Greece, and the European Union

[Value Buy]

Colin BarrFollowing the money in banking, economics, and Washington7comments Walking the Greek tightrope
By Colin Barr June 23, 2011: 4:50 PM ET Greece and its patrons took a half-step forward Thursday, leaving just a few hundred billion more to go.

Greek leaders reached an agreement with the European Union and the International Monetary Fund on another round of tax hikes and spending cuts, Reuters reported.


A soaring moment
The deal was taken as a positive on a day otherwise dominated by the sinking prospects for U.S. growth and policymakers' latest act of desperation, the release of oil reserves at a time when there is no supply shock. Stocks trimmed their losses after earlier falling as much as 2%.

But it is easy to see that the agreement reached Thursday is just the first of many hoops that the save-the-euro crowd must jump through.

Greece, after all, has a budget deficit, a contracting economy and more than 300 billion euros ($425 billion) in debt. This is not the ideal combination.

That's why it is far from clear that the austere medicine being advocated by the IMF and the EU will work. No surprise, then, that winning approval of the next round of cuts in the Greek parliament looks less than certain -- particularly after an opposition party leader pointed out that slashing spending in an economy already in deep recession creates "obvious problems."

This means that next week's vote on adopting further contractionary policies promises to be another nail-biter. And after that there is the question of squeezing further funds out of European and IMF coffers at a time when further bailouts aren't exactly big winners at the polls.

Beyond that lurks the danger of frazzled debt markets and nervous depositors. The European Central Bank has been funding the banking systems of the weak European countries, but a big bank run in Greece or elsewhere could give even the ECB pause.

As Sebastian Mallaby of the Council on Foreign Relations writes in a recent post on the fragile balance in Greece:

There are no easy ways out. For more than a year, Europe's leaders have pretended otherwise, kicking the can down the road with stopgap measures. But voters in both Greece and the core countries are running out of patience. The euro, intended to unify Europe, is driving it apart. A crunch may be approaching.

So the tightrope walk continues for another day. It's not anyone's idea of fun but it sure beats the alternative.

Posted in: crisis, euro, Greece

[❤ mollymouser ❤]

Interesting. (Thanks for the post)

[Value Buy]

Greece was all over the board today. It was announced earlier in the day that the northern European countries (actually Germany) was refusing to redo the loans. They had had enough double talk from Greece.
Then, late this afternoon Reuters reported Greece had made an agreement.
Now we will have to wait a few days and see.
I expect the Greek Government will have a call of No Confidence in a few days, and they will name a new cabinet.
Watch the Euro fall big time by August, imo.

[marshabar1]

John Stewart had an interesting bit on Greece last night. All about currency swaps and credit default swaps. Those bankers never quit. They're like drug dealers only deadlier.

Video here. Funny. But not funny. . . www.thedailyshow.com/#tool_tip_1

[EVT1]

Saw that- so who is the real enemy lately? I have no problem with marching out Goldman executives and other bankers and executing them as traitors, along with the rest of the shits that do nothing other than steal from the rest of us. In fact it is needed and welcome.

[marshabar1]

Follow the money right to the big banking cartel. Everything that happens happens because they want it or have blundered into it. American taxpayers are merely their milk herd. Going dry, yo.