Monday, August 29, 2011

Greece`s Eurobank, Alpha Bank in merger deal

By Lefteris Papadimas and George Georgiopoulos

ATHENS (Reuters) - Greece's second and third largest banks, Eurobank and Alpha Bank, are set to announce on Monday a merger deal to better cope with a severe sovereign debt crisis and recession, banking sources said on Saturday.

The expected deal, which would create the biggest bank in southeast Europe by assets, will help the two lenders avoid turning to a state liquidity support mechanism and is likely to spark more reshuffling in the country's banking sector, analysts said.

"The boards of the two banks will sign the deal early on Monday and the announcement and a press conference will take place at around midday," a banking official close to the deal told Reuters.

Troubled by rating downgrades, deposit outflows and loan impairments in the wake of the country's worst recession in four decades, Greek bank shares have tumbled more than 55 percent in the year to date.

"The deal is about a friendly merger between Alpha Bank and Eurobank, with the participation to a significant extent of the Qatar Investment Authority," a senior banker at Alpha Bank told Reuters.

The new entity will have assets of 150 billion euros ($211.3 billion), 8 million clients and 80 billion euros of deposits, said a third banking official, adding that the banks were very close to a deal.

The Qatar Investment Authority, which is already a shareholder in Alpha, will become a major shareholder in the new group, the officials said. Another banking official said the Gulf Arab state had signed the deal on Saturday.

Analysts welcomed news of the deal between

Eurobank, which failed the latest EU-wide bank stress test, and Alpha, saying it could help the two lenders weather the crisis.

"This is a strategic move in the right direction that will protect the two banks from the worst that is ahead for the Greek banking sector," said Takis Zamanis, chief trader at Beta Securities.

"Qatar will probably inject money into the new entity at a time when Greek banks are facing lack of liquidity, losses from the PSI (private sector involvement in the bond swap) and rising loan impairments," he said. "The two banks may avoid asking liquidity from the existing support mechanism."

Investors have been concerned that writedowns from an upcoming bond swap aimed at saving Athens from bankruptcy and loan impairments could force Greek banks to recapitalize and turn to the state for help.

Recourse to Greece's Financial Stability Fund, a 10 billion euro safety net set aside to recapitalize lenders that find it hard to raise funds in the market, would set banks up for restructuring.


The banking officials provided no detail of the Qatari fund's involvement in the new group but one said it would participate in the new entity through a rights issue.

"The merger, with Qatar's participation, is a very positive move and keeps away the danger for the two banks to go to the support mechanism," said Manos Hatzidakis, analyst at Pegasus Securities. "It is positive because a new, bigger and stronger private group will be created in southeast Europe with a new shareholder."

The deal may also help the new entity open up access to wholesale funding markets.

Greek banks have been shut out from the interbank market and are dependent on the ECB for liquidity, borrowing at its money market operations by putting up Greek government bonds and other assets as collateral.

The latest data show funding from the ECB rose to 103 billion euros ($148 billion) at the end of June, about 20 percent of the Greek banking sector's total assets.

Alpha Bank, which one banking official said has been advised on the merger by JP Morgan and Citigroup, has a market capitalisation of 1.068 billion euros. Eurobank has a market capitalisation of 1.017 billion euros. Eurobank shares have fallen 51 percent since the beginning of the year and Alpha shares are down 50 percent.

National Bank of Greece is the country's largest lender, with a market capitalisation of 2.877 billion euros.

The government, which has long pressed banks to merge to better face the crisis, declined to comment on Saturday.

Greek banks will publish their first half results next week, starting with Eurobank on Monday.

(Writing by Ingrid Melander, editing by Rosalind Russell)

Greece`s Eurobank, Alpha Bank in merger deal - sources - Reuters -

Saturday, August 27, 2011

What can the Ancient Greeks do for us?


Lesson 1: Tactics for engaging in civil disobedience, from Antigone

to Aristophanes


Ancient Greek comic playwright Aristophanes discussed the nature of civil disobedience in Lysistrata. Photograph: Hulton Archive/Getty Images

What do you do if the state imposes what you regard as a blatantly unfair sanction, something that challenges everything that you hold dear?

