Aftermath : The Greek Debt Crisis

Meeting of Greek Political Party Chiefs : No Cohesion

Greek Political Parties: No Cohesion

The meeting held by Greek Prime Minister George Papandreou and the other Greek political parties under the auspices of the Greek President Karolos Papoulias proved fruitless so far since the parties agreed that they disagreed.

During the meeting, protesters in central Athens waved pots and pans similar to the demonstrators of the Argentinian crisis.

Commissioner Olli Rehn expressed disappointment at the floundered meeting but expressed hope that things will shape up and the Greeks will finally unite in supporting the IMF/EU support mechanisms and measures.

European banks hold over 100 billion in Greek bonds; the expectations are that because of the current split in Greek politics, the euro will fall only to regain after the Greek political parties finally reach some sort of agreement.

At stake is the fifth IMF/EU monetary installment which is due in June; Greece has stated that without the installment the country has enough money to last ‘till mid July.

Leave Greece Alone !

By Dina Kyriakidou and Renee Maltezou
ATHENS Sat May 7, 2011 1:23pm EDT


(Reuters) - Greek Prime Minister George Papandreou on Saturday denied there was even unofficial discussion over Greece quitting the euro zone and asked that his troubled country be "left alone to finish its task."
Ministers from the euro zone's biggest economies met in Luxembourg to discuss Greece's debt crisis on Friday but Athens and senior EU officials denied a report by Germany's Spiegel Online that the Greek government had raised the prospect of leaving the 17-member euro zone.
"These scenarios are borderline criminal," Papandreou told a conference on the Ionian island of Meganisi. "No such scenario has been discussed even in our unofficial contacts...I call upon everyone in Greece and abroad, and especially in the EU, to leave Greece alone to do its job in peace."
European Central bank Governing Council member Erkki Liikanen on Saturday shot down reports of Greece exiting the euro and said restructuring its 327 billion euro ($470 billion) debt would offer no permanent solution to its problems.
"No euro zone country wants to leave the euro," Liikanen, who also heads the Bank of Finland, said in an interview at Finnish national broadcaster Yle.
Greek Finance Minister George Papaconstantinou attended the Luxembourg talks, his finance ministry said, adding Greece remained committed to repairing its finances and returning to economic growth.
"Markets continue to have doubts and we have scheduled our next steps for 2012," Papaconstantinou told reporters on Saturday when asked about what was discussed at the meeting.
"We (Greece) will either go out to markets or use the recent decision by the EU Council that allows the European fund (EFSF) to buy Greek bonds. That was what the discussion was about."
Sources close to the talks said on Saturday the meeting did not look at extending the repayment of Greece's bailout loans, or any new bailout deal terms for the country.
"There was an extensive debate on Greece's economic adjustment programme. The progress made was recognised but it was also recognised that the programme has not changed the situation (markets' confidence in Greece) as fast as expected," one source said.
EURO EXIT "STUPID"
Jean-Claude Juncker, head of the group of euro zone finance ministers who called the late Friday meeting, said there was a broad discussion of Greece and other international economic issues but said the idea of exiting the euro was stupid.
"We have not been discussing the exit of Greece from the euro area. This is a stupid idea. It is in no way -- it is an avenue we would never take," he told reporters after the meeting attended by ministers from Germany, France, Italy and Spain.
"We don't want to have the euro area exploding without reason. We were excluding the restructuring option, which is discussed heavily in certain quarters of the financial markets," he added.
But he said a meeting of all euro zone finance ministers on May 16 would discuss whether Greece needed a further economic plan. The EU is currently negotiating a bailout with Portugal, the third state it is rescuing after Greece and Ireland.
Despite a 110 billion euro international bailout, Greece, a euro zone member since 2001, has not cut its budget deficit as fast as it promised its lenders amid a deep recession. Gains from spending cuts and tax hikes have been partly erased by low revenues due to tax evasion and a deep recession.
SCEPTICAL MARKETS
Financial markets have been sceptical for months that Athens could manage its huge debt without eventually restructuring. As austerity bites, even some ruling socialist party politicians have been suggesting a "soft" restructuring which might involve lengthening maturities on the country's bonds.
On Friday, the euro fell nearly 1 percent against the dollar and the cost of insuring Greek debt against default was quoted at a record high in response to the Spiegel report.
The Luxembourg talks were also attended by European Central Bank President Jean-Claude Trichet and Olli Rehn, the European commissioner for economic and monetary affairs

Greece, Papandreou, Strauss Kahn, IMF and Lazopoulos

Aside from all the controversy the questions remain:
Was Greece’s request for IMF assistance a pretext for IMF entrance into the Eurozone?

Did Greece have the luxury of not going to the IMF considering the reluctance of Europe to proceed with immediate assistance, and the unavailability of proper mechanisms at that time to deliver such assistance?

The situation can be seen from two points of view : The IMF intervention after request from Greece (with the blessing of the Eurozone) introduced new mechanisms which are now being applied to Portugal and actually saved a chain reaction since Greece would’ve been the first country in the Eurozone to go bankrupt with unforeseeable results for the entire continent. Or, Greece had other options (no one cares to state them, however European assistance at that time was out of the question) and the IMF was not necessary implying that Greece was used as a back door for the IMF and American Economic Policies to make their way into the Eurozone, which generally leaves much to be desired (the Eurozone) in terms of a consolidated strategy.

So Greece, depending on the circumstances, may have saved or damaged the Eurozone. One must remember that it took a couple of calls to Obama in order to get Germany to show a more flexible stance towards the expected economic havoc. Also, the Greek debt, which still hasn’t been classified since some of it may be illegal and not a debt at all, was formed by Greek political favoritism towards certain Northern European companies which used bribery as primary closure mechanisms.