the interest rates on bilateral loans to Greece, as well as the extension of their maturities, to help make Greek debt sustainable. But he ended up adopting a more conservative position after the German government’s coalition partners, the CSU and FDP, advised Chancellor Merkel that such an initiative would not have their support and would not pass through the German parliament.
Beyond domestic politics, one factor that could complicate any deal is that the International Monetary Fund seems to be advocating that any bond buyback scheme should happen immediately, possibly even before December 14, when T-bills worth 3.4 billion euros are due to mature. This would mean a fresh delay for Greece’s loan tranche, which would be held up until the buyback has been completed.
| Greece is hoping to receive the whole 44 billion euros due to be released from the bailout program next month. As things stand, all of this money will go to cover immediate obligations. Some 24 billion euros will be used to complete the bank recapitalization program, 9 billion will be invested in the buyback scheme, 4.5 billion is needed to cover the primary deficit, 3.5 billion has been slated to reduce state arrears, 3.4 billion is needed to cover four-week T-bills that mature next month and 500 million euros will go toward covering a bond that matures on December 21. |
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/11/2012_471493
Greece eyes agreement on debt after Eurogroup teleconference
There was no official statement after Saturday's teleconference, which lasted about three hours. Finance Ministry sources in Athens denied there was any disagreements between ministers and insisted that discussions were on track for Monday's meeting. “God forbid that we should not be close to an agreement for Monday,” a senior Finance Ministry source said, according to Skai TV. Some reports said that sources in Brussels suggested that a final decision might not be reached and that finance ministers might have to postpone an agreement until a regular Eurogroup meeting on December 3. |
http://www.eurointelligence.com/eurointelligence-news/archive/single-view/article/edging-towards-a-deal-1.html
Edging towards a deal
23.11.2012
It looks like a deal on Greece is in sight. Kathimerini cites Yannis Stournaras saying that there are about €10bn away from a deal and that the IMF has accepted that Greek debt will not meet its target of 120% of GDP in 2020 and is willing to change this to 124% in the same year. The measures on the table to finance this include foregone profits of the ECB, an interest rate cut on the first bailout programme, an interest rate moratorium for several years on the second programme. A new EFSF-credit of up to €10bn is preferred by Germany but rejected by the Netherlands and others (see our News Briefing the other day). Boersenzeitung this morning reports that to get the package together different countries are to contribute in different ways to the deal.
Bond buyback could also benefit private sector lenders
If Greece could buy back Greece's private-sector bondholders, i.e. of those who took part in the restructuring deal, it could reduce its outstanding debt by € 45bn, so the calculations of the IMF, equivalent of 24% of its GDP. Most European banks holding Greek debt have already written it down to 20-22 cents on the euro, writes the Wall Street Journal, so they could even book a profit on the buyback. A significant portion of the remainder lies with hedge funds, most of which bought the debt at even more depressed levels, and so stand to realize big profits on an otherwise illiquid asset.
The troika’s credibility problem
The delay of the last tranche aid of €44bn constitutes a threat to Greece’s future, Paolo Manasse writes. In an analysis published on Linkiesta, Manasse notes that the delay contains three dangers: the solvency of Greek banking system, a possible new contagion to Italy and Spain, the destabilization of a government majority. According to Manasse, the refusal of the only possible remedy to Greek debt crisis, an OSI in exchange for massive privatizations and a reliable fiscal consolidation programme, can only be explained with the German elections in September 2013. The loss of credibility of the troika is well illustrated by last figures about Greek debt-to-GDP forecasts, released by the IMF, see below.
Mark Schieritz on the optimal moment for a Greek debt restructuring
In his column in Herdentrieb, Mark Schieritz casts doubt on whether an immediate Greek debt restructuring is sensible. He said Greece had already received significant help through lower interest rates, to be lowered again, and through a maturity extension. He said an immediate debt restructuring would be beneficial if the debt itself could cause negative economic effects. But he writes the debt overhang literature is not clear on this point.
