GREECE - Bailout and Political Consequences

"Deal struck, pain and political hurdles ahead for Greece" PBS NewsHour 7/13/2015

Excerpt

SUMMARY:  Greece struck a debt deal after a long night of negotiations with European creditors.  According to the preliminary deal, the nearly bankrupt country will receive a $95 billion bailout over three years, and be subject to tough austerity measures.  Special correspondent Malcolm Brabant reports from Greece and Judy Woodruff gets reaction from Eswar Prasad of Cornell University.

JUDY WOODRUFF (NewsHour):  The nation of Greece and its creditors reached a preliminary deal to avert immediate financial collapse, but it demands that the struggling country make major concessions and means continued sacrifice and hardship for its people.

NewsHour special correspondent Malcolm Brabant has this report.

MALCOLM BRABANT (NewsHour):  Prime Minister Alexis Tsipras emerged after a long night of bitter negotiations.

PRIME MINISTER ALEXIS TSIPRAS, Greece(through interpreter):  Until the end, we battled to get an agreement to get the country back on its feet.  We were faced with a very difficult decision within hard dilemmas.  We took the responsibility to decide in order to avert the most extreme plans by conservative circles in the European Union.

MALCOLM BRABANT:  German Chancellor Angela Merkel was one of those conservatives who ran a hard bargain with the Greeks.  They seemed ready to quit until European Council President Donald Tusk, who is also president of Poland, persuaded them to keep at it.

DONALD TUSK, President, European Council:  The decision gives Greece the chance to get back on track with the support of European partners.  It also avoids the social, economic and political consequences that a negative outcome would have brought.

MALCOLM BRABANT:  Meanwhile, in Athens, pensioners saw no reason to celebrate, as they queued up to withdraw money outside closed banks.

GREECE - Government Blinks on Bailout

"Greek government blinks with new bailout proposal" PBS NewsHour 7/10/2015

Excerpt

SUMMARY:  Greek Prime Minister Alexis Tsipras is now offering concessions to creditors, such as a higher sales tax and pension changes, in hopes of winning a new bailout worth nearly $60 billion.  Jonathan Rugman of Independent Television News reports on the response to the controversial package in Greece.

JUDY WOODRUFF (NewsHour):  Now, the drama in Greece heading toward a climax at a Sunday summit of European leaders.

The Greek prime minister has now offered concessions to creditors, ranging from a higher sales tax, the so-called VAT — VAT — to pension changes.  The goal?  A new bailout worth nearly $60 billion.

Jonathan Rugman of Independent Television News reports.

JONATHAN RUGMAN, Independent Television News:  Climbing the steps of Greece’s Parliament today, the members of a government forced into a last-minute climb down.  Days ago, they were railing against Greece’s creditors.  Today, they were talking up the chances of a new deal with them this weekend.

OLGA GEROVASILI, Greek Parliament Member (through interpreter):  I am certain we will reach an agreement.  There was never any doubt.  The battle was lengthy and long and will reach its conclusion by taking the steps you already know about.

JONATHAN RUGMAN:  And greeted like a conquering hero, Alexis Tsipras, the prime minister, who is now pushing through Parliament the kind of austerity 61 percent of Greek voters rejected last weekend, because money or lack of it talks.

These banks could be bankrupt by Monday, and so the government, it seems, has blinked.  Greece’s proposals are on time and to the kind of budget a wary Eurozone might accept, giving into more austerity, with a standard VAT rate at 23 percent beginning in October, reducing the 30 percent VAT tax break applied to tourism-rich Greek islands, corporation tax rising from 26 percent to 28 percent, as Greece’s creditors demanded, and raising the standard retirement age to 67 over the next seven years.

But what is Mr. Tsipras hoping to win in return?  Well, 53.5 billion euros in loans over three years and, crucially, restructuring the repayment of Greece’s vast debt, though the 13 billion euros in tax rises and spending cuts is at least four billion euros more than the package Greeks on Sunday voted against.

