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Greece Warns Against Default as EU Finance Chiefs Meet
ATHENS – Greece's finance minister warned Sunday of the catastrophic results that a debt default would have for his troubled nation as the government prepared to announce an overhaul of the pension system.
A tourist takes pictures at the Acropolis in Athens. Greece's finance minister warned of the catastrophic results that a debt default would have for his troubled nation as the government prepared to announce an overhaul of the pension system. (AFP) EU finance chiefs meanwhile met
in Brussels to try and stop the collapse in investor confidence
stemming from the Greek crisis from spreading to other eurozone nations
as observers nerouvsly awaited market reactions on Monday.
"The banking system would stop operating and businesses and households would automatically lose access to bank funds," George Papaconstantinou told To Vima daily, saying Athens would avoid this outcome at all costs.
"We would enter an even deeper recession of around 10 percent, maybe more, which we would not exit for years," the minister said.
He also said unpopular austerity measures agreed with the EU and the IMF in return for emergency loans could be revised if the economy improves.
"If we succeed and early results are positive, we will be able to return to a negotiation table...(and) save certain things," he said.
Greece is burdened by giant debts and a recession-mired economy and appealed to the European Union and the International Monetary Fund for help as it ran out of options to borrow on the markets amid steeply rising costs.
Fears of a Greek default have put a focus on the weakness of other European economies such a s Portugal and Spain, hitting the euro.
Crisis talks between the EU's 27 finance ministers began in Brussels on Sunday, with sources saying the focus of talks would be plans for common bailout fund of 60 billion euros (76 billion dollars) for troubled members.
Greece hopes funds from its 110-billion-euro bailout loan from its 15 eurozone partners and the IMF will start flowing before its next maturing debt payment on May 19 so as to avoid a default.
The government on Monday was set to finalise the latest element of its crisis package -- a controversial pension reform, which would then go to parliament for a vote.
The pension reform progressively raises the mandatory stay in the workforce and imposes a uniform retirement age of 65 for men and women.
The country's main union that represents around a million private employees has pledged to mobilise to prevent the pension reform from passing.
One student from Greece's powerful anarchist movement who is taking part in the protests, Iasonas, 23, told AFP: "My parents are going to lose 10,000 euros a year. They feel like they've worked all their lives for nothing."
Prime Minister George Papandreou has called a meeting with political leaders for Monday in a bid to rein in social tensions, with far-left parties boycotting the talks in protest against the government's austerity plans.
But a poll showed Greeks grudgingly accepting the need for cuts.
The survey in To Vima daily showed that 55.2 percent of respondents would accept austerity measures, while 56.3 percent prefer wage cuts to national bankruptcy and 71.3 want squabbling Greek political parties to cooperate.
The nationwide survey of more than 1,000 Greeks by Kappa Research was conducted the day after three people died in Athens when protesters firebombed a bank.
The deaths, the first in a Greek protest in two decades, have also divided the country on the necessity of new demonstrations. A candlelight vigil against protest violence will be held in front of parliament later Sunday.
Anti-globalisation activists held a separate protest outside parliament later Sunday against corruption in Greek politics.
A leftist womens' group earlier also held a protest outside the defence ministry to demand a halt to costly weapons purchases.
An arms race with neighbouring Turkey has cost Greece billions of euros.
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13 Comments so far
Show AllOn the one hand there be monies "Owed" to the worker in the way of pensions, wages and the like. The Worker ultimately creates all wealth and in good faith have paid taxes for their working lives to ensure a somewhat comfortable lifestyle. The typical worker owns little more then a modest home and might have enough money for a vacation each year.
On the other we have the INVESTOR who lends their money in order to garner a return on that investment. The majority of these investors represent a small percentage of the worlds population and are amongst the worlds wealthiest.
The Government is saying "Defaulting of our debt to the INVESTOR will lead to Chaos and collapse"
They are on the other hand saying "We must default on the monies promised the worker (pensions wages) in order to pay these investors.
The INVESTOR comes first. What is the underlying moral difference between saying..
"Investors have these promises (Bonds treasuries) indicating we MUST pay them back and the worker stating "we were promised these pensions and wages and voted for the same when we elected our Government to represent us" ?
How is it that the investor class, most of whom do not even live in Greece and do not vote there are first at the trough when there not enough WEALTH to go around ?
This is NOT democratic. This should refute any notion that people might still have that Democracy can only come about via Capitalism.