(For once, in the case of Greece, there is a negative effect simply through a lack of investment caused by uncertainty about the country’s future in the eurozone. A sufficient degree of OSI would remove doubts over the future of Greek membership in the eurozone. It is difficult to see how Greek GDP could pick up until that uncertainty is removed.
Europe’s incredibly shrinking banking union
German newspapers have more details on the German position on the banking union – which like all eurozone policies will ultimately determine the outcome. Germany is in principle ok with the five of the seven Landesbanken to come under the ECB’s remit, as Suddeutsche Zeitung reports. With that acknowledgement, Germany wants to make clear to other member states that it does not plan to sabotage the project. But the German position remains unrelenting on the other banks. As FT Deutschland points out, the German position is that the SSM focuses only on the systemtically relevant banks, while the others remain under full national control. The article goes into some detail of what that entails. The Germans want to the ECB only to have the right to ask questions, and obtain information, but no automatic right of access, except only in extreme cases, where national supervision has failed. The FT Deutschland also confirmed that five Landesbank would be considered systemically relevant. They are, NordLB, Bayern LB, HSH Nordbank Helaba and LBBW. The two remaining smaller Landesbanken, from Bremen and the Saar, will remain under national control. The sources for these sources maintain that Germany fully supports a banking union, but wants to ensure that it is done properly.
(Yeah right. The German government is determined not to let go of the Sparkassen and savings banks, which produces a two-tier system, with a small number of ECB controlled banks, and smaller banks in national control. This is a banking disunion. As the whole idea of a banking union is to separate sovereign risk from banking risk, this construction seems absurd.)
Eurozone economy continues downtrend in November
The latest Markit PMI was not good. The composite index for the entire private sector in the eurozone sharnk 0.1 to 45.8 in November – still well in recession territory. Markit now estimates that the eurozone’s GDP could shrink by 0.5% during the fourth quarter. Looking at the components, industry stabilised, with the index rising 0.8 points to 46.2 points, while the production index rose 0.9 points to 45.9 points. But this was more than compensated by a further downturn in service, which has reached the 2009 levels.
Jerez, a microcosm of Spain's recession
Residents protesting a three-week garbage collection strike set fire to rubbish piles across the Spanish city of Jerez, reports the Irish Examiner. The cost of the destroyed garbage containers is estimated at €150,000 which is a heavy blow to the finances of a city of 212,000 people whose revenue has collapsed from €22m to €2m a year as a result of the recession, and which finds itself €1bn in debt after 30 years of what even the previous mayor of 24 years, Pedro Pacheco, acknowledged as living beyond its means. Most city employees are owed wages and are or have been on strike in recent years as unemployment, reaches 34%, out of an active population of 100,000. El Pais (English edition)surveys the situation under the ominous headline "if you want to see where Spain is headed, take a look at Jerez".
An impending nonperforming mortgage crisis in Spain?
El Confidencial publishes an analysis by Spanish think-tank Sintetia on Spain's nonperforming loans. Reacting to a statement by Spain's economy minister Luis de Guindos that "Spain's non-performing mortgage rate is low and will continue to be low", the analysts point out that loans accounting for 10% of nonfinancial sector debt to the financial sector is non-performing, up from under 1% 5 years ago, and that 4/5 of that amount is due to firms, and 1/5 to households, despite both sectors accounting for roughly the same amount of total debt. This is mostly because large firms take advantage of limited liability. In fact, SMEs and self-employed people also have low rates of non-performing debt because, like individuals, they are typically required to personally guarantee business loans.
The article observes that through the crisis, financial institutions have restructured debts backed by personal guarantees, but that this outlet is being exhausted and, if the recession endures and unemployment stays high, private nonperforming loans could explode, as among European countries, Spain's rate of nonperforming mortgages is seen in countries with unemployment rates around half of Spain's.
