European realism no respite for Greek government
Is the Greek government about to say goodbye? New-found European realism offers no respite from domestic woes (Dromos 24/9)
By Yannis Kimbouropoulos
(extracts)
[…]
If the EFSF is to shoulder the cost of a greek haircut and a continent-wide bank recapitalization, it absolutely needs new funds. The total amount necessary is estimated to be up to 1,3 bn euros. Is this money available? No, and this is why a Eurobond looks more likely by the minute (commissioner Vivian Reding already announced a european commission proposal for common bond issuance by the hard core of the euro, i.e. Germany, France, Holland, Austria, Luxembourg and Finland,) and this is why there is also an increasing likelihood that the ECB will partially abandon its orthodox monetary policy and start printing money. Those are the kind of moves suggested, quite emphatically, by Timothy Geitner. […]
Internal default
At first glance, a European policy u-turn of this kind, made necessary for reasons of survival, seems to create more breathing space for the Greek government. This would have been the case, had the price our fellow Europeans demand not been so high. The price is the outrageous economic and social violence visited upon the majority of Greeks. The Papandreou government is expected to implement to the bitter end all measures already announced, to come up with more measures, next week, of similarly barbaric nature, that will be implemented until 2014, to submit to the test of the strictest troika inspection, so as to get the green light for the 6th installment until the beginning of October, and, to top it all up, to survive an incontrollable internal default, a full halt in payments to the people, which could happen since liquidity in state coffers is barely enough to cover day to day costs, mainly salaries and pensions.
Will the government withstand all this? And if does indeed survive a temporary payment halt, what will happen if the movement of tax disobedience grows large enough for the troika to notice? The government has exhausted all its political capital, opinion polls reaching Maximou (the prime minister’s office) are a nightmare for PASOK, the lawmakers cannot hide behind the “saving the country by destroying it” rhetoric, other political forces who contributed to the pro-austerity “coalition of the willing” are cutting and running and elections can come any moment, even by accident. Let’ s say on Tuesday, Sept 27th, as a result of the vote on new property taxes. What will happen if the postal vote of Papandreou, who will be meeting with Mrs Merkel in Berlin at that time and the crude rhetorical blackmail of Venizelos turn out to be insufficient? The worst for the government is that this vote will not be the last.
(extracts)
[…]
If the EFSF is to shoulder the cost of a greek haircut and a continent-wide bank recapitalization, it absolutely needs new funds. The total amount necessary is estimated to be up to 1,3 bn euros. Is this money available? No, and this is why a Eurobond looks more likely by the minute (commissioner Vivian Reding already announced a european commission proposal for common bond issuance by the hard core of the euro, i.e. Germany, France, Holland, Austria, Luxembourg and Finland,) and this is why there is also an increasing likelihood that the ECB will partially abandon its orthodox monetary policy and start printing money. Those are the kind of moves suggested, quite emphatically, by Timothy Geitner. […]
Internal default
At first glance, a European policy u-turn of this kind, made necessary for reasons of survival, seems to create more breathing space for the Greek government. This would have been the case, had the price our fellow Europeans demand not been so high. The price is the outrageous economic and social violence visited upon the majority of Greeks. The Papandreou government is expected to implement to the bitter end all measures already announced, to come up with more measures, next week, of similarly barbaric nature, that will be implemented until 2014, to submit to the test of the strictest troika inspection, so as to get the green light for the 6th installment until the beginning of October, and, to top it all up, to survive an incontrollable internal default, a full halt in payments to the people, which could happen since liquidity in state coffers is barely enough to cover day to day costs, mainly salaries and pensions.
Will the government withstand all this? And if does indeed survive a temporary payment halt, what will happen if the movement of tax disobedience grows large enough for the troika to notice? The government has exhausted all its political capital, opinion polls reaching Maximou (the prime minister’s office) are a nightmare for PASOK, the lawmakers cannot hide behind the “saving the country by destroying it” rhetoric, other political forces who contributed to the pro-austerity “coalition of the willing” are cutting and running and elections can come any moment, even by accident. Let’ s say on Tuesday, Sept 27th, as a result of the vote on new property taxes. What will happen if the postal vote of Papandreou, who will be meeting with Mrs Merkel in Berlin at that time and the crude rhetorical blackmail of Venizelos turn out to be insufficient? The worst for the government is that this vote will not be the last.