Greek aid in doubt.

[Lazy Lob]

Greek aid in doubt as German professors prepare court challenge

A quartet of German professors is to preparing to challenge the EU-IMF rescue for Greece at Germany's constitutional court as soon as the mechanism is activated, claiming that it violates the 'no-bail-out' clause of the EU Treaties.

By Ambrose Evans-Pritchard
Published: 6:00AM BST 15 Apr 2010
Comments 5 | Comment on this article

A Greek euro coin - EU aid for the debt-strapped country is in doubt as German professors prepare to challenge its legitimacy in court. Photo: Bloomberg

The group will ask for an injunction to block the transfer of German funds until the court has ruled. It will demand a verdict on whether the European Central Bank has broken EU law by bending collateral rules to help Greece.

The warning comes as fresh details emerge on the scale of the bail-out. Germany's Handelsbatt cited sources in Berlin warning that the bill may be three times as high as thought, pushing the EU share to €90bn (£79bn) - with an extra €15bn from the IMF.

The brief respite on Greek debt markets has already given way to fresh capital flight. Yields on 10-year Greek bonds surged yesterday to 7.11pc, higher than a week ago. Portuguese bonds began to wobble after Brussels called for more austerity.

The legal challenge has far-reaching implications. It threatens to cloud the issue for weeks or months and may ultimately force Berlin to withdraw support, raising the risk of wider systemic crisis in Southern Europe.

Dr Karl Albrecht Schachtschneider, law professor at Nuremberg and author of the complaint, told The Daily Telegraph that he will be ready to file within days and will ask the court for an expedited procedure. A ruling could occur within a week, but may take as long as six months.

The complaint will argue that the rescue contains an illegal rate subsidy, threatens monetary stability as encoded in the Maastricht Treaty, and breaches the 'no bail-out' clause. Greece is clearly responsible for its own mess.

"It is a question of law. The duty of the court to defend the German constitution. They have no choice other than reaching a lawful decision. This may cause a great crisis in Europe but we already have a crisis," he said.

He will ask the court to freeze rescue aid while the case is pending. There is a precedent for this. It ordered Berlin to halt implementation of the Lisbon Treaty while it reviewed the treaty last year. Such a move would cause havoc on Europe's bond markets.

"This court hearing is going to be very dangerous," said Hans Redeker, currency chief at BNP Paribas. "It could lead to Germany itself being catapulted out of the currency union. Once investors begin to fear this, there will not be single euro in further financing for the EMU periphery."

Dr Wilhelm Hankel, professor of economics at Frankfurt University and one of the four litigants, said the EU-IMF bail-out throws good money after bad. "The whole manoeuvre merely delays the day of reckoning. It is not in Greece's interest to accept the money because the wage cuts and tax rises being imposed will lead to an endless economic depression. They should step out of the eurozone voluntarily, devalue, and restructure their debts with IMF help. That is the path of economic sense," he said. "In the end, the only way to save the euro is to shrink the eurozone. There are other candidates".

Dr Hankel said it would be risky politically for Berlin to transfer funds to Greece while the case was in the courts. "We're in a dark zone. Nobody knows," he said.
"This is a political court that will look for a way out by shifting responsibility on to the Bundestag. Our
purpose is to stir up public opinion and put the government in extreme difficulty. Aid for Greece requires an extra budget: that will be very unpopular," he said.

The Greek rescue is political poison in the industrial heartland of the Ruhr where jobs are scarce and funding for schools is already under threat. The tabloid Bild Zeiting has captured the mood with articles calling for Greece to raise the retirement age to German levels of 67 and sell off its islands before asking for money.

The anger may cause Chancellor Angela Merkel's Christian Democrats to lose control of North Rhine-Westphalia in elections on May 9, shifting the balance of power in the Bundesrat.

Dr Hankel said the complaint would also aim to stop the ECB relaxing collateral rules to help Greek banks borrow cheaply at its lending window, a covert bail-out. "The ECB is breaching its own statute. It will be part of our complaint to prohibit this," he said. Greek banks increased reliance on ECB funding to €65bn in the first quarter.

Jean-Claude Trichet, the ECB's president, said the bank's decision to continue accepting bonds with a BBB- rating had nothing to do with Greece. He was undercut yesterday by Holland's ECB member, Nout Wellink, who said the decision was "of course" linked to Greece.

Dr Schachtschneider said the court tends to split 4:4 on EU matters. It nevertheless issued a trenchant ruling on Lisbon in June 2009 upholding German sovereignty.

