Greek Austerity Now: Bankster Cartel’s Another Victory Over the People

Once again, the bankster cartel wins. The Greek Parliament just voted for more austerity measures. Don’t get me wrong, austerity is a good thing. It should be done. But not at gunpoint and threats that are solely aimed at saving the way of life for the bankster cartel. The only thing this will do is delay the inevitable.

IMO, the right thing to do would have been.

1. Default on debt. This should be done first. Right now, default is delayed, not prevented. What they have done now is kicking the can down the road and make it the problem of future leaders. Every lender knew that default is always an option and should have been prepared for it. Sure there would have been run on the banks. The bankster regime will eventually crumble, which will happen with run on the banks – if not in Greece, but in some other part of the Western economies.
2. Leave Euro. It really looks like Euro is a terrible experiment and its demise is inevitable.
3. Step 3: Restructure the debt – in your new currency. This is what happens when you and I take loan and default, right? Why don’t banksters take their own medicine? Put the gun back to banksters’ head. Give them some 40 cents on the dollar. Force some of the originators and peddlers of CDOs and underwriters of fluffy CDS contracts into soup line. These are the people who are responsible for sending pension funds to bankruptcy and even countries into default.
4. Finally, austerity. Cut down on spending.

The news Via Guardian:

The votes are just in, and the €28bn (£25bn) austerity bill has been passed, but Greece‘s troubles are still a long way from being resolved.

What has the Greek parliament just voted through?

The programme covered €28bn of spending cuts and tax rises, and permission for €50bn of asset sales. Measures include cuts to public sector pay, a new solidarity levy on income, and cutbacks in government spending. Here’s a full rundown of the key measures.

Does this mean victory for prime minister George Papandreou?

Not yet. The Greek parliament will reconvene on Thursday to vote on an enabling law that will allow the government to speed up the pace of reform. This will also include a specific breakdown of some of the fiscal measures, including the tax changes and a €50bn privatisation programme. Analysts believe this could be even tighter than Wednesday’s vote, given Papandreou’s narrow majority.

Why did MPs agree to these measures?

Greece has been struggling to meet the conditions of the original €110bn rescue loan agreed with the EU and the International Monetary Fund last year. Eurozone finance ministers had insisted on tougher austerity measures in return for the next slice of the package, worth €12bn.

What would happen if Greece did not receive the €12bn?

More than €6bn of Greek government bonds mature in July, meaning they must be repaid then. Another €6.6bn matures in August. Greece cannot roll the debt over by issuing new bonds, as the financial markets are now demanding ludicrously high interest rates on Greek government borrowing. The €12bn tranche of aid is already earmarked to cover these payments – without it, an immediate disorderly default looked inevitable.

So will these measures definitely be implemented?

That’s the twenty-eight-billion-euro question, given the depth of public unhappiness about the measures. The Greek administration doesn’t have a great track record of preventing tax evasion, for example, so the planned clampdown may not yield as much as hoped. The VAT increases, extra taxes on luxury goods, and new “solidarity levy” may be easier to enforce.

Will this calm the financial markets?

The initial reaction has been favourable, with world stock markets up on Wednesday even before the result was announced. Greek government debt has also rallied slightly. However, the yields (interest rates) on Greek bonds are still far too high for it to consider tapping the financial markets again (the two-year bond has a yield of 27.8%).

So is a Greek default still likely, despite the measures being approved? And what would happen if so?

Eventually, yes, because Greece’s debts still look unsustainable: as outgoing ECB member Axel Weber said earlier this week, “ultimately, solving the Greek debt problem will have to deal with the outstanding, past amount of debt”. Lending them yet more cash is just a stopgap – it’s a bit like borrowing on your credit card to pay your mortgage. Unless your fortunes improve – which looks highly unlikely for poor Greece – it makes the situation worse, not better, in the long run. If Greece did default, even through a “soft” option such as a restructuring of its bonds, it would be likely to create chaos in world financial markets, as investors tried to work out who was exposed to the dodgy debts.

How safe is the euro looking?

Shaky. Investors are warning that even if Greece scrapes through the next few weeks and its problems are solved for the time being, the markets’ attentions will turn to the other bailed-out members of the single currency – Portugal and Ireland – and potentially to Spain and even Italy. But on the other hand, the actions of eurozone politicians over the past few weeks, though chaotic, have suggested they remain committed to the project, and are prepared to put their taxpayers’ money on the line to salvage it.

When might a second bailout deal be agreed?

Eurozone finance ministers will discuss this at an extraordinary meeting on 3 July. In principle, there is agreement for a €110bn package of additional financial support. However, this is reliant on a solution being found that will allow private creditors to voluntarily roll over their debts without this being declared a default. The best bet appears to be a proposal from France under which owners of Greek bonds would invest half the money back into Greece as they mature. Agreement on this new package looks some distance away, though.

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