That is the dilemma faced by the titular heroine of Antigone, Sophocles' play first produced in Athens in about 441BC. She reacts with what we would now think of as an act of civil disobedience.

Just before the drama opens, Antigone's brothers, Polynices and Eteocles, have killed each other in battle.

Polynices has been decreed by King Creon (Antigone's uncle) a traitor to the city, and denied burial on pain of death.

Antigone's response is that Polynices is still her brother: "I will bury him myself / And even if I die in the act, that death will be a glory."

The play questions the limits of loyalty to the authorities, the strength of family ties and the importance of piety.

Things do not go well for any of the characters. Creon duly condemns Antigone to death. Her fiance, Haemon, who happens to be Creon's son, refuses to live without her. For good measure, his mother, Creon's wife, kills herself.

Creon is the last man standing – but utterly broken. Antigone remains a poster girl for defiance against authority.

A more cheerful form of civil disobedience is that practised in Aristophanes' comedy Lysistrata, premiered in 411BC, towards the end of Athens' gruelling war with Sparta.

The heroine Lysistrata persuades the women of Greece to go on a sex strike to bring an end to the war: they swear to forgo such intriguing sexual positions as the "lioness on the cheese-grater".

The men, desperate for sex, agree to terms and the play ends with a song and a dance.


Lesson 2: The first mention of money in classical Greece

Head of Athena

Head of Athena on a Greek coin from the 5th century BC, when money became the norm. Photograph: Danita Delimont/Getty Images

The Greeks may have got the idea of coinage from their neighbours across the Aegean in Lydia, but the Greek world was the first society to use money in much the same way as we do – state-issued currency as a universal and guaranteed form of exchange.

Money was probably introduced in the early part of the 6th century BC – and was a wild success.

Its first mention, notes Richard Seaford in his book Money and the Early Greek Mind, comes in the laws written by the 6th-century Athenian reformer Solon, which, prosaically enough, lay down prices to be paid for animals in public sacrifices and standard rates of compensation for injuries. By the mid- to late-5th century BC, the great flowering of Greek intellectual life, money was universal and commonplace.

But it was still a fresh enough phenomenon to cause Greek writers to submit it to some powerful observations, as Seaford also points out.

The Greeks noted its seductive but somewhat suspect universality, the way it can be exchanged for absolutely anything – rather like a prostitute, who will go with anyone. In Aristophanes' comic play Wealth, money is characterised as a force with power over everything. You can have enough of all kinds of things, he writes – music, bread, sex, honour, courage, pea-soup – and yet nobody ever feels they have enough money. A fragment of Solon's poetry reads: "Of wealth there is no limit that appears to men. For those of us who have the most wealth are eager to double it."

Not everybody valued money, however. Socrates refused to be paid for his philosophical teachings. Just as charging for beauty, he argued, is prostitution, so it is that money cannot be exchanged for wisdom.


Lesson 3: family can be murder as well as a dream for a Viennese psychoanalyst

Ancient Roman fresco painting of The Sacrifice of Iphigenia

Ancient Roman fresco painting of The Sacrifice of Iphigenia. Photograph: Mimmo Jodice/Corbis

It is no surprise, given the larger-than-life, murderous entanglements of mythical Greek families, that psychotherapists have borrowed from Greek legend to illustrate the archetypes of blood relationships: Oedipus, who slays his father and marries his mother; Electra, who plots with her brother to slay her mother; the god Zeus, who, according to Freud, castrates his father, Cronus. (Freud was mistaken: according to Hesiod's poem Theogony, Zeus in fact confines his father to the depths of Tartarus, whereas it is Cronus who castrates his father, Uranus).

The heroes of Greek mythology often have a complicated family life. Take the Atreides family. To cut a long story (reasonably) short: when Thyestes stole the golden fleece, his brother Atreus took revenge by serving him a delicious meat stew. Then Atreus brought out a platter bearing the heads and feet of Thyestes' children: he had fed his brother his own offspring. It was Atreus's sons Agamemnon and Menelaus who set out to besiege Troy. In order to secure a fair wind for the voyage, Agamemnon sacrificed his own daughter, Iphigenia. When he returned home to Mycenae, his wife, Clytemnestra, and her lover Aegisthus (his cousin) murdered him.

