Task Force issues warning  European Commission expresses concern about the credit crunch and high unemployment  The head of the Task Force in Greece, Horst Reichenbach By Evgenia Tzortzi High unemployment and the lack of cash in the market that would have supported small and medium-sized enterprises are the main problems of the Greek economy, which, according to European Commission estimates, “will stabilize in 2014 and revert to a positive growth rate.” Despite encouraging signs of stabilization, the situation remains difficult for Greek citizens mainly due to the high jobless rate, noted European Economic and Monetary Affairs Commissioner Olli Rehn on the occasion of the publication of the report by the Task Force in Greece on Tuesday. The report highlights the progress the country has made, but also notes the lagging of a series of key sectors in the Greek economy. “The credit crunch is identified as one of the most important obstacles, which remains in place despite the recapitalization of the banking system, so that the channeling of liquidity continues to undergo significant restrictions,” a top-level European Union official stated while commenting on the report’s findings. The liquidity problem is growing due to high interest rates, the high collateral required and the growth of nonperforming loans in the banking sector. In its report, the Task Force examines solutions for these problems and proposes the use of certain instruments, which include the Institute for Growth to be partly funded by EU subsidies, and the capacity for some funding from outside the banking system. Greece will have to issue its response to these issues in the coming period. Regarding the delayed reforms for the improvement of the business environment and the facilitation of exports, the Task Force report also calls on Athens to stop preparing for actions and proceed with their implementation. The report praises the tax administration for becoming more efficient, noting that the number of taxpayers of high significance who have been inspected has doubled in the last seven months. The head of the Task Force, Horst Reichenbach, noted that the technical assistance his team supplied has been crucial in the creation of new structures for managing public finances and tax administration.

ekathimerini.com , Tuesday October 22, 2013 (23:01)

Greek public debt rises in second quarter of 2013 Greece’s public debt reached 169.1 percent of the country’s GDP in the second quarter of 2013, compared to 160.5 percent in the year’s first quarter, according to figures released by Eurostat on Wednesday. The report pointed to Greece showing the European Union’s highest debt to GDP, followed by Italy (133.3 percent), Portugal (131.3 percent) and Ireland (125.7 percent). The lowest figures were recorded in Estonia (9.8 percent), Bulgaria (18 percent) and Luxembourg (23.1 percent). The agency noted that at the end of the second quarter of 2013 the government debt to GDP ratio in the eurozone stood at 93.4 percent compared to 92.3 percent at the end of the first quarter.

ekathimerini.com , Wednesday October 23, 2013 (14:16)

Despite two full bailouts , the debt just keeps rising - why would a third Greece bailout yield a different result ?



http://www.zerohedge.com/news/2013-10-23/troika-wants-strip-greece-defense-auto-industries-greece-balks-troika-greece-can-kic

Troika Wants To Strip Greece Of Defense, Auto Industries, Greece Balks: The Troika-Greece Can-Kicking Toxic Loop

Submitted by Tyler Durden on 10/23/2013 09:14 -0400

• Creditors
 
• Deutsche Bank
 
• European Central Bank
• Germany
 
• Greece
 
• International Monetary Fund

inShare

 

While the world awaits with bated breath until the moment that Greece can no longer afford to pretend it is solvent and has to apply for its third bailout from Europe, or else threaten to take down Deutsche Bank and its tens of trillions in gross derivatives, the world has to listen to the constant jawboning from the Troika which for the past nearly 4 years continues to express its displeasure with Greece, and yet still provides every Euro of funding the imploding country requests. In the latest iteration of this charade, the Troika has apparently flexed its muscles and made it clear that if Greece wants to receive the next round of cash, it will have to shutter the state-owned Hellenic Defense Systems (EAS) and the Hellenic Vehicle Industry (ELVO). In short: shut down the domestic defense and auto industries, and we'll talk. Oh, and if as a result you have to import your guns and cars from Germany (whose generous funding has kept you afloat so far), and have to take out Deutsche Bank loans to pay for them, so be it.

From Kathimerini:

The heads of the troika mission in Greece are due to return to Athens at the beginning of November, it was revealed on Tuesday as sources in Brussels insisted that the country’s lenders would not back down over their demands for further fiscal measures and the closure of Hellenic Defense Systems (EAS) and the Hellenic Vehicle Industry (ELVO).

The Greek government has balked at suggestions it may have to find as much as 2 billion euros more than it has planned in savings next year. However, EU sources told Kathimerini that the troika does not consider the draft 2014 budget reliable. Greece’s creditors believe the plan overestimates tax revenues and underestimates social spending.

As a result, the troika wants to thrash out more measures with the Greek government, ensuring that the deficit target for 2014 will be met. The European Commission, European Central Bank and International Monetary Fund agree with Athens’s positions that any extra savings should not come from “horizontal” cuts to wages and pensions.

The precise amount needed to cover Greece’s fiscal gap next year will not be assessed fully until the current troika review is completed. This requires Greece to meet the milestones agreed with its lenders, such as rounding off the first phase of a public sector mobility scheme. EU sources noted that Greece could survive without receiving its next loan tranche until spring, thereby underlining that the troika is not in a rush to complete the review.

With regard to EAS and ELVO, Greece’s lenders do not believe it is possible to save the two state firms as they are a drain on public finances, in contrast to other European countries, where companies in the defense industry are profitable.

Athens has been in contact with the European Commission over the past few days to respond to queries about its plans to keep the firms afloat. The government believes that it could turn EAS into a profitable company with two years. EU sources said Brussels had heard similar pledges from Greek governments over the past 20 years.

The last snarky sentence was from Kathimerini, not us.

And of course, all of the above would be dramatic if it wasn't quite clear apriori that this is merely the latest iteration of the kick-the-can closed loop, best summarized by the schematic below.

h/t @GreekFire23