This case is going to be a cliff-hanger.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7591027/Greek-aid-in-doubt-as-German-professors-prepare-court-challenge.html

[Hyde]

Ridiculous on so many levels. First off, why do they call it "aid"? It's not like they are donating them that money, it's a simple, normal credit with regular interest, which Greece will have to pay back. Second, why in the name of god are these idiots, who are supposedly "professors" at something, challenging a finance deal that will bring their country profit?

[joka]

"This court hearing is going to be very dangerous," said Hans Redeker, currency chief at BNP Paribas. "It could lead to Germany itself being catapulted out of the currency union. Once investors begin to fear this, there will not be single euro in further financing for the EMU periphery."

LOL. It's like they don't even try to be discrete anymore when creating panic.

[coltfan111]

I wounder if what has happened in Greece will effect the EU aspirations of the likes of Serbia,Croatia,Macedonia etc.

[BorisA]

Ridiculous on so many levels. First off, why do they call it "aid"? It's not like they are donating them that money, it's a simple, normal credit with regular interest, which Greece will have to pay back. Second, why in the name of god are these idiots, who are supposedly "professors" at something, challenging a finance deal that will bring their country profit?



It's credits below market rate. These are forbidden by treaty (Treaty about the functioning, if i remember correctly). This mean no credits on a bilateral level or through the EU institutions. And about the pay-back and the time i would be highly sceptical. It wouldn't be that these credits would be high priority after they we issued...
Another aspect would be the moral hazard of countries like Spain, Portugal etc.

[creativeUsername]

So when i take out a loan from my bank and they charge me sphincter tightening interest rates on it they are actually "bailing me out"? Cool i never knew that. I always thought they were greedy mofos, but now i finally see the truth.

[gazell]

LOL. It's like they don't even try to be discrete anymore when creating panic.

No, they are not. They haven't been for a while.

[Hyde]

It's credits below market rate. These are forbidden by treaty (Treaty about the functioning, if i remember correctly). This mean no credits on a bilateral level or through the EU institutions. And about the pay-back and the time i would be highly sceptical. It wouldn't be that these credits would be high priority after they we issued...
Another aspect would be the moral hazard of countries like Spain, Portugal etc.

How is it below market rate if it is explicticly said in every German article (at the end of course, after the word "aid" fell 10 times troughout the article) that Greece did not get any discount on the interest and that the interest will be around 5%.

[Diogenis]

I said this in january and I will say it again;
The eurozone/EU needs germany and germany needs desperatly a weaker euro for her export-economy.All this panic shows quite well that everyone in the EU works hand in hand to achieve this goal(making euro weaker against $ and yuan).If economy of germany collapse in next two years whole eurozone will collpase too.Most of these politicians and "analysts" don´t even try anymore to hide their intensions with their daily hysteria and psyochological warfare.I guess as soon the euro reaches 1.20-1.15$ we will see a change in all these hysteria.

[creativeUsername]

I said this in january and I will say it again;
The eurozone/EU needs germany and germany needs desperatly a weaker euro for her export-economy.All this panic shows quite well that everyone in the EU works hand in hand to achieve this goal(making euro weaker against $ and yuan).If economy of germany collapse in next two years whole eurozone will collpase too.Most of these politicians and "analysts" don´t even try anymore to hide their intensions with their daily hysteria and psyochological warfare.I guess as soon the euro reaches 1.20-1.15$ we will see a change in all these hysteria.

Add to that a feeling of superiority that the German government and media get everytime they mention "aid" and "bailing out" of another Eurozone country. No wonder they wont let this go, it seems that even the Greek media dosent have as big a hard on for the situation in Greece as the German media and government has.

[aop]

Ridiculous on so many levels. First off, why do they call it "aid"? It's not like they are donating them that money, it's a simple, normal credit with regular interest, which Greece will have to pay back. Second, why in the name of god are these idiots, who are supposedly "professors" at something, challenging a finance deal that will bring their country profit?
With what money?

I don't believe for a second that Greece can pay back or even intends to pay back money it might get from other EU countries. If Greece gets money next thing you know is Italy, Spain and Portugal asking for some too. These Southern European countries have created their mess themselves with their unsustainable economy and now they are trying to make other countries pay for that.

[creativeUsername]

With what money?

I don't believe for a second that Greece can pay back or even intends to pay back money it might get from other EU countries. If Greece gets money next thing you know is Italy, Spain and Portugal asking for some too. These Southern European countries have created their mess themselves with their unsustainable economy and now they are trying to make other countries pay for that.