A new and lasting deal with Greece will depend on the Greeks actually doing what they say they will and not buckling under the weight of more austerity.  And Germany will need to agree on some form of debt relief which doesn’t leave German taxpayers feeling shortchanged.  But whatever the outcome of this weekend’s talks, Greece is heading for years of economic hardship and the debate over its Eurozone membership is very unlikely to stop.

GREECE - Financial Bailout Falters

"Greek bailout talks falter amid threat of default" PBS NewsHour 2/17/2015

GWEN IFILL (NewsHour):  The escalating standoff between Greece and other members of the European Union showed little sign of abating today, prompting more questions about whether the country might soon run out of money, whether it would agree to continuing austerity cuts, or possibly leave the Eurozone altogether.

The demand from the E.U. to Greece:  Agree to an extension of a quarter-trillion-dollar bailout program by Friday, or risk losing assistance altogether.

That is not something many Greek citizens want to hear.

COSTAS SKLIROPOULOUS, Greece (through interpreter):  I am angry with the logic of the European Union.  Perhaps we should consider from now on how this country will acquire a different policy, one that could possibly be outside the frame of the European Union.

GWEN IFILL:  Still, some have called on the popular new left-wing government to rein in its resistance to what they have termed an ultimatum.

GEORGE AVGERINOS, Greece (through interpreter):  I would have liked them to be more serious from the very beginning.  When you’re asking with your hand stretched out, you can’t have this attitude.

GWEN IFILL:  European nations have propped up Greek’s unsteady finances since 2010, in exchange for deep spending cuts.  But with unemployment topping 25 percent and shrinking bank deposits, many who voted for the new government blame the austerity itself for the country’s economic ills.

In Brussels today, the Greek finance minister, who campaigned on a promise to scrap the bailout, denounced a plan to extend it as absurd.  But he didn’t rule out a deal.

YANIS VAROUFAKIS, Finance Minister, Greece (through interpreter):  Well, the next step is the responsible step.  Europe will continue to deliberate in order to enhance the chances of, and actually achieve, a very good outcome for the average European

GWEN IFILL:  His German counterpart, speaking on behalf of the Eurozone, said Athens’ goal remains unclear.

WOLFGANG SCHAEUBLE, Finance Minister, Germany (through interpreter):  Greece needs to decide whether they want the program or not.  Nobody understands what Greece wants and if Greece knows what it wants.

"After an election built on promises, what can Greece’s new leadership deliver?" PBS NewsHour 2/17/2015

Excerpt

SUMMARY:  As bailout talks continue between Greece and other EU members without clear progress, the new Greek government’s election promises seem at odds with economic reality.  Gwen Ifill talks to Jacob Kirkegaard of the Peterson Institute for International Economics and journalist John Psaropoulos about the potential for a rude awakening for Greece and its new leaders.

EUROPE - The Falling Euro

"Eyes on Greek instability as Euro plunges to nine-year low – Part 1" PBS NewsHour 1/5/2015

GWEN IFILL (NewsHour):  The value of the Euro plunged to a nine-year low against the dollar today, renewing fears in some quarters that the economic stability of Europe could be at risk.

Jeffrey Brown has our look at that.

JEFFREY BROWN (NewsHour):  One reason for the Euro’s recent fall, all eyes are once again on economic and political instability in Greece.

Just weeks before the January 25 national election, Greece’s left-wing Syriza Party is ahead in the polls, and its leaders want to change the terms of a bailout deal, one that imposes extreme austerity, forged as a result of the country’s economic crisis.

But that move would likely anger the rest of the Euro group, leading to a possible split.

MAN (through interpreter):  Greece has to remain in the Euro and has to keep its promises and the signature that Greece has done.  So the Europeans, I think they are right.  Greece shouldn’t distance itself from Europe and shouldn’t get out of the euro.

MAN (through interpreter): I don’t believe our leaving the Euro would be that much of a problem. I think we’d be in the same mess. We’re at zero. It can’t get worse. We will try to work and make things better.

JEFFREY BROWN:  Will Greece go so far as to leave the German currency?

