ANARCHY DAY 10: Germany to Greece “No Austerity, No Bailout”

Posted: May 10, 2012 in Anarchists & Communists

Reuters 5-10-12

European Union paymaster Germany warned Greece on Thursday that European  partners could only go on aiding debt-ridden Athens if it sticks to an  international bailout programme rejected by voters in a general election.

Financial markets, spooked by the risk of a disorderly Greek default  spreading turmoil, steadied as Spain’s move to clean up its banks and the  release of a key payment to Athens eased immediate concerns about the euro  zone.

“Greece can rely on the solidarity of Europe, but if Greece does not help  itself, there is nothing to be done,” German Finance Minister Wolfgang Schaeuble  told a news conference.

“Whether Greece is ready to do what is necessary – only the Greek people can  decide.”

The head of the euro zone’s rescue fund, Klaus Regling, said Athens would  have to agree with international lenders on the terms for financial aid before  any more money flows after June.

The European Financial Stability Facility (EFSF) agreed on Wednesday to  release the latest 4.2 billion euro ($5.4 billion) aid tranche to tide Greece  over for the next two months, as talks to try to form a government in Athens  appeared doomed.

Socialist leader Evangelos Venizelos, whose party came third in Sunday’s  election, made a last-ditch effort to cobble together a coalition that would  back the deeply unpopular EU/IMF bailout, but Greece seemed to be moving  inexorably towards new elections, probably next month.

A Reuters poll of economists taken in the last two days showed that only a  slim majority – 35 out of 64 respondents – think Greece will still be in the  euro zone by the end of 2013. The rest thought it would not be.

In Brussels, a senior EU official said there was no desire among euro zone  states for Greece to leave the 17-nation currency bloc. He also said the bailout  terms were not negotiable, but added it may be possible to adjust the “outer  margins” of the 130-billion-euro rescue package.


Highlighting one reason why two-thirds of Greek voters cast ballots for  anti-bailout parties of the radical left and far-right, figures released on  Thursday showed unemployment hit a record 21.7 percent in February, with a  staggering 54 percent of young people aged 15-24 without a job.

Budget cuts imposed since 2010 under the terms of the bailout to save Greece  from a chaotic default have caused a wave of corporate closures and  bankruptcies, fueling anger and despair.

Greece is in its fourth year of a deep recession, and the absence of economic  growth in much of the currency zone is making it harder for countries to reduce  their public deficits and debt.

France’s new president-elect, Francois Hollande, has vowed to shift Europe’s  focus from hair-shirted austerity to measures to revive growth and will take  that message to Berlin right after his inauguration next Tuesday.

But German Chancellor Angela Merkel, talking tough before a regional election  next Sunday that her Christian Democrats look set to lose, rebuffed pressure for  new stimulus measures funded by debt to revive growth in the euro area.

“Growth through structural reforms is sensible, important and necessary,” she  told parliament in Berlin. “Growth on credit would just push us right back to  the beginning of the crisis, and that is why we should not and will not do  it.”

Merkel faces calls from both her centre-left opponents at home and many  European governments to relax the austerity measures that, as leader of Europe’s  largest economy, she has prescribed as the remedy for the sovereign debt  crisis.

“So much has been discussed, from to euro bonds to leveraging, they are all  hailed as miracle cures then deemed unsustainable,” Merkel told parliament.  Hollande said just before his second-round victory that he wants to reopen the  discussion on common euro zone bonds with Berlin.  In Paris, a spokesman for  Hollande’s Socialist Party said he would not be deflected from his growth drive  by Merkel’s comments.

“Angela Merkel is sticking to her position but she cannot override the will  of the French people,” spokesman Benoit Hamon told BFM TV.



In Spain, the government effectively took over the country’s fourth largest  bank, Bankia SA, in a radical attempt to put an end to a four-year banking  crisis triggered by a real estate crash.

Prime Minister Mariano Rajoy’s centre-right government said the banking  sector was safe and more measures to strengthen other ailing banks would be  announced on Friday, spurring a rebound on the Madrid stock exchange.

The sector has been through three major overhauls since the 2008 construction  and property market crash, which left lenders with at least 184 billion euros in  toxic assets, including repossessed housing complexes that stand empty.

Spain has insisted it can manage the bank rescues on its own and meet its  European commitment to reduce its public deficit to 3 percent of gross domestic  product next year.

But many economists, led vociferously by New York University doomsayer Nuriel  Roubini, believe Madrid will end up having to request a bailout, unless the euro  zone rescue fund is allowed to lend directly to its banks – a move Germany  opposes.

The situation in Europe is being closely watched by major investors  abroad.

“We are all watching with great concern,” said Gao Xiqing, president of the  China Investment Corporation, China’s $410 billion sovereign wealth fund.

“Over the years we repeatedly said we support a unified Europe, but now with  all these things, we’re very concerned,” he told Reuters at a conference in  Ethiopia.


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