You do know what a loan is right?

[BorisA]

that Greece did not get any discount on the interest and that the interest will be around 5%.

Which is over market level. Germany intented to put it higher but failed to do so.



You do know what a loan is right?

And you do know what is loan default right?



I said this in january and I will say it again;
The eurozone/EU needs germany and germany needs desperatly a weaker euro for her export-economy.All this panic shows quite well that everyone in the EU works hand in hand to achieve this goal(making euro weaker against $ and yuan).If economy of germany collapse in next two years whole eurozone will collpase too.Most of these politicians and "analysts" don´t even try anymore to hide their intensions with their daily hysteria and psyochological warfare.I guess as soon the euro reaches 1.20-1.15$ we will see a change in all these hysteria.

So there are no problems in Greece? Why then the belt-tightening?
And about Germany. If the Germany export industry would be in so bad shape the french finance minister would not beg to slow it down so that the others can also export a little...

[Hyde]

With what money?

With the same money with which the US, GB and Germany pay back their loans.



I don't believe for a second that Greece can pay back or even intends to pay back money it might get from other EU countries. If Greece gets money next thing you know is Italy, Spain and Portugal asking for some too. These Southern European countries have created their mess themselves with their unsustainable economy and now they are trying to make other countries pay for that.Very well then, more profit for Germanys economy. What are you complaining about? :lol:


Which is over market level. Germany intented to put it higher but failed to do so.

Soooo? What is your point, exactly? That makes it even less of an aid and more of a rip-off and exploitation of Greece's bad situation.

[Diogenis]

Who said that there are no problems in greece?But the whole hysteria is about the greek deficit and the debt in 2009.Well...the deficit of the first quarter in 2010 shows a -40% reduction.This BEFORE the belt-tightening (all the measures and cuts) has start (1.april).In last days greek analysts say the budget deficit in 2010 may be cut to 6%!!From 13% in 2009.
As for the dept...italy,belgium have well above 100% dept too.Add to this that the private dept in greece(60% of GDP) is low when compared to most other eurozone countries.Portugal,spain,luxemburg etc show private depts of 300-500% of the GDP of GDP.This all does not justify the attacks greek economy lives right now.


[QUOTE]And about Germany. If the Germany export industry would be in so bad shape the french finance minister would not beg to slow it down so that the others can also export a little...

Do you really want to tell us that the 1.35$ euro is good for germanies economy???
:roll:

I last days we see a war ongoing between the US,eurozone and china.It is all about to urge china to strengthen her currency.I don´t know if you noticed this discussion.If not it would be a good moment for you to watch some serious news.

[Aor]

With what money?

I don't believe for a second that Greece can pay back or even intends to pay back money it might get from other EU countries. If Greece gets money next thing you know is Italy, Spain and Portugal asking for some too. These Southern European countries have created their mess themselves with their unsustainable economy and now they are trying to make other countries pay for that.

I think you've got things mixed up. Greece right now receives loans on its own with no outside help . The same goes for the rest of the Med countries. The E.U plan calls for loans with low, affortable interest rates IF a country needs it. It is not an imperative for them to get it. If a country can negotiate loans on its own it will do so with whoever wants to lend money.


Which is over market level. Germany intented to put it higher but failed to do so.

And quite right so. Germany is right now shooting itself on the leg. If the plan goes to hell, then the Euro will too.

[Lazy Lob]

I think you've got things mixed up. Greece right now receives loans on its own with no outside help . The same goes for the rest of the Med countries. The E.U plan calls for loans with low, affortable interest rates IF a country needs it. It is not an imperative for them to get it. If a country can negotiate loans on its own it will do so with whoever wants to lend money.

And quite right so. Germany is right now shooting itself on the leg. If the plan goes to hell, then the Euro will too.

You are quite right but Greece is rapidly running out of collateral and parts of its infrastucture cannot be subsidised any further. That is why it needs the EU, pure leverage (blackmail).

[BorisA]

Soooo? What is your point, exactly? That makes it even less of an aid and more of a rip-off and exploitation of Greece's bad situation.

Sooooo what? The lower credit rate is a rip-off? Strange view.
Greece is in a bad situation (like some other southern EU countries) because they did not use the extra, easy credits which came with the Euro to enhance their competitive capabilities. I.e. the Greek farmes...instead of updating their equipment, production methods etc. they chose to make every year road blocks and to extort amenities. And now the party is over.