The German magazine “Der Spiegel” reported that, for her part, Chancellor Angela Merkel is — quote — “no longer afraid that a Greek exit could result in the collapse of the entire Eurozone.”

But, today, a government spokesman insisted that Germany’s stance has remained the same.

STEFFEN SEIBERT, German Government Spokesman (through interpreter):  Since the beginning, it has been the policy of the federal government and its European partners to stabilize and strengthen the Eurozone, meaning the Eurozone with all its members, certainly also including Greece.  This has not changed at all.

JEFFREY BROWN:  In the meantime, another reason for the euro’s fall, as Europe’s economy continues to struggle, the European Central Bank is widely expect to take new action to stimulate growth, along the lines of the U.S. Federal Reserve’s quantitative easing of recent years.

"Will falling euro end up boosting Europe’s economy? – Part 2" PBS NewsHour 1/5/2015

Excerpt

SUMMARY:  One reason for the euro’s drop in value is the anticipation that the European Central Bank is going to enact some stimulus effort, along the lines of the U.S. Federal Reserve’s quantitative easing.  Jeffrey Brown learns more from Jacob Kirkegaard of the Peterson Institute for International Economics and Kenneth Rogoff of Harvard University.

GREECE - The Lingering Question

"With Greece Bailout Comes Relief, Lingering Doubts" (Part-1) PBS Newshour 2/21/2012

Excerpt

RICHARD EDGAR, Independent Television News: Today, the Greek finance minister returned home with the news. Today's decision in Brussels, he says, in regards to the political, economic and social consequences, is perhaps the most important of the post-war era.

EVANGELOS VENIZELOS, Greek finance minister (through translator): We avoided the nightmare scenario yesterday -- or today in the morning, rather. We had a positive outcome, which, as I said in Brussels, was neither easy nor obvious.

RICHARD EDGAR: The aim is for Greek debt to fall to just over 120 percent of the country's GDP, a measure the size of its economy, in eight years' time.

But the European Commission's own research which emerged last night says the plan is accident prone and debt could swell dramatically, only falling back to today's levels in 2020, despite the bailout. It's concentrating minds elsewhere in Europe that this might not yet be over.

Here in the U.K., meeting the Spanish prime minister, David Cameron calls for financial protection.

DAVID CAMERON, British prime minister: What I would say is that Greece has made its choice. And we now have to focus on the next step, which is constructing a firewall that is large enough to prevent contagion within the Eurozone.

RICHARD EDGAR: And Spain may need that firewall. Markets are turning their attention to other countries in the Eurozone.

BILL BLAIN, market analyst: What we think could be the next stage is that the market refocuses on how Italy and Spain in particular restore their economic growth. So it may be over the next couple of weeks that we see a renewed crisis in the rest of Europe.

RICHARD EDGAR: On the streets of Athens, the reality of their situation is sinking in.

WOMAN: I believe that Greece won't bear this burden.

WOMAN: I have two children, and I'm just scared for them. They most probably want to go abroad and live abroad.

RICHARD EDGAR: The full consequences of this rescue are still to be felt. This is the first act of the Greek tragedy, not the last.

"After Second Bailout, Is Greece Still Likely to Default?" (Part-2)
PBS Newshour 2/21/2012

EUROZONE - Greece Bailout Approved

More Euros down a blackhole?

"Europe Agrees on New Bailout to Help Greece Avoid Default" by STEPHEN CASTLE, New York Times 2/20/2012

Excerpt

Greece finally secured its second giant bailout early Tuesday after euro zone finance ministers agreed to save it from bankruptcy in exchange for severe austerity measures and strict conditions.

After more than 13 hours of talks, the ministers approved a new bailout of 130 billion euros, or $172 billion, under which private investors in Greek debt will take even steeper losses than expected to help stave off the country’s imminent default.

“We have reached a far-reaching agreement on Greece’s new program and private-sector involvement,” Jean-Claude Juncker, the prime minister of Luxembourg, announced Tuesday morning.

The agreement could be a new turning point in the European debt crisis, which has raised questions about the viability of the euro itself.