Their son, Orestes, in turn took revenge on his mother by killing her. The cycle of violence ended only when he, pursued by avenging Furies, reached Athens, where the goddess Athena established a trial. The jury was split, but Orestes was acquitted on her casting vote.

To pacify the Furies, she transformed them into the Eumenides, the "Kindly Ones". This latter part of the story, dramatised by Aeschylus, has been interpreted as a metaphor for the rise of Athenian reason and the rule of law.


Lesson 4: As Socrates found out to his cost, teaching brilliant and ambitious youths can be dangerous

The Death of Socrates by Jacques-Louis David

The Death of Socrates by Jacques-Louis David (1787). Photograph: Francis G Mayer/Francis G Mayer/CORBIS

In the last years of the 5th century BC, Athens was on the rocks. The Peloponnesian war against Sparta had been rumbling on, unresolved, since 431BC.

In 414BC, the Athenians planned a bold move: anoffensive against Sicily. Before the navy departed, however, two outrages occurred in Athens.

First, there were rumours that an important religious cult, the Eleusinian Mysteries, had been profaned. Second, a shocking act of religious vandalism occurred – sculptures of the god Hermes, hundreds of which stood around Athens as protectors of thresholds, were hacked and mutilated.

These were unpropitious omens for the Sicilian expedition: it ended in defeat for Athens, with almost the entire navy lost and numerous citizens slaughtered.

In the febrile atmosphere after the mutilation of the Herms an anti-democratic conspiracy was feared, and the young, charismatic, handsome, brilliant and desperately unreliable aristocrat and military commander Alcibiades was blamed.

After the Sicilian disaster, in 411BC, democracy was briefly overturned and replaced by an oligarchy. In 404BC, after Athens' final defeat, came another revolution: the reign of terror of the Thirty Tyrants, characterised by mass killings.

After a few months, democracy was restored and an amnesty declared. In 399BC Socrates was tried on charges of impiety and of "corrupting the youth" of Athens. Critias, one of the tyrants, had been Socrates' pupil and friend, as had Alcibiades.

Historians and philosophers still debate how anti-democratic Socrates' teachings were; there is strong evidence that the execution of Greece's greatest philosopher was at least partly an act of scapegoating for the actions of the brilliant, ambitious and often dangerous politicians whom, as youths, he had educated.


Lesson 5: Greeks and others

Herodotus map

The world as seen by Herodotus: a 19th century reconstruction of a map dating back to around 450 BC Photograph: INTERFOTO / Alamy/Alamy

We talk about "ancient Greece" and yet this can be misleading: there was no ancient Greek nation state, but rather a collection of numerous independent "city states" or poleis scattered through the Mediterranean from the south of France to the Turkish littoral. What made Greeks Greek, wrote the historian Herodotus in the 5th century BC, was a sense of shared religion, language and customs. On the other hand, the Greek poleis might often be at war with one another; they might have totally different political institutions, even different calendars and names for the months.

Still, Greeks were Greek and the rest were barbarians – barbaroi, those people who speak foreign languages that sound like "bar, bar, bar". Despite that rather binary classification of the world, the seafaring Greeks were vividly interested in the lands beyond. At the fountainhead of Greek literature come Homer's salt-caked tales of Odysseus's fantastical travels.

Herodotus collected travellers' tales from places as distant as the steppes of Scythia and Ethiopa. He reported admiringly on Egyptian culture. He did not really believe in the existence of the Tin Islands (a possible echo of traders' voyages to Britain) but a 4th-century Greek called Pytheas, from Marseille, circumnavigated Britain and wrote about it in his lost work On the Ocean.

Archaic Greece soaked up influence from its neighbours to the east. One of the earliest surviving Greek poems, Hesiod's Theogony, is marinated in Babylonian creation myths. In turn, centuries later, the rising power that was Rome fell in love with Greece (often a rather tough love, as the Roman army reduced the great city of Corinth to rubble) importing and imitating her great art, philosophy and literature.