Do you really want to tell us that the 1.35$ euro is good for germanies economy???

So the german economy was 2004-2007 in crisis when the euro hit similar rates? Nice explanation dude. :roll:

You should first examine the german export structure and then talk.

PS for tomorrow, while the meeting in Brussels the Greek request for the aid program is expected. For next week a team of the IMF will arrive in Athens to examine their data etc. and maybe prepare the conditions for their part.

[Diogenis]

Now honestly you´re a joke.There is not anyone (not even in germany) who does not say that the weak euro just right now saves the german economy.The rest of europe right now attacks germany for her export orientated policy and the weak inner-market resulted by the 10 years of real-wage cuts on the german workers.

[Aor]

You are quite right but Greece is rapidly running out of collateral and parts of its infrastucture cannot be subsidised any further. That is why it needs the EU, pure leverage (blackmail).

I think we haven't even scratched what can be further subsidized. In terms of collateral the government has vast amounts of land that could be subsidized if the need arises. Right now we have cut costs more than 40% and everyone, that is both the E.U and the IMF that added measures to those already taken won't be required. So the question arises why the markets are not happy. Easy answer: hit them when they are down. They know the rates for a Euro economy are ridiculous. For example how can Romania with its economy be borrowing at almost half our rates is beyond me. What we see is pure speculation against the Euro and those behind the scam use the weakest link in the chain that is right now Greece. If it weren't Greece it would be Portugal, Italy, Spain or whoever could be used as a medium to fast money and people, economies, states be damned.

As for us blackmailing others. It is funny, but if we are blackmailing the E.U I haven't noticed anyone complaining ever since we joined. I haven't seen anyone complain with Greece being a member when that way the E.U countries have better access to the Balkan economies, or governments or when the E.U via the Greek membership gets access to one third of the global commercial fleet that right now sails under Greek interests or flag. I haven't seen anyone complain on us being European when there was no crisis, o when we entered the Euro, but now we are blackmailing the E.U? How so ? Because we request the solidarity on which the E.U was built and is supposed to function? Because we follow protocol and rules that are negotiated between governments?

Yes we are to blame for messing up our economy, but the Euro? Where were the mechanisms to prevent this crisis? Where are the safeguards that should have been there for the catastrophe we are now experiencing? Everyone just thought something like this was unthinkable and nobody prepared for it. Now we are "blackmailing"... Well boo hoo , but last time I saw it was a union of 27 countries and a 16 nation monetary union and not just Greece. Also last time I checked your economy wasn't all roses either. I wonder what "blackmail" you would cook up for yourselves if you were in the deep red.

[BorisA]

Now honestly you´re a joke.There is not anyone (not even in germany) who does not say that the weak euro just right now saves the german economy.The rest of europe right now attacks germany for her export orientated policy and the weak inner-market resulted by the 10 years of real-wage cuts on the german workers.


Look at what you wrote you clown. You exaggerate the effect of the exchange rate (which is even slightly higher than in the 2004-2007 period), while not connecting what you even correctly (export policy) wrote to the realities! The success of German exports are not because of the exchange rate but because of better productivity, the type and quality of products, high demand in emerging economies (especially in Asia) and because of structural reforms which other countries did not carried out. And now the Frenchies and Greeks are blaming the Germans for their success. Yeah it's just the exchange rate that mechanical engineering sells better than Feta and Louis Vuitton (currently)...

[Diogenis]

The funny thing is that even the germans admit that they need a weaker euro.Now..your comments show why most turks think they could speak about others economies when they went bankrupt in 2001 and needed the IMF and over 50bn $ (to be paid back till 2013)to save their country.
:roll:

[BorisA]

The funny thing is that even the germans admit that they need a weaker euro.Now..your comments show why most turks think they could speak about others economies when they went bankrupt in 2001 and needed the IMF and over 50bn $ (to be paid back till 2013)to save their country.


The "weak" Euro is one factor but not the decisive one, but this you will never get. And i thought "economy" is derived from Greek :roll:

And well, at least you managed the same with DECADES of EU subsidies. That's even a greater accomplishment don't you think? To rely on EU and IMF aid! You are now on the same level like the new EU states which were formerly behind the Iron Curtian. That i call European integration the Greek style...

PS nice that you introduced flaming into the thread.

