Greece’s Creditors Likely to Extend Its Bailout After Talks Fail

Wall Street Journal
November 26, 2014

Greece’s international creditors are looking at extending the country’s bailout program by up to six months, two eurozone officials said Wednesday after two days of marathon negotiations with the country’s officials here failed to reach an agreement.

The country’s so-called troika of lenders—the European Union, the European Central Bank and the International Monetary Fund—is leaning toward a six-month extension of Greece’s current program, one eurozone official said.

The IMF and Germany, often aligned when it comes to the Greek bailout program, back the idea, a second official said.

The talks in the French capital, which began Tuesday afternoon and continued almost nonstop for 24 hours, were aimed at wrapping up the final review of the country’s austerity and reform program. They come as Greece fast approaches a year-end deadline to hammer out a new financing deal with creditors.

The financial markets have looked negatively on the possibility of Greece’s early exit from the program. In addition, Greek banks could be cut off from the European Central Bank’s cash lending if Greece is not under internationally approved supervision.

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Greece Submits Budget With Troika Talks Still at Impasse

by Marcus Bensasson and Christos Ziotis

Bloomberg
November 21, 2014

Greece submitted its 2015 budget to parliament without prior sign-off from its international creditors as talks with them remained stalled.

The plan sees the government posting a budget surplus before interest payments of 3 percent of gross domestic product next year, or 5.6 billion euros ($7 billion) compared with a forecast of 2.9 percent of GDP in an earlier draft of the budget last month, Alternate Finance Minister Christos Staikouras told reporters in Athens today. Hours earlier, talks between the government and officials representing the European Commission, European Central Bank and International Monetary Fund, known as the troika, ended without an agreement over those forecasts.

“The risk of a complete breakdown is quite high,” said Aristides Hatzis, an associate professor of law and economics at the University of Athens. “This is a pre-electoral message. There’s a competition going on between the government and Syriza over who can unshackle Greece from the bailout accord the quickest.”

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Give Greece a Chance

Bloomberg
Editorial
November 21, 2014

Greece's creditors are testing the country's endurance -- again. If they keep pressing, they could split the euro area apart, which would be a disaster for them as much as for Greece. They need to stop insisting on the impossible, and find a way to relieve the country's debts.

The European Commission, the European Central Bank and the International Monetary Fund have told the government of Prime Minister Antonis Samaras to cut the country's debt burden, the biggest in the euro area, by reducing public spending even further. In return, they propose a last injection of bailout money and an emergency credit line.

The offer is toxic because further efforts to reduce debt through fiscal tightening are almost certain to fail. And that's assuming they don't plunge the country into political instability, as they well might. Polls suggest that the radical left-wing Syriza party, led by Alexis Tsipras, is in a strong position to replace Samaras's moderates in elections next year. (A few months back, Syriza rode a wave of anti-Europe sentiment to victory in elections to the European Parliament.)

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Grecovery

Economist
November 22, 2014

The euro area stayed in the doldrums in the third quarter, according to data released on November 14th. Output rose by 0.2% compared to the second quarter, equivalent to just 0.6% on an annualised basis. That was only slightly faster than the meagre 0.1% growth in the second quarter (0.3% annualised). Against this dismal backdrop there was one nice surprise: of the 14 countries in the 18-strong currency union that reported data, Greece fared best, growing by 0.7%.

It turns out that the Greek recovery started in the first quarter of this year, when it grew even faster, by 0.8%, according to the new figures (for technical reasons quarterly figures had been suspended since 2011); it then slowed to 0.3% in the second quarter. The upturn has meant that the economy is now growing on a yearly basis (see chart). Apart from a blip in early 2010 just before the first of two bail-outs, this is Greece’s first spell of annual growth since the start of 2008. Between the pre-crisis peak, in the second quarter of 2007, and the trough at the end of last year, GDP contracted by 27%, a decline rivalling America’s in the early 1930s.

Even though the euro zone as a whole is doing badly, the Greek recovery looks set to continue, at least in the short-term. An economic-sentiment index compiled by the European Commission stood at 102 in October, well above its level a year before, when it was 92, let alone during the worst of the euro crisis, when it sank below 80. Since the indicator tends to track GDP growth this suggests a decent start to the current quarter.

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Aristides Hatzis: The Economic Crisis and the Economic Science

ELIAMEP
Crisis Observatory
November 19, 2014

Aristides N. Hatzis, Associate Professor at the University of Athens (Department of Methodology, History & Theory of Science), answers the following questions of the Crisis Observatory, concerning Economics and the way it is being taught since the beginning of the crisis.

Question 1: In the wake of both the financial crisis and the economic crisis that ensued (and continues to cause problems, especially to the European economy), Economics came under harsh criticism. This criticism involved its failure to foretell the crisis, but also the validity of its established models and approaches in general, as well as their capacity to correctly diagnose economic problems and to offer appropriate policies therefore. In your opinion, is this criticism justified and, if so, what do you think are the lessons that Economics should draw from the recent crisis?

Question 2: Based on your previous response, what do you think that ought to change in the way Economics is being taught in universities, considering that the economic policy makers of tomorrow are today's the students of Economics?

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Greek Bailout Review Stalls as Troika Demands Final Steps

by Nikos Chrysoloras

Bloomberg
November 17, 2014

Greece’s government and its international creditors are deadlocked over a final round of measures required to release the last tranche of the country’s bailout, two people familiar with the negotiations said.