Lesson 6: Health, and the legacy of Asclepius and Hippocrates

medicinal baths complex at Thermopylae, central Greece,

Medicinal baths at Thermopylae, some 90 miles north-west of Athens, Thermopylae meant the Hot Gates in ancient Greek. Photograph: Petros Giannakouris/AP

Homer is the fountainhead of so much in Greek culture, and that includes literary doctors. In the Iliad, Machaon and Podalirius, the sons of the god Asclepius, are Greek warriors famed for their prowess in healing and field surgery. They appear on the coat of arms of the Royal College of Surgery to this day. In the Odyssey, Helen gives her husband, Menelaus, and other war veterans a drug that makes them forget the horrors of the conflict; early treatment for post-traumatic stress, perhaps?

In about 500BC, the cult of Asclepius sprang up in Greece. If you slept in his sanctuary, your dreams might help you find a cure. In the second half of the 5th century BC, a doctor called Hippocrates became celebrated for his skill, and was one of the authors of a number of texts known collectively as the Hippocratic Corpus.

Some of this material reads oddly, to say the least, today. Among the pronouncements are that people who lisp are prone to diarrhoea; that sperm originates in the head and travels down through the marrow before reaching its usual outlet; and that the excessive horse riding of the Scythians makes them impotent. In the Hippocratic text called Airs, Waters, Places, we read that environment has a crucial effect on health. Those exposed to the south wind can expect moist heads full of phlegm, haemorrhoids and, for women, vaginal discharges.

All that said, most of the Hippocratic Corpus favours diagnosis based on observation and is based on the idea that disease is a naturally explicable phenomenon, rather than caused by divine wrath or other supernatural factors. And the Hippocratic oath can be seen as the first statement of medical ethics - doctors are to swear to help and not harm patients, and to honour patient confidentiality.

Charlotte Higgins Charlotte Higgins, Sunday 31 July 2011 21.01 BST

What can the Ancient Greeks do for us? | World news | The Guardian

Greek tourism hit by recession but still seen as recovery hope

Country's economic troubles and taxi drivers' strike result in fall in visitors, crippling the important tourism sector

Helena Smith in Zakynthos, Thursday 4 August 2011 19.03 BST

Greek taxi drivers' protest

Greece's tourism industry has been hit by economic troubles and a strike by taxi drivers over deregulation plans. Photograph: Thanasssis Stavrakis/AP

It's 10pm on a Friday and the main drag of Laganas – party resort, hedonists' delight, Greek playground par excellence – is alive with the sound of music. Above the hubbub, a group of inebriated young Britons – many in "I love Zante" hotpants and T-shirts – unsteadily make their way up the street chanting: "It's full of shit, it's full of shit."

It seems hard to believe that this is what they are screaming until my eye catches a rep at the head of the pack who, arms flailing, is clearly encouraging the shouting. Further down the neon-lit drag, another Briton, in schoolboy's shirt and tie, lies in a drunken heap outside a bar. He smiles helplessly as a Gypsy girl, selling trinkets, chastises him.

Surveying the scene from the ceramics shop she has run for the past 25 years, Vasso Georgiadou heaves a sigh of resignation. "When they don't drink they are such good kids," she says, adding that by the time the sun rises "there'll be hundreds of them" wandering the resort in a drunken stupor. "But it's not only their fault. Unfortunately, this is the tourism we Greeks have tolerated, we Greeks have gone out of our way to create, even at a time when we are in such economic difficulty."

Just as in Corfu, Rhodes, Kos and Crete, the once peaceful village of Laganas has managed to scale new heights in debauchery. This year, the holiday season opened not only with predictable lewdness but with the murder of a British teenager stabbed to death by a local taxi driver. Though deeply remorseful, the 21-year-old says he was driven partly by rage over the behaviour of Britons visiting the island they call Zante but which Greeks know as Zakynthos.

"This is not the best image, but then Laganas is not Greece," says George Nikitiadis, deputy minister of culture and tourism. "Many times it is the system, the tour operators who co-ordinate these bar crawls, which makes these kids act in this way. It's a pity because we don't want tourists to leave with this experience. Our country has so much more to offer."

So where has the tourism industry in Greece gone wrong? Without a moment's hesitation, Nikitiadis – born in New York to a Greek waiter and babysitter mother before settling in Athens – shoots back. "The sector went wrong in every way that Greece went wrong," he counters, looking up at the Acropolis framed in the window of his sixth-floor Athens office. "There was no strategy, no methodology, no preparation, no business plan. The markets, the tour operators, the travel agencies, the airlines, they all came to us. We didn't go to them. I am not even sure we knew how to."