[Diogenis]

Greece never took more than 50% of the EU subsidies.Yes,greece recieved some 40 billion euros (over 30 years) but compared to our GDP made in the same period it is a joke...maybe some 1-2% of it.Most of this money went to foreign (mostly german) companies anyway which were selected (by our corrupt politicians) instead of greek companies for construction of roads,airports etc.
Anyway..till yet we did not asked for any "aid" from nobody.Our economy grew with 4-5% in the last ten years and we had also good datas in almost every issue.


PS nice that you introduced flaming into the thread.


Why is it flaming when I say the truth?I can understand when a german or a french gets angry about to help greece but not people who live in much worse conditions than greeks.

[Aor]

And well, at least you managed the same with DECADES of EU subsidies. That's even a greater accomplishment don't you think? To rely on EU and IMF aid! You are now on the same level like the new EU states which were formerly behind the Iron Curtian. That i call European integration the Greek style...

Oh really? Check out per capita income Sherlock . By the way you make it sound as if ALL the money in Greece comes from the E.U. The state has problems, not the average citizen, at least as long as the public sector is ok , because then the impact on the people will be great no matter if you work hard or where you work.

Before making any comparisons check out stuff like per capita income , literacy rate etc with your country and then come and preach on economics and European institutions.

[BorisA]

Greece never took more than 50% of the EU subsidies.Yes,greece recieved some 40 billion euros (over 30 years) but compared to our GDP made in the same period it is a joke...maybe some 1-2% of it.Most of this money went to foreign (mostly german) companies anyway which were selected (by our corrupt politicians) instead of greek companies for construction of roads,airports etc.

Yeah, sure. All the money was given to charity. Greek farmers, service sector, education and other infrastructure did not receive one cent.

Apropos infrastructure: The companies (may they be all german ffs) did of course just hire foreigners and imported all building materials...and the roads, airports etc. you mention did not help overall the country (industry, service->especially tourism)?


Oh really? Check out per capita income Sherlock . By the way you make it sound as if ALL the money in Greece comes from the E.U. The state has problems, not the average citizen, at least as long as the public sector is ok , because then the impact on the people will be great no matter if you work hard or where you work.

Before making any comparisons check out stuff like per capita income , literacy rate etc with your country and then come and preach on economics and European institutions.

I see i touched a sensible point. :)

Watson no need to worry soon the ex-commis will have surpassed you. And like you exactly stated it all depends on the state who employs a ridiculously high amount of employees...and he is bad shape...isn't he?

PS mates just lets wait till Friday evening and then discuss it further. Some news will come.

[Aor]

Yeah, sure. All the money was given to charity. Greek farmers, service sector, education and other infrastructure did not receive one cent.

Apropos infrastructure: The companies (may they be all german ffs) did of course just hire foreigners and imported all building materials...and the roads, airports etc. you mention did not help overall the country (industry, service->especially tourism)?

You really have a very poor understanding how the E.U works.


I see i touched a sensible point. :)

Watson no need to worry soon the ex-commis will have surpassed you. And like you exactly stated it all depends on the state who employs a ridiculously high amount of employees...and he is bad shape...isn't he?

PS mates just lets wait till Friday evening and then discuss it further. Some news will come.

[/quote] ... just asking, but where do the facts end and the wishful thinking begins. You haven't answered one of the things I have written, but the Schadenfreude is there none the less.

The public sector will be restructured and if people have to go they will go. The crisis has been a wake up call and things will change eventually for the better. Try to answer this: if with the corrupt system we reached 5% growth rates how high do you think we can reach with a reformed system?

It might sound funny , but I am happy that this will be the catalyst for growth and a more sound European economy. Changes will be implemented that otherwise would have been unthinkable and in the end we will still be in the E.U, we will still have the Euro and well... you won't have neither.

You say lets look till Friday, I say look 10 years from now.

[Diogenis]

Some people should first take a look at their own much worse problems.But obviously they spend their precious time on watching others..and btw.
You said lets what will happen till tomorrow.I say lets look what greece achived since 1974 after all her desasters and compare this with the achievments with some folks who neither had any participation in a worldwar,desastrous civil war and dicatorship since 1922.

[BorisA]

You said lets what will happen till tomorrow.I say lets look what greece achived since 1974 after all her desasters and compare this with the achievments with some folks who neither had any participation in a worldwar,desastrous civil war and dicatorship since 1922.
I see you have little knowledge about world history alike. And if you refer to Turkey especially :roll:
Why don’t you list which states in Europe did not participate in one world war, wasn’t victim of a dictatorship or saw a civil war?

