"There could be tanks in the streets of Athens"
Rich Grove | 10.12.2009 11:53
The Greek finance crisis - what will it lead to? The Greek government will not stand the pressure of the European Central Bank and finance bourgeosie, and European governements, that´s for sure. But will the people of Greece withstand the pressure of their own government? Greece could slide into bancruptcy. As rating agencies and European politicians put pressure on the socialist governenment to push through "reforms" ie severe cuts in public spending to avoid bankruptcy, Papandreou announces hard times for the Greek people. In the end it all comes down to this: Is Papandreou more scared of riots, or of the European finance bourgeoisie? In a US blog someone even sees tanks in the streets of Athens.
municipal workers strike
Greek Central Bank entrance
There´s fear that the Greek finance chaos could destabilise the Euro-zone. Banks, politicians and the infamous rating agencies put massive pressure on Papandreou´s new government. Kathimerini online writes:
"Prime Minister George Papandreou yesterday gave the first real indication of a possibility of emergency measures being taken by the government to kick-start the reeling economy, describing the country’s burgeoning debt as a potential threat to “national sovereignty.”
http://www.ekathimerini.com/4dcgi/_w_articles_politics_100003_10/12/2009_113195
Kathimerini discloses:
"According to sources, Papandreou has held a series of initial talks with close aides and industry representatives and may launch a dialogue on possible reforms as early as Monday. The same sources revealed that proposals for emergency measures include a raft of privatizations, an attempt to tackle the hot potato of social security reform and possibly even the freezing of state employees’ salaries. Sources at the Maximos Mansion did not confirm that these proposals were being discussed but neither did they deny it."
"Tanks in the streets of Athens"
While the strike by municipal street cleaners, now entering its second week, has swamped Athens with thousands of tons of trash, in a US finance experts´ blog someone describes the worst case-scenario, if social unrest in Greece continues:
"Unlike California, which can borrow from good'ol Uncle Sam, it is currently illegal for other European nations to buy Greece's debt. Thus it is very conceivable that a European Nation will default. (although I agree with the post below, that they might ignore their own Constitution)
We've seen nations default before. But unlike Argentina, for example, Greece's currency doesn't float and it can't become worthless like it would under normal circumstances (when Greece would simply print money, in a vain effort to inflate their way out of the debt). Because it's the Euro - the same Euro that buys goods and services in Paris and Dusseldorf - it remains artificially strong in Greece. They can default, but they can't monetize their debt.
Thus there's no way out. Even if they default on every loan and eliminate debt service from their cash flow, it's clear that Greece can't live within its own means. How do they pay their Army, Navy, Fire, Police, Garbage Collectors, Doctors, Nurses, etc.?
Greece is already well known for their many municipal strikes. Last year the Postal Workers struck for something like 6 weeks. It was a nightmare - and that was just ONE agency. Imagine the whole country on strike, with no money flowing. A situation like this could lead, quite literally, to tanks in the streets. In Athens.
There's another perhaps more insidious issue: faith in the Euro. If foreign nations won't buy Greek debt, they will also look at other less-stable Euro-nations and bid up interest rates. Unless the invisible hand is working with perfect information, you are going to see issues with that. The "flight to quality" for German and French Euros may or may not reflect a fair exchange with the premium people are paying for Spanish or Italian Euro's. This is exacerbated if the Greek situation devolves into actual social unrest, etc.
It's not a good situation, by any means."
http://meganmcardle.theatlantic.com/archives/2009/12/greece_threatens_bankruptcy_an.php
"Prime Minister George Papandreou yesterday gave the first real indication of a possibility of emergency measures being taken by the government to kick-start the reeling economy, describing the country’s burgeoning debt as a potential threat to “national sovereignty.”
http://www.ekathimerini.com/4dcgi/_w_articles_politics_100003_10/12/2009_113195 Kathimerini discloses:
"According to sources, Papandreou has held a series of initial talks with close aides and industry representatives and may launch a dialogue on possible reforms as early as Monday. The same sources revealed that proposals for emergency measures include a raft of privatizations, an attempt to tackle the hot potato of social security reform and possibly even the freezing of state employees’ salaries. Sources at the Maximos Mansion did not confirm that these proposals were being discussed but neither did they deny it."
"Tanks in the streets of Athens"
While the strike by municipal street cleaners, now entering its second week, has swamped Athens with thousands of tons of trash, in a US finance experts´ blog someone describes the worst case-scenario, if social unrest in Greece continues:
"Unlike California, which can borrow from good'ol Uncle Sam, it is currently illegal for other European nations to buy Greece's debt. Thus it is very conceivable that a European Nation will default. (although I agree with the post below, that they might ignore their own Constitution)
We've seen nations default before. But unlike Argentina, for example, Greece's currency doesn't float and it can't become worthless like it would under normal circumstances (when Greece would simply print money, in a vain effort to inflate their way out of the debt). Because it's the Euro - the same Euro that buys goods and services in Paris and Dusseldorf - it remains artificially strong in Greece. They can default, but they can't monetize their debt.
Thus there's no way out. Even if they default on every loan and eliminate debt service from their cash flow, it's clear that Greece can't live within its own means. How do they pay their Army, Navy, Fire, Police, Garbage Collectors, Doctors, Nurses, etc.?
Greece is already well known for their many municipal strikes. Last year the Postal Workers struck for something like 6 weeks. It was a nightmare - and that was just ONE agency. Imagine the whole country on strike, with no money flowing. A situation like this could lead, quite literally, to tanks in the streets. In Athens.
There's another perhaps more insidious issue: faith in the Euro. If foreign nations won't buy Greek debt, they will also look at other less-stable Euro-nations and bid up interest rates. Unless the invisible hand is working with perfect information, you are going to see issues with that. The "flight to quality" for German and French Euros may or may not reflect a fair exchange with the premium people are paying for Spanish or Italian Euro's. This is exacerbated if the Greek situation devolves into actual social unrest, etc.
It's not a good situation, by any means."
http://meganmcardle.theatlantic.com/archives/2009/12/greece_threatens_bankruptcy_an.php
Rich Grove
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