This year, debt-ridden Athens has gone to them, acutely aware that the 12 million tourists who annually visit Greece will offer the single biggest relief to a recession-hit economy hobbled by draconian austerity.

With tourism accounting for 18% of gross domestic product and one in five Greeks working in the field, Prime Minister George Papandreou has frequently declared it will be the motor to drive the economy forward. At 16% and climbing, joblessness has fast become Greece's biggest problem as the EU and International Monetary Fund have pressured the government to enact deficit-reducing reforms in return for an unprecedented €219bn in emergency aid.

"We haven't achieved even 20% of what we are able to achieve as a country, which makes me optimistic," says Nikitiadis. "If we work hard we can easily reach 25m arrivals per year which, in turn, will bring in revenues and mean more work for everyone."

But, first, there is the little problem of Laganas – and the hoary image of sun, sand, sea and sex that Greece, since the onset of mass tourism in the 1960s, has all too often come to be associated with.

Unlike Egypt, across the Mediterranean, or Turkey, across the Aegean, Greece attracts some 52% of its visitors between July and September – with numbers of Britons second only to those of Germans. From January to March, a mere 7% descend on the country, according to figures released by the tourism ministry, compared with 24% in Egypt.

In the 35 years since democracy was reintroduced with the collapse of military rule – a time in which even the most far-flung Greek isle has come to be discovered – the overload has put immense strain on an infrastructure that is finding it increasingly hard to cope.

On the Cycladic isle of Koufonisia tourists were left stranded last month, not because the local boat failed to show up but because its one and only cash machine at the outpost's only bank had run out of money.

Nikitiadis does not disagree. For too long, he sighs, the industry was dominated by political patronage which didn't help. "It was all about party influence and political favours. If someone had a kid studying in London they'd be given a job at the offices of EOT, the Greek Tourism Organisation, there. It was crazy. Now, little by little, we are trying to make that system disappear but it's not easy. Similarly we're trying to prioritise alternative forms of tourism, like agro tourism and religious tourism, to encourage visitors to come all year round."

With this in mind, the ruling socialists have waived landing and take-off fees for aircraft and taken steps to facilitate foreign investment in the sector which, because of its prominence, has also been afflicted by corruption and lack of competitiveness – the very ills that helped bring Greece to its knees. Visa restrictions for non-EU citizens, including fellow Orthodox Russians, have also been lifted.

But despite these measures – and what at the beginning of the summer was gleefully projected as a 10% increase in arrivals after several lean years – officials have also discovered that tourism is far from immune to fallout from reforms in other areas now needed to overhaul Greece.

The penny may finally have dropped that, blessed with the longest coastline in Europe, the country's beauty is there to be exploited. But some fear it may also be too late.

In recent weeks the sector has been pummelled by striking taxi drivers protesting against the government deregulating their profession – part of efforts to liberalise restricted business sectors.

During the 20-day furore, which finally showed signs of coming to a halt on Thursday, holidaymakers have been forced to drag luggage to blockaded airports and ports, locked out of archaeological sites and, in Crete, pushed, shoved and teargassed as cabbies fought pitched battles outside the island's aerodrome with riot police.

This week, tourist agencies announced that the strike was about to kill any hopes of the sector contributing to the country's economic recovery – after thousands of tourists not only cancelled trips but made bookings elsewhere. Satirists retorted that finally tourists were living "their myth in Greece" – the slogan used in the country's latest advertising campaign.

"The damage that could be dealt [to the sector] is such that it will never be repaired," despaired the Hellenic association of travel and tourist agencies.

In the cool of his air-conditioned office, Nikitiadis concedes that the summer months were perhaps not "the best time" to pick a fight with the cabbies. "But," he adds almost in the same breath, "it is just one of the reforms that we are determined to pass. Some people won't like it, but in the end it will all be part of the revolution that will change Greece."

Greek tourism hit by recession but still seen as recovery hope | World news | The Guardian

Friday, August 26, 2011

Greece forced to tap emergency fund

Greece has been forced to activate an obscure emergency fund for its banks because they are running short of collateral that is acceptable to the European Central Bank (ECB).