The public sector will be restructured and if people have to go they will go. The crisis has been a wake up call and things will change eventually for the better. Try to answer this: if with the corrupt system we reached 5% growth rates how high do you think we can reach with a reformed system?
It might sound funny , but I am happy that this will be the catalyst for growth and a more sound European economy. Changes will be implemented that otherwise would have been unthinkable
Which facts? You mentioned gdp per capita which is not the topic here and would also not serve you well in this discussion. Furthermore your youth is already pessimistic and rebelling in the streets and now you want to fire state employees? Which industry will provide these people jobs? Your non-existing heavy industry? Your satisfied service sector? Your imaginary high-tech start-ups? Tell me where these people will find jobs?

and in the end we will still be in the E.U, we will still have the Euro and well... you won't have neither.
We have and will have progress without them. And if I see how small and weak states lose their sovereignty I would not be happy as you are right now. Well national pride is something some people don’t have.

And about your “5%” growth rates…well with that high EU subsidies to a country like yours that’s not so difficult. Especially if you have since the Euro access to cheap credits.


You really have a very poor understanding how the E.U works.
No, the contrary is the case. For the Greeks it is just another institution (apart from their state) to reap cash for nothing.


You say lets look till Friday, I say look 10 years from now.
When you are even in worse conditions?

[Aor]

Supertroll BorisA strikes again.


Which facts? You mentioned gdp per capita which is not the topic here and would also not serve you well in this discussion. Furthermore your youth is already pessimistic and rebelling in the streets and now you want to fire state employees? Which industry will provide these people jobs? Your non-existing heavy industry? Your satisfied service sector? Your imaginary high-tech start-ups? Tell me where these people will find jobs?

You really want to twist things to fit your point of view. Now if you measure how a people fares you don't only explore the state economy, but rather you examine how people live, what their quality of life is. Go ahead and imagine Greeks living in poverty. You clearly have a very nailed down dismissive stance towards us.

The youth took to the streets because a policeman acted like a moron and shot a young kid. I wonder in "democratic Turkey" what would be your reaction. Tanks on the street?

The people on the streets are mostly the ones that are in the public sector and those who benefited from ill practices. They complain because they will lose their pampering. Let them. The vast majority is against them.

As to where people will find jobs. For someone who is supposed to be an expert on Greek issues you don't understand that one of the things that didn't work and is being fixed is the structure that promoted free enterprise. It is being fixed. So no doom and gloom there either.
We have and will have progress without them. And if I see how small and weak states lose their sovereignty I would not be happy as you are right now. Well national pride is something some people don’t have.

And about your “5%” growth rates…well with that high EU subsidies to a country like yours that’s not so difficult. Especially if you have since the Euro access to cheap credits.

If you have progress good for you. It must be wonderful to devalue the Lira every now and then, receive IMF loans and be proud, have vast swaths of your country with women in head scarfs, children barely reaching secondary education and people living in mud brick houses. It must be equally wonderful while you have all that to have the military handle its own expenses and equip itself like mad.

Spare me with the sovereignty bull. 27 countries are in the E.U, 16 in the Euro. You applied for membership and are still applying, with poor results. All are fools for entering the E.U , but not the ultra nationalists Turks, like yourself.

The E.U subsidies were explained to you by diogenes. And what do you mean with " a country like yours" spell it out Turk.

Oh and the Euro is not always a blessing. If we didn't have it we could devalue the Drachma the same way you did with the Lira. Oups

No, the contrary is the case. For the Greeks it is just another institution (apart from their state) to reap cash for nothing.

Another wonderful insight on how your ultra nationalist clogged mind works.

When you are even in worse conditions?

No, when we are out of the storm.

[BorisA]

The only trolls around here are you and your buddy with the false pride of yours.


And i do not twist stuff,but that what is obvious. You should not see everything as an insult.

Anywhy why don't you tell me, as someone who is at the spot, what will happen with the people who will be set free? I am listening (reading).
The points i mentioned about the youth are what greek friends and my reading are suggesting.


If you have progress good for you. It must be wonderful to devalue the Lira every now and then, receive IMF loans and be proud, have vast swaths of your country with women in head scarfs, children barely reaching secondary education and people living in mud brick houses. It must be equally wonderful while you have all that to have the military handle its own expenses and equip itself like mad.

Spare me with the sovereignty bull. 27 countries are in the E.U, 16 in the Euro. You applied for membership and are still applying, with poor results. All are fools for entering the E.U , but not the ultra nationalists Turks, like yourself.

