This article must be read in the context of the following articles that deal with the topic of the debt created by the finacial terrorists in the City from our perspective:
Argentina in 2002:
”Borensztein and Panizza put together a history of countries that defaulted between 1824 and 2004. Then they look at the short- and long-run consequences of the default. Their conclusion? “The economic costs are generally significant but short-lived . . . we almost never can detect effects beyond one or two years.”
What is happening to the people of Greece, and in particular our disabled sisters and brothers in their country is nothing short of a crime against humanity. We stand shoulder to shoulder with our Greek friends in saying “NO! YOU SHALL NOT PASS!”
The Greek nation is being taken over by the financial terrorists who intend to enslave us all for a generation.
There IS A BETTER WAY!
European leaders appear to have agreed that Greece can cut its VAT rate in a move designed to win support for more public spending cuts as the embattled nation prepares for a crunch decision on a second international bailout.
Athens was offered the VAT olive branch in a last-ditch effort to win over conservative opposition, which has been demanding tax cuts as the price for agreeing to further EU loans. It believes tax cuts will encourage businesses to expand and help the economy grow.
After several days of wrangling, a German source said the so-called troika team of EU, IMF and European central bank inspectors had struck a deal with the socialist government on VAT cuts as part of a wider agreement that Athens will reduce its debts to below 3% of GDP by 2014. “They have agreed on it,” the source said. A deal is expected in the next few days, before an EU finance ministers meeting at the end of June.
However, political agreement remained elusive after the opposition Democracy party warned that it wanted more than a VAT cut. A party official said: “If correct, it is a good step, but not good enough; it is not sufficient to restart the economy.”
Greece is expected to miss targets set by the EU last year in exchange for a €110bn (£96bn) bailout. Eurozone governments expect Greece to come up with new measures that will help it cut its deficit at a faster pace. Last year, it posted a deficit of 10.5% and at the current rate the EU estimates it will have a funding shortfall of some 9.5% this year, 2 percentage points above target. By the end of the year its overall debt is likely to reach 150% of GDP. Greece was supposed to raise around €12bn from the debt markets next year to supplement borrowing from the ECB, but with interest rates for 10-year bonds above 16% and estimates that it will need nearer €25bn, that prospect now seems unrealistic.
Analysts said the tax concession revealed a softening of French and German demands for new loans to be tied to deeper spending cuts, with outside officials overseeing accelerated privatisations.
Stock markets were cheered by the news. Commodities climbed as the dollar slumped, with Brent crude up to 7 a barrel. An index of commodities rose 1.2%. The London Stock Exchange was up 51 points at 5989.
German and French officials are keen to strike a deal with Greece, to end speculation that the country will be forced to renege on its debts. German and French banks are some of the biggest lenders to the country. German banks are owed bn and French banks bn. A restructuring of Greek debt by either lengthening payment times or cutting the amount owed would hurt the balance sheets of these banks, many of which are already in a parlous financial state. Other governments fear a restructuring of Greek debt will lead investors to believe similar remedies will be required in Ireland and Portugal.
The UK is a heavy lender to Ireland with 4bn of outstanding debt, and Spain is a big lender to Portugal, with around a third of Lisbon’s debts held in Madrid.
“More aid for Greece does not solve the problem, but it does buy time and limit contagion risk into Ireland, another country with funding requirements in 2012,” said Camilla Sutton, chief currency strategist at Scotia Capital, in Toronto.
A report by analysts at Ernst & Young supported fears that Ireland is likely to need extra funds within a few months. It downgraded the country in its latest economic growth forecast after predicting a 2.3% contraction in GDP this year, resulting in the fourth successive year of recession. Ireland is expected to see its overall debts jump above 100% of GDP by the end of the year, putting it third in the EU league of debtor nations behind Greece and Italy.
Richard Batty, of Standard Life Investments, said investors were keen for an early solution to prevent a panic across the eurozone.”The danger is that biting the bullet on Greek debt sets in train a domino effect. If you let Greece go to the wall the spotlight will turn on other major debtor nations,” he said.
Several economists have called for Greece to restructure its debts rather than pay them back in full through spending cuts and privatisations, which could leave the country with declining GDP and rising unemployment for more than a decade.
The EU has rejected the plan, partly under pressure from the European Central Bank, which also holds billions of euros of bonds issued by Greece and would be a big loser uunder any restructuring plan.
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