A flash of lightning illuminates the sky over the 2,500-year-old Ancient Parthenon temple, on the Acropolis hill during heavy rainfall in Athens

Athens' activation of the ELA will raise concerns that Greece will simply shift debt to Brussels Photo: AP

By Louise Armitstead

9:45PM BST 25 Aug 2011

In a move described as the "last stand for Greek banks", the embattled country's central bank activated Emergency Liquidity Assistance (ELA) for the first time on Wednesday night.

Raoul Ruparel of Open Europe told The Telegraph: "The activation of the so-called ELA looks to be the last stand for Greek banks and suggests they are running alarmingly short of quality collateral usually used to obtain funding."

He added: "This kicks off another huge round of nearly worthless assets being shifted from the books of private banks onto books backed by taxpayers. Combined with the purchases of Spanish and Italian bonds, the already questionable balance sheet of the euro system is looking increasingly risky."

Although it was done discreetly, news that Athens had opened the fund filtered out and was one of the factors that rattled markets across Europe. At one point Germany's Dax was down 4pc before it recovered. In London, bank stocks - which have been punished by traders nervous about the European debt crisis - fell again.

In a bid to curb the falls regulators in Italy, France, Spain and Belgium extended their short-selling bans. Although it was designed to support European banks, experts in London reacted angrily to the move, claiming that regulators were wrongly targeting hedge funds.


Related Articles

Andrew Baker, chief executive of the Alternative Investment Management Association, the hedge fund lobby group, said: "Short-selling was not the reason bank share prices were under pressure and banning it has not relieved that pressure."

Richard Payne, a finance academic at the Cass Business School in London, said the restrictions could do more harm than good by increasing volatility and bumping up trading costs. He argued that the moves were an attempt to deflect attention away from the failures of European politicians to come up with convincing solutions to the financial crisis.

Traders argued that the worsening crisis in Greece was the real driver of market concerns. There are particular concerns that the political will to solve the crisis is waning, particularly in Germany.

Athens' activation of the ELA will raise concerns that Greece will simply shift debt to Brussels.

The ELA was designed under European rules to allow national central banks to provide liquidity for their own lenders when they run out of collateral of a quality that can be used to trade with the ECB. It is an obscure tool that is supposed to be temporary and one of the last resorts for indebted banks. So far it has only be used in Ireland.

By accepting a lower level of collateral the debt in the ELA is, in theory, supposed to be the responsibility of Greece. However, since the Greek state is surviving on eurozone bailouts and Greek banks are reliant on ECB funding, in practice the loans are backed by the eurozone. The terms of lending and other details are not disclosed publicly.

Mr Ruparel said: "Though the ELA is meant to be a temporary emergency solution, we know from Ireland, where the programme has been running for almost a year, that once banks get hooked on ELA they rarely get off it."

Greece forced to tap emergency fund - Telegraph

Wednesday, August 24, 2011

Greek collateral deals may delay bailout, warns Moody's

Published 23 August 2011

Eurozone nations trying to persuade Greece to cough up cash collateral in return for aid risk delaying the debt-mired state's next bailout payment and driving it into default, rating agency Moody's said yesterday (22 August).

Greece clinched a new rescue package at a eurozone leaders' summit in July, covering its borrowing needs up to mid-2014.

In a bilateral deal, it then agreed to provide Finland with collateral in exchange for loans, sparking similar requests last week from Austria, the Netherlands and Slovakia.

But rating agency Moody's said on Monday a proliferation of such deals to furnish cash collateral would be credit-negative for Greece, which is currently rated Ca, just one notch above default, by the agency.

"The agreement between Greece and Finland, which is small by itself, assumes much greater significance. The pursuit of such agreements could delay the next tranche of financial support for Greece and so precipitate a payment default," it said.

Proliferation of collateral agreements

Austria, the Netherlands and Slovakia said on Friday they wanted collateral on their loans to Greece after Finland secured Athens' commitment to do so, but Greek officials have said they were not talking to countries other than Finland about such a plan.

Moody's said a proliferation of collateral agreements would also limit the availability of funds for future bailout programmes, and that for these reasons it expected other euro area members ultimately to reject the Finland-Greece deal.