The E.U subsidies were explained to you by diogenes. And what do you mean with " a country like yours" spell it out Turk.

Oh and the Euro is not always a blessing. If we didn't have it we could devalue the Drachma the same way you did with the Lira. Oups

I see that you are an expert on the Turkish economy and society.
And yes it is foolish to join un der certain circumstances the EU / Euro. Like with faked data...

And what Diogenes claimed i already commented (about it effects etc.) and about his numbers i am sceptical.

My point with "country like yours" Greco was meant that investments (i.e. infrastructure) on states with a different level of economic / infrastructural development have other effects and growth rates. If you see this as flame attempt poor you since it is not offensive at all.


Another wonderful insight on how your ultra nationalist clogged mind works.

My bad. I forgot that you are the cosmopolitan, peace loving in here. :roll:



No, when we are out of the storm.

Let's hope it.

[Aor]

The only trolls around here are you and your buddy with the false pride of yours.

Coming from a ultra nationalist Turk like yourself I find that highly ironic. Go troll somewhere else.

And i do not twist stuff,but that what is obvious. You should not see everything as an insult.

Facts talk, trolls walk. Keep walking. No insult
Anywhy why don't you tell me, as someone who is at the spot, what will happen with the people who will be set free? I am listening (reading).
The points i mentioned about the youth are what greek friends and my reading are suggesting.

Answered and amswered. If you don't like what you read, then go ask a fellow Kemalist. I couldn't care less


I see that you are an expert on the Turkish economy and society.
No, just making point based on clear facts and what I see in every other report coming from Turkeys non- Tourist areas. For a guy who doesn't know jack about the E.U and who comes froma country that isn't in the E.U you are the one to complain about my comments? That is rich...
And yes it is foolish to join un der certain circumstances the EU / Euro. Like with faked data...

Yes, go on with AKP styled neo-ottomanism or the Kemalist pseudo junta. All data was accepted as true. Now with the crisis we cooked everything up.
And what Diogenes claimed i already commented (about it effects etc.) and about his numbers i am sceptical.

Not skeptical, but dismissive because facts don't fit the way you want things to be.
My point with "country like yours" Greco was meant that investments (i.e. infrastructure) on states with a different level of economic / infrastructural development have other effects and growth rates. If you see this as flame attempt poor you since it is not offensive at all.

That is true. Glad you clarified it.


My bad. I forgot that you are the cosmopolitan, peace loving in here. :roll:



I am. Are you?

Let's hope it.

Coming from you, this goes a long way. Thanks

[Stonewall71]

April 15, 2010, 6:21 am
The Next Global Problem: Portugal

By PETER BOONE (http://economix.blogs.nytimes.com/author/peter-boone/) AND SIMON JOHNSON (http://economix.blogs.nytimes.com/author/simon-johnson/) http://graphics8.nytimes.com/images/2010/02/10/world/10portugal_CA0_337-span/10portugal_CA0-articleLarge.jpg (http://graphics8.nytimes.com/images/2010/02/10/world/10portugal_CA0_337-span/10portugal_CA0-articleLarge.jpg)
Gonçalo Santos for The New York Times
Prime Minister José Sócrates is trying to reassure world markets that he can bring down Portugal’s deficit.


(http://economix.blogs.nytimes.com/2010/04/15/the-next-global-problem-portugal/?scp=2&sq=Portugal&st=cse)
April 15, 2010, 6:21 am
The Next Global Problem: Portugal
By PETER BOONE AND SIMON JOHNSON

Gonçalo Santos for The New York Times Prime Minister José Sócrates is trying to reassure world markets that he can bring down Portugal’s deficit.

10:17 a.m. | Updated
Today's Economist

Peter Boone is chairman of the charity Effective Intervention and a research associate at the Center for Economic Performance at the London School of Economics. He is also a principal in Salute Capital Management Ltd. Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of 13 Bankers.

The bailout of Greece, while still not fully consummated, has brought an eerie calm in European financial markets.

It is, for sure, a huge bailout by historical standards. With the planned addition of International Monetary Fund money, the Greeks will receive 18 percent of their gross domestic product in one year at preferential interest rates. This equals 4,000 euros per person, and will be spent in roughly 11 months.

Despite this eye-popping sum, the bailout does nothing to resolve the many problems that persist. Indeed, it probably makes the euro zone a much more dangerous place for the next few years.

