Monday, May 03, 2010
German view
Bloomberg: Merkel Says She Was Right on Greece, Winning ‘Unthinkable’ Cuts
German Chancellor Angela Merkel said she was right to demand International Monetary Fund involvement in the Greek bailout over the objections of her European peers, wringing previously “unthinkable” budget cuts from Greece. “This is an ambitious program that contains tough savings measures and on the other hand seeks to improve the efficiency of the Greek economy,” Merkel told reporters. Cabinet is in session.
Posted by alan @ 09:37 PM (974 views) Add Comment
15 Comments
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1. devo said...
who thought the cuts were 'previously unthinkable? the greek citizens?
well done for getting them onboard, merkel :)
2. drewster said...
I've been surprised to learn just how inefficient the Greek economy is. One third of workers in the public sector? Retirement at somewhere between 51 and 58 (depending on your "profession")? Widespread and commonplace tax evasion? All this in a country which has been part of the European Union for nearly 30 years! Just imagine how much worse it must be in countries that are known to be corrupt, e.g. Bulgaria and Romania. When it comes to dodgy European debt, we simply don't know where the bodies are buried.
3. general congreve said...
It's just one big debt fest... and gold is loving it :)
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5. tyrellcorporation said...
If their desperate bout of vote rigging and collusion actually works, and Labour somehow cling to power or are the largest party, expect the UK to be next. I predict here that anything other than an overall majority for the Conservatives WILL cause a run on Sterling and will ultimately see us going to the IMF for assistance.
Oh the irony! All those thinking they can shelter under Gordon's nanny state (and bogus promises) will eventually be very badly burned by high interest rates and slashed public services and benefits. Ignorance is bliss - until reality bites (me).
6. tyrellcorporation said...
The odd thing is for me that if Labour do OK I'll probably will get my HPC - I'm a bit torn...
...but not THAT torn. My hatred of everything NL stands for is far greater than my own personal housing circumstances. I'd rather sit in rented accommodation for another 20 years than see one more day of these useless b**tards.
7. alan said...
In the UK, the levels of debt have not really been explored as an election issue. I think the 3 big parties have ducked the issue.
What is also clear is that the UK cannot continue borrowing to pay for a luxury lifestyle. Sooner or later somebody says NO. Better to rein in spending before you are forced to do it.
Alas, New Labour are only interested in promoting their party! Cameron is keeping his cards close to his chest and the Lib-Dems have become aware that their newly gained Westminster seats will be at a time of the most unpopular term of government in years.
8. uncle tom said...
The thing I'm noticing is just how lite on detail these additional cuts are..
..can't help thinking they're either not enough, and there's an attempt to dupe the rest of the eurozone into signing up to the bailout before all is revealed - or they reckon that the Greek population with rise up in revolution when they hear what they've got to suffer..
..could also be a bit of both..!
They can slaughter public spending in Greece, but that will depress GDP and rocket unemployment; leading to lower tax revenues and higher claimant payouts. Even if they get past that hurdle, they still have a fundamentally uneconomic economy, which will then need to slowly deflate - further reducing GDP while their debt mountain remains.
Overall, it's a formula for many years of depression in Greece..
With 74% of their national debt foreign owned, the alternative of going for bust now, has to be the better option for the Greek people..
9. nickb said...
Sorry to be a stick in the mud, but I thought economic history shows that countries that try to reduce their deficits by cutting spending, rather than boosting the economy by funding the deficit, do rather badly. One reason the UK malingered compared to the rest of europe after ww2.
10. britishblue said...
Wouldnt it be better for Greece to withdraw from theEuro, have a vastly depreciated currency and then go bust and be re structured by the IMF. This way they will be on the equivalent of a debt management plan, that whilst onerous will at least be 'maneagible.' Plus if their currency is vastly depreciated they could have first mover advantage in people re-investing in holiday property and as holidays become much cheaper there tourism could improve.
11. uncle tom said...
britishblue,
Agree - if Greece breaks with the ECB and goes for broke, with attendant heavy de-valuation; they will very quickly be able to pick themselves up again on the back of a competitive and re-vitalised tourist industry.
Pain, yes - but with gain in prospect right from the outset.
Staying in the euro affords the prospect of long term depression, with no light at the end of the tunnel..
12. nickb said...
all would be well advised to read the article two posts down (election lite...) some snippets:
"British citizens will be burdened for many years with either higher taxes or cuts in public services – because of an economic crisis ... cooked up in trading rooms where ... many people earned annual bonuses equal to a lifetime's earnings of some of those now suffering the consequences." (Lord Adair Turner)
"a large part of the activity of the financial sector seems to be a machine to transfer income and wealth from outsiders to insiders while increasing the fragility of the economy as a whole" (Martin Wolf, FT)
For Britain read Greece...
13. uncle tom said...
The markets are unconvinced - Greek bond yields are on the rise again..
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