Prime Minister Antonis Samaras’s government is resisting pressure from the so-called troika of creditors for additional budget savings in 2015 of as much as 2.5 billion euros ($3.1 billion), said the people, who asked not to be named because the negotiations are private. The impasse risks leaving Greece without a backstop on Jan. 1 after the program ends, they said.

Troika representatives are furious because the Greek government has failed to come up with any concrete measures to plug the fiscal gap since euro-area finance ministers warned earlier this month about a lack of progress in Greece meeting its commitments, one person said. With the government in Athens refusing to concede there is a funding hole, the standoff means Greece may miss a Dec. 8 deadline for agreement on the steps required to unlock the aid and what comes after it, both said.

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Greek Economy Returns to Growth

by Stelios Bouras & Alkman Granitsas

Wall Street Journal
November 14, 2014

Greece’s crisis-stricken economy has returned to growth following six years of recession, official data showed Friday, marking an end to one of the steepest and longest economic contractions in postwar European history.

According to figures from the Hellenic Statistical Authority, or Elstat, gross domestic product in the third quarter rose 1.7% from a year earlier, thanks in large measure to a record summer tourism season.

The figures were better than expectations—making Greece one of the fastest-growing economies in the eurozone—and confirm that a promised recovery is now under way. Economists had forecast between 1% and 1.4% growth compared with a year ago. On a seasonally adjusted basis, Greece’s GDP rose 0.7% quarter-on-quarter.

Output was also revised higher for the first six months as part of Europe-wide changes to GDP estimates. They showed that Greece technically emerged from recession in the second quarter when the economy grew 0.4%. The latest figures confirm that Greece is now on track to record its first full year of growth in more than half a decade this year.

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The disabled children locked up in cages

by Chloe Hadjimatheou

BBC News
November 14, 2014

Disabled people in Greece are often stigmatised and can struggle to get the support they need. Some disabled children who live in a state-run home are locked up in cages - staff say they want to improve conditions but money is short.

Nine-year-old Jenny stands and rocks backwards and forwards, staring through the bars of a wooden cage.

When the door is unlocked she jumps down on to the stone floor and wraps her arms tightly around the nurse. But a few minutes later she allows herself to be locked back in again without a fuss.

She is used to her cage. It's been her home since she was two years old.

Jenny, who has been diagnosed with autism, lives in a state-run institution for disabled children in Lechaina, a small town in the south of Greece, along with more than 60 others, many of whom are locked in cells or cages.

Fotis, who is in his twenties and has Down's syndrome, sleeps in a small cell separated from the other residents by ceiling-high wooden bars and a locked gate. His cell is furnished only with a single bed. There are no personal possessions in sight anywhere in the centre.

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Greece on Track to Achieve Primary Budget Surplus For Second Year

by Stelios Bouras

Wall Street Journal
November 13, 2014

Greece has taken a further step in achieving a primary budget surplus for a second straight year, according to data released by the Finance Ministry Thursday.

Greece’s primary budget surplus, which doesn’t take into account interest payments, for the January to October period reached €2.4 billion ($3 billion), amounting to 1.3% of gross domestic product, in line with targets set by the Greek government and its international creditors.

Revenue for the 10 months hit €41 billion, below the €42.9 billion target, due to increased tax returns, the ministry said in a statement. Outlays, or government spending, were lower than expected at €43.7 billion.

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Sun Sets on Golden Dawn: Greek Party Accused in Killings and Racist Attacks

Spiegel
November 4, 2014

The 697-page report from the public prosecutor's office reads like a thriller. But it addresses things that people in Greece long would have considered inconceivable. It paints a picture of a neo-Nazi party that is both openly and forcefully attacking the democratic system in a way not seen in Europe in decades.

Directly or indirectly, the report accuses 69 members or supporters of the Chrysi Avgi, or Golden Dawn, political party -- among them 16 members of Greek parliament -- of participation in murder or attempted murder, serious bodily injury, violent hate crimes, theft, blackmail or arson. Chief Prosecutor Isidoros Dogiakos describes in meticulous detail the structures of a criminal organization that is being directed from inside the Greek parliament.

Eight members of parliament from the party are currently being held in pre-trial detention, including party spokesman and chief ideologist Ilias Kasidiaris in addition to party chief Nikos Machaloliakos. Three additional parliamentarians are currently under house arrest while five others have been forbidden from leaving the country. Investigators are hoping to take the case to trial early next year.

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EU leaders weigh plan for Greek exit from bailout

Financial Times
November 3, 2014

Eurozone leaders are weighing a plan to allow Greece to exit its four-year-old bailout at the end of the year by converting nearly €11bn of unused rescue funds into a backstop for Athens for when it raises cash from the markets on its own.

The plan, which will be discussed at a meeting of eurozone finance ministers in Brussels on Thursday, would allow Antonis Samaras, Greek prime minister, to declare an end to the quarterly reviews by the hated “troika” of bailout monitors ahead of parliamentary elections, which could come as early as March.

At the same time, backers of the plan believe it would give financial markets the security of knowing Athens could draw on the credit line in an emergency.

The credit line would come from the eurozone’s €500bn rescue fund, meaning it would still require monitoring from Brussels, albeit less onerous than at present. By tapping €11bn originally earmarked for shoring up by Greek banks, eurozone officials hope to avoid political resistance from Germany.

“In political terms, the money has already been made available to the Greek authorities,” said an EU official involved in the negotiations.

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