I can see no conceivable way Greece can ever repay this massive debt. They do not have the resources for export. They are not a manufacturing power. They have a small population. This means that for this lifetime and the lifetimes of generations to come, the Greek worker will sacrifice ever more of their limited income to send OUT of Greece to the Investor Class.
This means perpetual wage/debt slavery.
Russia defaulted on its debt and the world did not end. The "World will end if Greece defaults crowd" are spokesmen for the UBER wealthy families who want to ensure they get paid.
succinctly put gwnorth..................
and look at all the russian millionaires now.................
Lycurgus was arguably the most famous Spartan of antiquity. (Don't read about him on Wiki, read Plutarch on Sparta.) Lycurgus saved Sparta from itself. It seems that over time some Spartans acquired most of the wealth - property, money, slaves, etc. Some Spartans were left poor. All Spartans were expected to defend the empire equally. Early capitalism was then as now like the board game monopoly. The Spartans had been many times around the board and some people owned hotels on all the properties and some people were sitting on the sidelines with no real stake in the game.
Lycurgus saw this as inequitable and a threat to Sparta's national security. To remedy this Lycurgus confiscated all the land and redistributed it equally among the Spartans. He devalued the money. Possession of gold was not allowed. With no gold in Sparta foreign trade dried up. Coins were made of lead and hording was forbidden. The Spartans were once again a military people and extreme nationalists. Sparta ruled for years to come. Solon took similar actions years latter.
In the Old Testament the Israelites had what was called a Jubilee year ever 49 years. In this Jubilee year all debts were forgiven. Interest could not be charged on loans to Israelites. It seems that the problem of some people ending up with all the wealth and others becoming slaves to debt is as old as time itself. The Israelites saw this as morally wrong and would not allow it.
Thomas Payne was my hero of the enlightenment. His theme was that we were unjustly subject to and subjects of the inherited wealth of the crown in perpetuity. Payne asserted that Normans thugs came with swords 400 years prior and conquered the English people. With the "right of conquest" they ruled as the crown of England. The "right of conquest" is that a conquered people is spared death by agreeing that they and their heirs be subject to the conqueror in return for their lives. In the Biblical time of the famine, the Egyptians sold themselves and their heirs as slaves to Pharaoh rather than die of starvation and they thanked Pharaoh.
The great thinker's of the enlightenment wanted people to be free. After the American revolution and the French revolution the spread of freedom slowed. The French revolution in effect failed because they did not redistribute the land - the wealth. 20 years after the revolution the sons of those who met the guillotine were still in control of the properties of their fathers. Napoleon marched the young able bodied men out of the country off to conquer the world and kept them occupied for 20 years. The enlightenment died a slow death. Like today people talked and wrote and meet and rallied and nothing more changed. The people were still poor and led wretched lives.
In the early to mid 1800's Marx and Engels came along and proposed that there would be no change without a bloody uprising. 70 years later the Bolsheviks acted on Marxist theory. The Russian revolution was a labor movement. The whole 20th century was about stopping the Bolsheviks. Hitler attacked Russia. Hitler lost his army on the Russian front. The Russians won WWII. The cold war was about stopping the Bolsheviks and keeping the western oligarchy in place.
Today two tenths of one percentile of the people own most everything again and they have no intention of giving it up. Was their wealth acquired in the same fashion as the Norman's of old? Who is to say. These people don't pay taxes, don't support the commons and don't believe that their subjects have a right to health care. I again suggest that maybe a general default of debtor nations would be a good thing. What better way of redistributing wealth without blood being shed. Why should a few men have billions in the bank while million live in poverty all over the world?
Thank you for stating the lessons of history, besides being obvious to any thinking person.
Almost all wealth held by two tenths of one percent and the worlds political leaders can't see what is wrong with this picture?
I say they are more stupid than greedy---and that is pretty damn stupid.
SJRYAN -- what a SUPERB, cogently powerful explanation to learn from. THANK YOU so much!!
A most important fact was left to the very end of the article, where it was most likely to be cut off by a space-conscious editor: "An arms race with neighbouring Turkey has cost Greece billions of euros."