Though the outcome had been predicted, the meeting in Brussels proved more grueling than expected as euro zone countries, the European Central Bank and the International Monetary Fund wrestled through the night over a discrepancy in the amount of Greece’s debt to be reduced.

Under the bailout terms, which were not finalized until after 5 a.m. Tuesday, Greece will reduce its debt to about 120.5 percent of its gross domestic product by 2020, from about 160 percent now. Achieving a deal with that goal proved difficult because the steady deterioration of public finances in Athens have left the country’s creditors with problems in making the figures for the new bailout add up.

After several rounds of tough talks, representatives of banks that hold Greek bonds, who had agreed in October to take a 50 percent loss on the face value of their bonds, agreed to take a 53.5 percent loss on the face value, the equivalent to an overall loss of around 75 percent.

Meanwhile Greece will pay lower interest rates on its bailout loans, and the European Central Bank agreed to give up profits from Greek bonds bought at a discount, and to pass those gains back to the government in Athens. This will be done via euro zone member countries because of the Central Bank’s regulations.

Stricter rules on euro zone debt and budget deficits are already in place, and next week European leaders are expected to agree on a new, higher firewall for euro bloc countries that get into financial trouble, a step that policy makers hope will signal the beginning of the end of the crisis.

EUROZONE - From Greece and Italy

"Greece Reels as Government OKs More Austerity Measures" PBS Newshour Transcript 2/10/2012

JEFFREY BROWN (Newshour): And we turn to the European debt crisis in two parts.

The Greek government has signed off on a new round of austerity measures in exchange for another bailout. But European finance ministers say that may not be enough.

We begin with a report from Athens from James Mates of Independent Television News.

JAMES MATES: They thought they'd done what was required of them, passing another round of cuts to jobs, wages, and pensions, only to be told by the rest of the euro zone, that's not good enough.

The result was fury in Athens' central square. Through the trees, policemen, whose wages have been cut under the austerity package, are hit by petrol bombs. Six ministers have already had enough, resigning today from the government. The leader of the smallest of the three parties in the coalition has now withdrawn his support.

"I will not vote for more austerity," he told a news conference, amid complaints of being trampled by German boots.

That was a theme taken up by one paper here, who put German Chancellor Angela Merkel on its front page in Nazi uniform. That is how strong passions are running.

MAN: I don't want to leave my country, but I don't have a future here.

MAN: They have to vote, but not with a gun on their head.

JAMES MATES: The man holding that gun is the chairman of the countries that use the euro, and he's not loosening the purse strings.

JEAN-CLAUDE JUNCKER, Eurogroup: We cannot live with a system where promises are made and repeated and repeated, and where the implementation measures are from time to time too weak. So we are insisting on a real, true implementation.

JAMES MATES: And a vote in parliament, possibly as early as Sunday, that will attract another huge demonstration, it may make today's protests look like nothing more than a warm-up.

"Italy: Amid Eurozone Crisis, 'Going the Greece Way' Would Be Disastrous"
PBS Newshour 2/10/2012

GREECE - 3 on the Plan, Euro, and Germany

"Austerity Plan Might Ease Greece Out of its 2-Year Debt Crisis" (Part-1) PBS Newshour 2/9/2012

JEFFREY BROWN (Newshour): Now, a political deal in Greece that may pull Europe back from the abyss of its two-year debt crisis.

After weeks of negotiations, the coalition government of Greek Prime Minister Lucas Papademos reported agreement on yet another round of austerity measures. Finance Minister Evangelos Venizelos, speaking in Brussels, said it would satisfy the European Union, the European Central Bank and the International Monetary Fund.

EVANGELOS VENIZELOS, Greek finance minister: After a long, tough period of negotiations, we have finally a staff-level agreement with the troika for a new, strong and credible program.

JEFFREY BROWN: The Greek goal was to win a new bailout of $170 billion and to prevent national default. Under the plan, Greece agreed to cut its minimum wage by more than 20 percent, fire 15,000 public sector employees and end dozens of job guarantee provisions.