The article ends with the observation that Spain's cédulas hipotecarias (Mortgage-backed securities), which are the main source of wholesale funding for Spain's banks in international markets, could lose much of their value if Spain's mortgage law was relaxed by making mortgages non-recourse loans as is being demanded widely in Spain. Currently, a repossessed property is auctioned and, if there are no buyers at auction, the creditor keeps it at 60% of its assessed value. The authors argue this should be raised to 95% which would solve most of the problems surrounding foreclosures.
Napolitano says Monti cannot be a candidate at the elections
Italian president Giorgio Napolitano yesterday clarified the role Mario Monti can play in the elections, as Il Corriere della Sera reports. Napolitano had appointed Monti to the job of life senator before he became PM, and as a parliamentary for life he is not in a position to run for parliament. This means, as head of the government, it would be preferable if he retained a position of neutrality. However, Monti can still play a prominent role after the elections. There will be no constraints on him taking on a political role then.
About Mersch
The European Council yesterday formally nominated Yves Mersch to the ECB – overriding a No vote by the European Parliament. We wonder what must go on inside somebody’s head who would want to serve on the ECB’s board, having been rejected by the European Parliament. The European Council will probably try to make amends by appointing a woman to the job of chief bank supervisor, but that is hardly a credible alternative, given the direction banking union is currently taking. As for the composition of opinion on the ECB’s governing council, Mersch’s appointment is largely irrelevant. (We still remember Mersch’s argument of why it is best to keep interest rates above zero: for otherwise, the economy would fall into a liquidity trap, he said.)
Ashoka Mody on the three effects that drive a synchronised global downturn
Writing in Boersenzeitung, via Project Syndicate, Ashoka Mody makes the point that the IMF and other forecasters had misjudged three factors in their forecast, which subsequently turned out to be too optimistic. The frist is the recovery time after a financial crisis, the second are the fiscal multipliers, and the third is what he calls the global trade multiplier. The latter is not as well known as the former two, but explains why the downturn is so broadly based globally. The eurozone is at the epicentre of all three effects. His bottomline is the predicted global recovery next year is in danger, and the political mistakes are likely to prolong the downturn.
Luis Garicano on cheating at solitaire
Writing on the blog of think tank Fedea, Luis Garicano criticizes the tendency to 'cheat at solitaire' in debt accounting, which damages the credibility of efforts to correct debt and deficit levels. Garicano enumerates 5 instances of misleading accounting:
1. The rescue of the financial system has been done in an opaque way optimized for not adding to public debt: issuing guarantees, bank mergers, and resort to the ECB's liquidity
2. The 'tariff deficit' of the electricity sector, whereby €30bn of difference between wholesale 'market' prices and a state-mandated price cap was securitised with (again) a state guarantee.
3. The 'bad bank' is being structured with the overarching concern of not adding to the state debt, not of 'doing it right'. In addition, the government keeps lowering its estimate of the amount to be tapped out of the banking rescue approved by the EU.
4. Spain's social security accounting is being manipulated to hide the consequences of having barely two workers per pensioner. Among other tricks, the government is paying social security on behalf on the increasing number of unemployed workers.
5. Finally Spain, as a creditor to Greece alongside the rest of the Eurozone, continues to act in denial of Greece's insolvency and throwing good money after bad in a futile attempt to avoid recognizing a loss.
Garicano closes asking that the focus shifts from improving the accounts to improving the economy.
* * *
And at austerity Central Ground Zero , just consider recent news flow from Greece.....
And at austerity Central Ground Zero , just consider recent news flow from Greece.....
http://www.keeptalkinggreece.com/2012/11/23/athens-small-bond-holders-occupy-nd-offices-they-will-be-paid-out-in-2042/
( Keep in mind that in any " deal " , small bondholders will get screwed again. Just keep voting for the same crooked politicians and hope for a different result ! )
http://www.keeptalkinggreece.com/2012/11/16/greek-govt-in-tax-frenzy-up-to-45-tax-for-redundancy-lump-sum-compensations/
( Keep in mind that in any " deal " , small bondholders will get screwed again. Just keep voting for the same crooked politicians and hope for a different result ! )
Athens: Small Bond Holders Occupy ND Offices – They Will be Paid Out in 2042!