Greece is set to receive the next €8 billion tranche from its first bailout package in September. Analysts said all eurozone states need to concur on aid disbursement for Greece, and any requests for collateral might cause delays as Athens faces fixed needs to redeem bonds and plug fiscal holes.

"One thing leads to another and then you can end up with difficulties in implementing the bailout deal. Perhaps it was wrong to have this agreement with Finland," said one Greek economist who declined to be named.

Greece, whose debt market activity is restricted to monthly short-term debt auctions, needs to roll over €4 billion of three- and six-month Treasury bills next month.

Moody's said seeking collateral showed a lack of will in some eurozone countries and put more pressure on Germany and France to take stronger steps to support the euro project.

"The deep fissures among the ostensibly united euro area nations evidenced by such demands, even in the context of new German and French proposals intended to strengthen European institutions, create additional concerns over the conditional and evolving nature of the current financial support mechanism," Moody's said.

It said a proliferation of collateral agreements would also limit the availability of funds for future bailout programmes. 


In late July 2011, eurozone leaders put together a second bailout for Greece to supplement a €110 billion rescue plan launched in May last year.

It is expected to include fresh emergency loans to Athens from eurozone governments and the International Monetary Fund, and possibly a range of other measures.

Worried about the impact on financial markets and wary of angering their own taxpayers, eurozone governments struggled for several weeks to agree on major aspects of the plan, especially a contribution by private sector investors.

In many months of haggling with the EU's banks, the private sector has agreed to take a hit on its holdings of Greek sovereign debt. Between 2011 and 2019, the private sector's total contribution to a Greek rescue could amount to €106 billion, according to conclusions from the July summit.

The second deal also saw disgruntled countries like Finland seek guarantees in return for their contribution to the Greek bailout. Finnish and Greek officials subsequently struck a deal whereby Greece would provide cash in return for the commitment of Finnish taxpayers to the bailout. 

EurActiv with Reuters

Greek collateral deals may delay bailout, warns Moody's | EurActiv

Monday, August 22, 2011

It’s the corruption, stupid!


Beneath the desperate debt crisis headlines, Jeff Randall finds a country mired in fraud and fiddling – and discovers its authorities are powerless to stop the rot


Fists of fury: on May 4, demonstrators took to the streets of Athens, but little has been done to curb Greece's endemic tax evasion Photo: Getty

By Jeff Randall

10:41PM BST 21 Aug 2011

Tavros is a scruffy suburb in the south-western part of Athens, about three miles from the city centre. It is home to the kind of utilitarian office blocks that 1960s town planners thought were a good idea. Many of the buildings are scarred by graffiti and the side streets are strewn with litter.

On a stiflingly hot day, I come here to interview Petros Themelis, a finance ministry official, who runs a call centre that’s part of the Greek government’s battle against tax evaders. The idea is that public-spirited citizens ring up and snitch on those they suspect of tax dodging. This is the human factor in a much bigger war: Greece’s life‑or-death struggle with the Debt Beast.

The state’s accumulated borrowings are equal to about 160 per cent of national output. Greece cannot afford to service the interest, much less repay the capital. The country is, in effect, insolvent. Without the largesse of outsiders – many billions in bail-outs from the International Monetary Fund and the European Union – it would already have collapsed into bankruptcy.

In a last-ditch effort to stave off such an outcome, the Greek government is trying something new – well, new for Greece. It’s treating tax collection as a process that requires more rigour than passing round a church plate. There is much to shoot for: about €30 billion (£26.2 billion), or 12 per cent of GDP, are lost to tax cheats every year.

Mr Themelis’s team consists of three middle-aged men in casual shirts and chinos, manning phones and scribbling callers’ details into log books. The operation resembles a provincial bookmaker’s credit betting office – before computers.


Related Articles

“Is this it?” I ask. “Where is everybody?”

The boss explains that cutbacks have diminished his resources. Some staff are on holiday, others have retired. As we chat, a tip-off is recorded about a supplier who did €700-worth of work but gave no receipt. At this rate of tax recovery, Greece’s voyage to viability will make the Odyssey seem like a stroll across Syntagma Square.

