Chas' Compilation

A compilation of information and links regarding assorted subjects: politics, religion, science, computers, health, movies, music... essentially whatever I'm reading about, working on or experiencing in life.

Saturday, July 09, 2011

Greece has an 81 percent chance of defaulting?

Those don't sound like good odds:

Euro zone warns Greeks on sovereignty and privatization
BRUSSELS/BERLIN (Reuters) - Euro zone finance ministers have approved a 12 billion euro ($17.4 billion) installment of Greece's bailout, but signaled that the nation must expect significant losses of sovereignty and jobs.

Ministers in the Eurogroup gave the go-ahead for the fifth tranche of Greece's 110-billion-euro financial rescue agreed last year, and said details of a second aid package for Athens would be finalized by mid-September.

But within hours of Saturday's decision, Eurogroup chairman Jean-Claude Juncker warned Greeks that help from the EU and International Monetary Fund would have unpleasant consequences.

"The sovereignty of Greece will be massively limited," he told Germany's Focus magazine in the interview released on Sunday, adding that teams of experts from around the euro zone would be heading to Athens.

"One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone," Juncker said.

Greeks are acutely sensitive to any infringement of their sovereignty and any suggestion that foreign "commissars" might become involved in running the country is an incendiary political issue and could trigger more street protests.

[...]

Juncker also said Greece must privatize on a scale similar to the sell off of East German firms in the 1990s.

"For the forthcoming wave of privatizations they will need, for example, a solution based on a model of Germany's 'Treuhand agency'," Juncker said, referring to the privatization agency that sold off 14,000 East German firms between 1990 and 1994.

[...]

Financial markets still see an 81 percent chance that Greece will eventually default, and German Finance Minister Wolfgang Schaeuble told Der Spiegel in an interview that Berlin was making preparations for such an event -- even though it does not expect it to happen.

Private financial institutions have held talks with finance ministry and central bank officials in euro zone countries to discuss under what conditions the private sector would be willing to help finance Greece and by how much.

Those discussions continue, with the involvement of the private sector in the next package a must for several euro zone countries as voters grow increasingly opposed to shouldering the burden of bailing out Greece on their own.

But private sector involvement must be voluntary to avoid triggering another downgrade of Greek debt to default status by ratings agencies, a development which could put the whole Greek banking sector at risk. [...]

It sounds like they (the EU) knows that what they are doing is going to fail, and they are hoping that the private sector will somehow bail them out of the mess government has made? How much sense does that make? And as for their comparison to East Germany's Treuhand selloff... well. Read the whole thing. It doesn't sound promising at all.

Meanwhile, back home:

Debt ceiling: Why Sunday could be make-or-break day for 'grand bargain'

I hope they do reach a grand bargin. I have no doubt that it won't be perfect, and that it will be criticized from both sides (as compromises usually are). But compromise IS the nature of politics in a democratic republic. An even though the "bargain" will be imperfect, I think it will be better than the continuing doubt and uncertainty being created by the ongoing lack of a budget, and lack of a plan to deal with the deficit. It's dangerous; we are teetering on the edge of an abyss. And the fact that it has been allowed to go on this long, is shocking. Tragic and shocking.

     

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