Additional Greek Bailout: A Blessing or a Curse? tagged: , , , , , , , , , , , ,

Additional Greek Bailout: A Blessing or a Curse?

Posted by keeptalkinggreece in Economy, Editor

The new bailout for Greece is unofficially sealed according to international and national media. A pretty packed additional aid of estimated €30-35 billion, revenues of €25 billion through privatizations and a kind of debt ‘recycling’ for €20 billion through private investors will apparently help Greece meet its creditors’ expectations and state expenditures needs. Details of the new deal are yet to be negotiated. EFC officials try to avoid a ‘credit event’ through the private investors, i.e. that the rolling over of €20 billion debt will not end or be considered as a ‘debt restructuring’. A further issue to be cleared is the agency that will manage the privatizations.

The bailout will be given to cover financial needs for the period of 2012-2014. The decision of the bailout is to be taken during the EU Summit on June 30, 2011. However precondition for the additional bailout is that the Mid-Term Stability Program will pass by the Greek Parliament. The vote is due in the middle of the month.

The additional bailout will accumulate the total loan at 140 billion euros excl. the interest rates. The new ‘aid’ will fall heavily on the shoulders of the average taxpayer, it will lead the society into a never ending austerity and take citizens as infernal hostages. It ill be recession and unemployment that will explode instead of development and growth.

 Greece looks like the guy who purchase one credit card after the other to pay outstanding debts. He collects 15, 50, 100 credit cards from different banks. However, unable to even pay the interest rates, at the end he ‘defaults’ and goes to jail. Or her  make an arrangement, a ‘hair cut’ and ‘debt restructuring’ with the banks. and at the end everybody is unhappy… But that’s the outcome of an incredible mismanagement.

Antonio Lengua, equities trader from Italy, who runs the hawktrader -website, e-mailed me this morning that

“the markets have welcome the package : the Greek CDS (credit default swap) are trading 50-100 bp lower. Very good purchases of paper from Italy and Spain. Greek bonds could rally even further but the incoming vote still keep investors on the sidelines : they want first to be sure that there are no surprises in the parliament !!”

Greek lawmakers are elected -in contrast of  euro zone ministers. And they have to face the anger of their voters. Greek voters are frustrated as they see their income decreasing daily. Greek voters are frustrated because they realize much clearly than the euro zone officials that Europe is in a fiscal and bank crisis, bigger than officials want to admit. Greek voters are frustrated that the incoming money is spent just for the shake of paying interest rates and state loans. And they believe that the whole issue cannot go on like this.

Greek voters are convinced that the solution can only be a political one. The proposal of the European Central Bank start printing €€€ is gaining supporters. Greek voters want to be released from an economic system run by traditionalists whose brain cells have grown fatally fat from too much sitting in  comfort chairs. The European Union and the Euro need urgently a re-juvenile cure. And there are not just the Greek voters who think this way.

Read Full Article on Additional  Greek Bailout in Capital.gr