This sent me back to Wikipedia. Article 42, paragraph 7 of the "Consolidated version of the Treaty on European Union/Title V: General Provisions on the Union's External Action Service and Specific Provisions on the Common Foreign and Security Policy"* states: "If a Member State is the victim of armed aggression on its territory, the other Member States shall have towards it an obligation of aid and assistance by all the means in their power, in accordance with Article 51 of the United Nations Charter." Unless Greece has reason to doubt that the EU would effectively defend it in the event of an attack, Greece did not need a massive military buildup of its own to defend itself from Turkey (itself a prospective EU member). Granted, paragraph 3 says "Member States shall undertake progressively to improve their military capabilities", but that did not oblige Greece to indulge in such an orgy of military spending. (It was driven, I'm sure, by the ancient and perpetual hostility between the Greeks and the Turks.)
Greece could therefore be greatly relieved if the EU would buy most of Greece's arsenal at full market value and give whatever additional security guarantee Greece finds necessary. The hardware could then be distributed among the member states and counted as a partial fulfillment of Paragraph 3.
If Greece is a member of NATO (which I didn't check), that just lays it on doubly thick.
*http://en.wikisource.org/wiki/Consolidated_version_of_the_Treaty_on_European_Union/Title_V:_General_Provisions_on_the_Union%27s_External_Action_Service_and_
Specific_Provisions_on_the_Common_Foreign_and_Security_Policy
(As usual, the URL is one long string that you will have to piece together)
Thank you for the notice it is an extremely important details isn't it. its that kind of observation that leads to cooperation and eventually change. Take Care
In Soulidarity
Is Greece going to domino the US?
I really don't think so. The Roman Empire staggered on hundreds of years past it's natural point of demise. We actually, the USA, ran out of gold reserves back when Nixon took us off the gold standard in 1972. France demanded its silver back. We had already spent it on the Vietnam War so we just refused to do it. The same will happen if China demands payment for it's bonds.
We are in a war economy, and the dollar is a battleship currency. Oil nations who refuse to accept it for oil, can expect an aircraft carrier to anchor off-shore with ill intent. Examples are Iraq, Iran and soon Venezuela. All the world's rich known oil reserves are surrounded by military bases like the Caspian Sea and the Persian Gulf.
But the miscalculation of this kind of Global Strategy is the environment. To go on under the thumb of Oil Barons is to accelerate our own extinction on this planet. Without diversion to solar, as it is the only alternate energy that is completely safe and abundantly available, and without addressing population control, the parts per million over 400 that we all already breathing in some places will asphyxiate us all eventually.
Our wakeup call will be the breakup of the Greenland Ice Cap. This will flood Republican's Florida waterfront homes with twenty feet of sea-water. Followed by Pulmonary failure all over the world from too much Methane as the tundra decomposes. It's apparent, to me at least, that great efforts are being made to hide the true scope of ice pack summer melt on the pole. But once Greenland breaks up, the flooding of Florida will remove all doubt about whether the men running this government are worthy leaders or just a bunch of shaved apes without a clue.
How long have we got? Well, solar sun spots just cranked up again this week buffeting the Earth. 2050 would be a miracle. But I'll be surprised if we make it to just 2020 without mass migration from flooding.
TJ
laura
With no idea whether there are any limits to the macabre tentacles of US foreign policy, I wonder what someone like John Perkins (author of Confessions of an Economic Hitman) has to say about the possibility of this being the result of a planned scheme from the US corporate mafia involved in "supporting" the necessary conditions to bring about this events in Greece, which leads to cracks in the EU.
Who stands to gain from the fall of EU?
Wouldn´t that leave US in a position to offer its "help" in exchange for furthering its tentacles (divide and conquer) for an ideal polarization of the world into two teams that would simplify show of the War Games: East vs West, the show of ultimate destruction! Like an action movie. Oh, how great, the ultimate action movie, most sports lovers will love this one. The arena is ready! Here come the gladiators, and the man-eating lions for the greatest show on earth. This time it will finally hit home! Action for the bored masses! Oh!
Just wondering where are the interests of greed and power leading us?
THERE IS ALREADY AN UNDECLARED AND UNREPORTED NUCLEAR WAR GOING ON IN IRAQ.
But, the media is imbedded, so nobody notices and the show must go on. The masses are enjoying popcorn and the action drama.
While the "intelligent" theorize. Gutless masses. Where do we stand?
What sickening inaction!
Let me see if we can provoke indignation for action.
We do know that Goldman Sachs was right there at the helm.
If they were hanging around with nothing to steal, they were wasting time and opportunity.
Thank you Bardamu for validating the gut feeling.