Next on the radar will be Portugal. This nation has largely missed the spotlight, if only because Greece spiraled downward. But both are economically on the verge of bankruptcy, and they each look far riskier than Argentina did back in 2001 when it succumbed to default.

Portugal spent too much over the last several years, building its debt up to 78 percent of G.D.P. at the end of 2009 (compared with Greece’s 114 percent of G.D.P. and Argentina’s 62 percent of G.D.P. at default). The debt has been largely financed by foreigners, and as with Greece, the country has not paid interest outright, but instead refinances its interest payments each year by issuing new debt. By 2012 Portugal’s debt-to-G.D.P. ratio should reach 108 percent of G.D.P. if the country meets its planned budget deficit targets. At some point financial markets will simply refuse to finance this Ponzi game.

The main problem that Portugal faces, like Greece, Ireland and Spain, is that it is stuck with a highly overvalued exchange rate when it is in need of far-reaching fiscal adjustment.

For example, just to keep its debt stock constant and pay annual interest on debt at an optimistic 5 percent interest rate, the country would need to run a primary surplus of 5.4 percent of G.D.P. by 2012. With a planned primary deficit of 5.2 percent of G.D.P. this year (i.e., a budget surplus, excluding interest payments), it needs roughly 10 percent of G.D.P. in fiscal tightening.

It is nearly impossible to do this in a fixed exchange-rate regime — i.e., the euro zone — without vast unemployment. The government can expect several years of high unemployment and tough politics, even if it is to extract itself from this mess.

Neither Greek nor Portuguese political leaders are prepared to make the needed cuts. The Greeks have announced minor budget changes, and are now holding out for their 45 billion euro package while implicitly threatening a messy default on the rest of Europe if they do not get what they want — and when they want it.

The Portuguese are not even discussing serious cuts. In their 2010 budget, they plan a budget deficit of 8.3 percent of G.D.P., roughly equal to the 2009 budget deficit (9.4 percent). They are waiting and hoping that they may grow out of this mess — but such growth could come only from an amazing global economic boom.

While these nations delay, the European Union with its bailout programs — assisted by Jean-Claude Trichet’s European Central Bank — provides financing. The governments issue bonds; European commercial banks buy them and then deposit these at the European Central Bank as collateral for freshly printed money. The bank has become the silent facilitator of p igate spending in the euro zone.

Last week the European Central Bank had a chance to dismantle this doom machine when the board of governors announced new rules for determining what debts could be used as collateral at the central bank.

Some anticipated the central bank might plan to tighten the rules gradually, thereby preventing the Greek government from issuing too many new bonds that could be financed at the bank. But the bank did not do that. In fact, the bank’s governors did the opposite: they made it even easier for Greece, Portugal and any other nation to borrow in 2011 and beyond. Indeed, under the new lax rules you need only to convince one rating agency (and we all know how easy that is) that your debt is not junk in order to get financing from the European Central Bank.

Today, despite the clear dangers and huge debts, all three rating agencies are surely scared to take the politically charged step of declaring that Greek debt is junk. They are similarly afraid to touch Portugal.

So what next for Portugal?

Pity the serious Portuguese politician who argues that fiscal probity calls for early belt-tightening. The European Union, the European Central Bank and the Greeks have all proven that the euro zone nations have no threshold for pain, and European Union money will be there for anyone who wants it. The Portuguese politicians can do nothing but wait for the situation to get worse, and then demand their bailout package, too. No doubt Greece will be back next year for more. And the nations that “foolishly” already started their austerity, such as Ireland and Italy, must surely be wondering whether they too should take the less austere path.

There seems to be no logic in the system, but perhaps there is a logical outcome.

Europe will eventually grow tired of bailing out its weaker countries. The Germans will probably pull that plug first. The longer we wait to see fiscal probity established, at the European Central Bank and the European Union, and within each nation, the more debt will be built up, and the more dangerous the situation will get.

When the plug is finally pulled, at least one nation will end up in a painful default; unfortunately, the way we are heading, the problems could be even more widespread.

Update: An earlier version of this post had an incorrect number for Portugal’s planned budget deficit in 2010. It is 8.3 percent, not 9.3 percent.
http://economix.blogs.nytimes.com/2010/04/15/the-next-global-problem-portugal/?scp=2&sq=Portugal&st=cse
(http://economix.blogs.nytimes.com/2010/04/15/the-next-global-problem-portugal/?scp=2&sq=Portugal&st=cse)