Greek leaders also said that, instead of cutting pensions by as much as $400 million, they had found unspecified alternative cuts. The agreement won praise from some, including Christine Lagarde, managing director of the IMF, at a late-day meeting in Brussels.

CHRISTINE LAGARDE, managing director, International Monetary Fund: There's clearly some very encouraging news coming out of Athens, and after the very heavy-duty work that has been done lately, I think it's positive.

JEFFREY BROWN: And European markets reacted favorably. Stocks moved upward. The euro traded near two-month highs.

But Germany warned, the deal fell short. The German finance minister, Wolfgang Schaeuble, said the Greeks had not met a requirement to bring national debt down to 120 percent of economic output.

And on the streets in Greece, there was outrage.

MAN (through translator): We took to the streets to fight for our rights and for the future of our children.

JEFFREY BROWN: Electrical workers protested the austerity cuts, and Greek labor unions planned a 48-hour strike beginning tomorrow.

In the meantime, the Greek finance minister said the government also had the outlines of a separate agreement with private creditors. It could cut the country's private debt in half, with creditors accepting a 70 percent reduction in the value of their holdings.

"What Greece's Latest Cuts Mean for Workers, EU" (Part-2)
PBS Newshour 2/9/2012


"In Bailing Out Greece, Germans Eye 'Functional, Surviving Euro'"
PBS Newshour 2/9/2012


REMINDER: We in the U.S. need to pay close attention to what's happening in the EU because, like it or not, this is a world economy and we are part of it. The economic climate in the Eurozone and elsewhere does effect the American economy.

GERMANY - Eurozone's Richest Country

"Amid Eurozone Crisis, How Germany Became Europe's Richest Country" PBS Newshour 2/8/2012

Excerpt

JUDY WOODRUFF (Newshour): And to Europe's debt crisis.

Negotiations are going down to the wire on yet another bailout for Greece, one that would require German help.

From Germany, Margaret Warner (Newshour) reports on some of the people who help make it Europe's richest country.

More excerpts

MARGARET WARNER: We've come to Germany to find out why it's doing so much better than its European partners. And part of the reason can be found here, in the southwest state of Baden-Wurttemberg. The castle behind me may date from the 1700s, but the economic model they've developed here is 21st century-plus.

Just outside the state capital, Stuttgart, is another one of Baden-Wurttemberg's high performer, Trumpf. Customers from Harley-Davidson to Apple buy its laser-driven metal cutting machines, $2.7 billion worth last year.

The family-owned firm devotes 8 percent of revenues to R&D to keep its innovation edge. They invest even more in their 9,000-person work force, more than half here in Germany. Like most German industries, Trumpf hires them young, after the equivalent of 10th grade, for a rigorous three-year training and schooling program and a full-salary job afterward. Most stay far longer. And after college, paid for by the company, some go on to become managers.
----
MARGARET WARNER: Trumpf keeps the apprentice program going even in hard times, as when the 2008 global financial crisis melted down the company's sales.

NICOLA LEIBINGER-KAMMULLER, CEO, Trumpf: It just hit us. Really went from one hour to the next, we didn't have any orders. At the same time, all over the world, no order. That was really cruel.

MARGARET WARNER: CEO Nicola Leibinger-Kammuller watched as sales plummeted 40 percent in two years, and she had to drastically cut production. For most firms, that would have meant layoffs, but not here.

NICOLA LEIBINGER-KAMMULLER: It's just a terrible thought having to lay off people, because we like our employees and we need them. And they are well-trained, and they're loyal. And they have been working for us for decades, some of them, or many of them have. And it's just a terrible thought to have to send them away.

MARGARET WARNER: Instead, Trumpf turned to a new German program called Kurzarbeit, or short work, cutting its employees' work hours and pay. The government made up part of the difference. And they got extra training on their off-days.
----
MARGARET WARNER: The Leibingers' financial caution also helped them weather the global credit crisis. Trumpf carries no major debt, they say, and in good times, they bank the extra profits to reinvest later.

America, just maybe we have something to learn from Germany. Train early, don't lay off skilled workers, save for a rainy day?