Posted by keeptalkinggreece in Society
Chanting “Thieves”, “Liars”, “Thugs”, “Give us our money back” and hurling eggs dozens of Greek bond holders got out of control when the appointment with Nea Dimocratia secretary, Manilis Kefaloyiannis, was cancelled. The meeting was scheduled for 11 in the morning at the headquarters of the party of prime minister Antonis Samaras.
According too Greek media, ND secretary had some other ‘duties’ and could not meet the frustrated small investors who go from political party to political party seeking a solution to their problem. A problem that had them lose halrf of their savings.
Dozens of small investors, holders of Greek bonds that underwent a 53% ‘haircut’ in March 2012, demand to be compensated and vehemently oppose the possibility of an additional PSI, currently under discussion by Greece’s lenders.
Eggs hurled at the portait of PM Antonis Samaras and ND-founder Konstantinos Karamanlis
Odd enough there were no riot police squads to take control of the situation. According tonewsit, Nea Dimocratia had not asked for police support.
Talking to Greek news portals, the protesters said that they invested a lot of money to buy the Greek bonds; for some it was the savings of a whole life:
“I invested the struggle of a whole life, 110,000 euro, in order to have something when I am in need. I will get 60,000 euro, if I get in the year 2042. ” said a woman.
Another investor who spent 400,000 to buy bonds said “They will give me 60,000 from the EFSF until 2014 and then, from 2022 until 2043 they will give me 6,000 euro per month. I sold a house that I had contructed after 50 years of work.”
http://www.keeptalkinggreece.com/2012/11/22/athens-protesting-municipality-workers-carry-the-government-to-grave/
Athens: Protesting Municipality Workers Carry the Government to …Grave.
Posted by keeptalkinggreece in Society
Four men in black carry a wooden coffin. The band of Athens Municipality plays funeral music. Three men carry funeral wreaths with the names of the leaders of the three-party coalition government. The procession walks slowly through the streets of downtown Athens, passes through the Ministry of Administrative Reform and reaches outside the Greek Parliament.
Video:
embedded by Embedded Video
Municipality workers’ union POE-OTA organized the symbolical funeral of Samara’s government to protest the ‘labour reserve’ that will forcefully send home 2,000 workers with 75% of their salary as of 1. December 2012. After the period of one year, the workers will be confronted with the option of being dismissed and thus without compensation.
The protest was joined also by members of several public sectors unions like civil servants, hospital doctors and teachers.
Some 100 municipality workers on motorcycles protested with black balloons.
The measure of ‘labour reserve’ had fueled an explosive atmosphere among public servants with rebelling majors refusing to send to minister in charge lists with the names of those to be sent home.
On Wednesday, Minister Antonis Manitakis issued a circular threatening to send home randomly chosen 2,000 people, also those who were supposed to be exempted like disabled or single-parent workers.
Samaras’ coalition partners PASOK and Democratic Left insist that there will be no dismissals after the period of one year and that workers will be transferred to other services. However a Troika paper was leaked to the press on Wednesday, claiming that these workers will be dismissed at the end.
Another 25,000 people are due for labour reserve in 2013.
So far only 20 out of more than 300 municipalities have sent lists with names. The majority of local governments are under occupation by angry workers.
Tomorrow Friday, Nov 23/2012, municipalities will be closed, workers will protest again in downtown Athens.
http://www.keeptalkinggreece.com/2012/11/22/pharmasists-protest-48h-strike-stop-prescription-medicine-on-credit/
Pharmasists Protest: 48h Strike, Stop Prescription Medicine on Credit
Posted by keeptalkinggreece in Society
A new round of troubles begin next week for Greek patients as pharmacists will stop giving prescription medicine on credit for those insured at EOPYY, the National Health Care Organization of Greece.
Pharmacists will start their actions with a 48-hour strike on Monday and Tuesday, 26-27 November 2012.
They protest the delay in payments of outstanding debts by EOPYY and the mandatory discount 5% (rebate) that will be imposed retroactive from 1.1.2012.
