Chile Forum

The pact imposes a number of stringent obligations on its members, which include reducing the deficit and moving towards a balanced budget and then an eventual surplus in the national budgets. It also includes rules on reducing national debt and the introduction of automatic sanctions on those member states which do not stick to their commitments.

The new Treaty also obliges member states to enshrine the principle of moving towards a balanced budget into their constitutions or similar legislation.

EU leaders yesterday also agreed on the establishment of a new permanent eurozone rescue fund, to be known as the European Stability Mechanism (ESM). The €500 billion fund will enter into force next July, a year earlier than expected, and will take over the current temporary European Financial Stability Facility (EFSF) which has been used to bail out Ireland and Portugal.

FrankPintor wrote:OK... and then there's there's this take on the process:

"Many others, however, dismiss the compact with so much faint praise. “It is an important distraction”, says one diplomat. “It has gone from damaging to merely useless,” says a member of the European Parliament. Even Mario Monti, these days everybody’s favourite Italian, judged the compact little more than “a decorative songbird”". http://www.economist.com/blogs/freeexchange/2012/01/euro-crisis-4

Something else that's been mentioned... is that in essence the rules regarding budget debt have been in place ever since the inception of the Euro and were first broken... by the elephant in the room... Germany.

The Greek Government Is Falling Apart - February 10, 2012

Although hopes for a positive outcome in Greece were buoyed by news that Greek politicians had come to an agreement on austerity measures yesterday, that enthusiasm has quickly vanished.

Eurozone finance ministers rejected the deal in its current form, saying that it still didn't go far enough in cutting down Greece's unsustainable public debts.

German Finance Minister Wolfgang Schaeuble estimated that Greece's public debt could remain as high as 136 percent of GDP in 2020 according to Bloomberg, despite strict stipulations that Greece bring its public debts down to 120 percent by that year.

Markets are sour, the euro is diving, and suddenly the picture no longer looks rosy in Greece.

We'll keep you up to speed throughout the day right here with all the latest news coming out of Greece.

UPDATE (8:25 AM ET): Violence has broken out again, with hooded youths throwing stones and police firing grenades in Syntagma square. This comes as workers begin a 48-hour strike sponsored by the country's two large umbrella unions.

UPDATE (8:33 AM): Greek cabinet members will meet at 1 PM EST on whether to endorse those measures. Despite fissures in the ruling coalition, they are likely to go through with this

UPDATE (8:41 AM): This photo from Associated Press shows petrol bombs exploding outside the Finance Ministry today.

UPDATE (8:53 AM): LAOS party leader George Karatzaferis said he can't agree to the new austerity agreement. According to AMNA news, ministers from that party have submitted their resignations to the prime minister's office.

UPDATE (9:02 AM): Reuters reports that Greece's police union wants to arrest EU and IMF officials for their austerity demands. It obtained a copy of a letter from the Federation of Greek Police outlining this anger:

"Since you are continuing this destructive policy, we warn you that you cannot make us fight against our brothers. We refuse to stand against our parents, our brothers, our children or any citizen who protests and demands a change of policy...We warn you that as legal representatives of Greek policemen, we will issue arrest warrants for a series of legal violations ... such as blackmail, covertly abolishing or eroding democracy and national sovereignty."

The threat is more symbolic than realistic, the report says, since a judge would have to first authorize any warrants.

UPDATE (10:30 AM): This AP photo has garnered some attention, as it demonstrates Greek anger towards new austerity demands from the German-led troika.

UPDATE (10:40 AM): According to the Guardian, there are rumors now that another Greek minister has quit—this time Deputy farm minister Asterios Rodoulis. Some video of the protests and today's events is available on the Guardian's website.

UPDATE (11:15): The Greek government is falling apart. Not only has Bloomberg confirmed the resignation of the farm deputy, now it reports that the Greek foreign minister just resigned as well.

State broadcaster ANA is saying that Greek PM Lucas Papademos will announce a cabinet reshuffle. That could jeopardize the bill on austerity measures and consequently disbursement of the next bailout.

UPDATE (11:24 AM): A few more details about some of those resignations, from the English-language arm of Greek newspaper Kathimerini:

Three Popular Orthodox Rally (LAOS) MPs have resigned from the Cabinet but two have said they will go against their party leaders’ wishes and vote in favor of Greece’s new loan agreement.

Transport Minister Makis Voridis, Deputy Merchant Marine Minister Adonis Georgiadis and Deputy Agriculture Minister Asterios Rondoulis tendered their resignation after LAOS leader Giorgos Karatzaferis said that he would not support the loan agreement following lengthy negotiations this week.

However, in their resignation letters, Voridis and Georgiadis, said they would vote for the new bailout on Sunday.

UPDATE (11:45 AM): European markets closed a few minutes ago, and it wasn't pretty. The Athens Stock Exchange fell the most, but stock markets closed negative across the board.

UPDATE (12:15 PM): In a conference today in Singapore, Fitch managing director Tony Stringer said that if Greece doesn't get its act together soon, it probably won't have enough time to avoid disorderly default.