In a meeting on Wednesday, the board of Panhellenic Pharmacists Association decided to stop giving medicine on credit and thus on what it seems ‘indefinite basis’.
EOPYY insurers will have to pay prescription medicine from their own pockets and request refund from EOPYY in a bureaucratic and long lasting procedure. These protest actions hit especially the chronic-ill and pensioners with low-income.
It is the fourth time within 2012, that pharmacists cut prescription medicine on credit.
http://www.keeptalkinggreece.com/2012/11/15/every-months-greek-ppc-cuts-electricity-to-30000-customers/
Every Month Greek PPC Cuts Electricity to 30,000 Customers
Posted by keeptalkinggreece in Society
Greek economic crisis forces more and more people to a life without electricity. Debts and shiccored incomes, unemployment, rising costs. No wonder that people are unable to pay utility bills. And especially the most expensive one: the electricity bill. Apart from the pure electricity amount to be paid for consumption and Value Added Tax, the electricity bill contains also additional fees like municipality, property and state broadcast fees and some fees of unknown destination as well the the emergency property tax. These extras normally multiply the original bill for electricity to such heights that the vulnerable groups of the society are not able to pay anymore.
On Thursday, the CEO of Public Power Company, Arthouros Zervos revealed that PPC cuts the power of 30,000 customers every month across the country due to outstandiing debts. The outages refer to private households and businesses.Zervos noted that despite the current economic turndown, the overwhelming majority of PPC customers fulfil their obligations.“A minority of PPC customers though require distinct treatment, they ask for arrangements which they normally do not keep.” ((news247)
I would be very much interested to know since when the 30,000-power outages per month is the … normal practice. Also how many are private households, how many are businesses that were closed down. Just out of curiosity to see how many people live in the darkness in the European Union of 2012.UPDATE: It seems DEH has not exact data of how many are private households, businesses or summer houses.According to DEH, outages for 2012 were:Jan 7,000 Feb 8,000 Mar 25,200 Apr 19,500 Oct 30,000 (no data released for May-Sept)Once, just once in my life I want to get proper official data and what in the world!
http://www.keeptalkinggreece.com/2012/11/16/greek-govt-in-tax-frenzy-up-to-45-tax-for-redundancy-lump-sum-compensations/
Greek Gov’t in Tax Frenzy: Up to 45% Tax for Redundancy & Lump Sum Compensations
Posted by keeptalkinggreece in Economy
Greek government will impose heavy taxes to whatever moves, flies, swim or stands. Compensations will undergo sharp cuts as the state’s arm will dig deep into the pockets of unemployed and grab its share. And all this despite, the promises of Prime Minister Antonis Samaras that they would be no new taxes – but that was before the June elections.
Lump sum conpensations will be taxed from the very first euro: 10% for the first € 12,000, 30% for the next 48,000 euros and 45% of the amount above 60,000 euros. the lump sum compensation comes from from workers’ contribution, even though workers at public administration normally receive much higher sums than employees have paid.
Until now, lump sums were tax free until 60,000 euro, 60,001-100,000 euro 10%, 100,001-150,000 euro 20% and over 150,001 30%.
Redundancy payments. Tax-free limit is set at 50,000 euro. Taxation scheme will be: 10% for the first € 12,000, 30% for the next €48,000 euros (that is compensation total sum of 60,000 euros) and 45% for amounts over € 60,000. You think, redundancy payments are thought to aid the jobless? That was… last year!
0-50,000: 0%
50,001- 62,000 : 10%
62,001-110,000: 30%
Over 110,001 : 45%
Income from Rent: a separate tax will be imposed to incomes from rent regardless of whether the property owner has other income or not.
0-12,000 euro: 10%
12,001-60,000 euro: 30%
Over 60,001: 45%
Free-Lancers will be taxed like self-employed and thus with 26% from the very first euro and up to 50,000 euro and with 45% for annual income of over 50,001 euro.
tax source: zougla.gr
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