“They must get this deal agreed really within the next few days to enable them sufficient time to do the paperwork and have the new bailout money disbursed before that bond is due,” Tony Stringer, a managing director at Fitch, said in a conference in Singapore today. “If they don’t manage to achieve that, then it could be in the realms of a disorderly default."

...“The manner of the default and whether Greece can stay in the euro zone are critically important too, to the future of the single currency,” Stringer said today. “If there is a negotiated agreement then we don’t think that’s going to be a particularly negative development for markets, it would be a positive development.”

UPDATE (12:33 PM): According to Athens News, PM Papademos arrived at parliament to begin a crucial cabinet meeting. There were reports that this meeting would be broadcast live, but it looks like we might just get highlights at the end of it.

UPDATE (12:46-12:57 PM): PM Papademos has emailed a statement from the meeting, and it has been obtained by Bloomberg. Papademos has apparently ordered government ministers to approve the austerity plan, saying "whoever opposes the bailout does not belong in government." However, he wrote that he was certain cabinet ministers would do their duty.

He adds that the loan plan will secure Greece's place in the euro, and that a disorderly default would cause social and economic chaos. Papademos noted that the troika plan accounts for a recovery in 2013 after another year of recession, and growth of 2.5% in 2014 and 2015.

Even more than that, he says that the eurozone's finance ministers held up a decision on the loan agreement because of political uncertainty. (Funny, but we didn't think that was the reason they gave...)

UPDATE (1:53 PM): The New Democracy and PASOK parties pushed meetings on the new austerity measures scheduled for today to tomorrow as the government struggles to deal with cabinet resignations, public angst, and EU leaders' latest demands, Athens News reports.

Elswhere in the eurozone, Standard & Poor's just cut the ratings of 34 Italian banks.

UPDATE (2:48 PM): It's unclear when exactly those austerity measures will be put to a vote in front of paraliament, but a number of prominent international and Greek news organizations are saying "Sunday or Monday."

Protests, too, will continue into the weekend, as the 48-hour general strike continues. Greek newspaper Kathimerini reports that there will also be a rally in front of parliament beginning at 5 PM local time (10 AM ET). According to the same report, there were six people arrested and two people injured today in clashes between "self-styled anarchists" (not your typical protesters) and the police.

greg~judy wrote:ok, we have been languishing for a while in our usual euro~pessimism...
there's been too many "positive" rumors~spin lately, obfuscating~denying the dismal reality...
SO... let's jump back in now - with a vengeance...!
we wonder why the "breaking news" from friday did not really "break" (into msm news)
anyway, the scab over the euro~ugliness has been left undisturbed for too long
let's rip it off forthwith, let's re-expose the festering~debt~debacle underneath...
those who had even the fainest shred of optimism might now pause to reconsider?
disorderly default (want it, or not) is coming to some democracy near you?
we'll be watching the markets + currencies + preciousssss closely this week...
CYA y suerte to all (who might wish to be even the least bit proactive)...?

The Greek state is being robbed of millions of euro each year by its citizens fraudulently claiming disability benefits... Despite repeated promises to act, Greece has thus far seemed powerless to tackle the tax evasion and fraud that are costing billions... Thousands of Greeks are suspected of collecting the pensions of dead relatives at a cost of yet more millions to the state... About 800,000 civil servants can claim a bonus simply for turning up to work on time.

Greek lawmakers looked set to endorse a new and deeply unpopular austerity deal on Sunday to secure a multi-billion-euro bailout and avert what Prime Minister Lucas Papademos warned would be "economic chaos."

After days of dire warnings and threats of rebellion, parliament began debating the bill setting out 3.3 billion euros ($4.35 billion) in wage, pension and job cuts as the price of a 130-billion-euro rescue package from the European Union and International Monetary Fund - Greece's second since 2010.

Greece needs the funds before March 20 to meet debt repayments of 14.5 billion euros.

But the bill has caused turmoil within the ruling coalition and deepened a social crisis among Greeks already hit by a round of cuts and tax hikes to ease the country's huge debt burden.

During the debate a Communist Party deputy hurled the pages of the bill on the floor of the chamber and in fiery exchanges with lawmakers, Finance Minister Evangelos Venizelos warned them: "If the law is not passed, the country will go bankrupt."

Afterburner wrote:150,000 public sector workers are going to be laid off, as well as other measures including cutting the minimum wage.

Painful measures but nothing compared to what would happen if Greece was forced out of the eurozone and let's not forget that Greece is largely the author of its own misfortune.

There will be another meeting on Wednesday in Brussels to determine whether tonight's vote is sufficient.

James-in-Wonderland wrote:Is the tourist industry coming back strong any time soon? Nope. Garments? Nope. Their only hope as i see it...

James-in-Wonderland wrote:

Apparently Greeks work hard, according to Wiki: " The Greek labor force, which totals approximately 5 million, works the second highest number of hours per year on average among OECD countries, after South Korea "

patagoniax wrote:

James-in-Wonderland wrote:

Apparently Greeks work hard, according to Wiki: " The Greek labor force, which totals approximately 5 million, works the second highest number of hours per year on average among OECD countries, after South Korea "

Working long is not working hard, nor productively. Look at Chileans. They show up for many hours, yet demonstrate marginal productivity. Just showing up doesn't get it.