I’m told by Mr Themelis that Greeks are “addicted” to tax evasion. The system is riddled with wheezes and loopholes. Yet this is only part of the story of how dreams of “new horizons” when Greece entered the euro 10 years ago turned into a national nightmare. Tax dodging is merely one strand of aberrance that is woven into the fabric of contemporary Greece. And everybody here knows it.

Business leaders, a church representative, a retired finance minister, a distinguished academic, an economist, a wealthy writer, a shipping tycoon, protesters on the streets and impoverished folk queueing for free meals all give the same answer to my question, “what has gone wrong?” It’s the corruption, stupid!

Jason Manolopoulos, author of Greece’s 'Odious’ Debt, says the state has become a hydra with seven heads: cronyism, statism, nepotism, clientelism, corruption, closed shops and waste. Kleptocrats have been running the show and their predilection for thieving and bribery has poisoned the nation.

When I mention that we in Britain have similar issues with dissolute politicians – MPs who fiddle expenses – Greeks, rich and poor, laugh in my face. To them, a few thousand pounds here and there for duck houses and dodgy mortgages are barely worth an inquiry. The problem in Greece is of a completely different magnitude.

Pillaging at the top by politicians, doctors, lawyers and even tax investigators gives those further down the ladder a justification for what some call “tax resistance” and others “tax protection”. The result, according to the World Bank, is that the black market now makes up nearly a third of Greece’s economy, compared with 27 per cent in Italy, the EU’s flagship of undeclared earnings.

A sideshow to the epidemic of dishonesty is an explosion of what a local English-language newspaper calls “rubber checks” (nothing to do with tyre testing). In the seven months to July, there was a 43 per cent increase in the value of bounced cheques to €1.38 billion. A survey of Greek small businesses shows that nearly half the companies that accept cheques are in possession of duds.

Listening to the accounts of fraud, seeing how the books were cooked, observing at first hand the chronic inefficiencies of an economy underpinned by fairy tales, one begins to wonder what EU chiefs were thinking of when they welcomed Greece into the single currency. What was their motive for allowing a barely developed weakling to play expensive games with the big boys in Berlin?

Did they really believe that by letting Greece join the eurozone, it would start behaving responsibly? How could anyone in Brussels with even a bluffer’s knowledge of budgets have been fooled by Greece’s numbers racket?

Inviting a country with Greek productivity (soft) to function with a German currency (hard) is not common sense. So why do it? Was faith in “political will” so blind that even the EU’s elite expected financial gravity to be defied indefinitely?

The scale of delusion was such that its cost now threatens to sink the entire euro project. Greece is sucking up emergency funds faster than the European Central Bank can produce them. A brace of €100 billion-plus “rescue packages” has failed to deliver salvation. Yanis Varoufakis, professor of political economy at Athens University, explains: “Greece was not bailed out, it was given an expensive credit card with which to pay off the mortgage, having lost its job.”

The money has gone, but the myths remain. In order to make financial aid for Athens appear more palatable than just tipping taxpayers’ funds into a bottomless pit, the IMF and EU conjured up projections for Greece’s economy. It was supposed to shrink by 3.8 per cent this year, but show a modest growth of 0.8 per cent in 2012.

These “forecasts” formed the basis for prime minister George Papandreou’s revised fiscal policy, the austerity measures that include a 20 per cent cut in public-sector jobs, wage reductions of up to 30 per cent, and a rise in VAT to 23 per cent.

It’s difficult to tell if the IMF-EU calculations were naively optimistic or coldly cynical, but they are already way off target. Greece’s minister of finance Evangelos Venizelos admits that the economy will probably shrink by up to 5 per cent this year, and Citigroup expects an additional contraction of 2.7 per cent in 2012. If that proves correct, Greece will have endured four consecutive years in recession.

Greece’s roof has fallen in. It faces what economic historian Niall Ferguson calls the “metrics of doom”. The country needs growth of about 4 per cent a year just to prevent its debt pile, €350 billion, becoming bigger. Hopes that privatisations can raise €50 billion to close the gap are risible; the programme is behind schedule and bogged down in red tape.

Left to its own devices, Greece will be forced to borrow ever greater amounts of money to service existing debts, which it could not afford in the first place. On current form, by 2040 Athens will be burning 20 per cent of GDP on interest payments. This is not going to happen; the stitching will split long before then.

In the absence of a new eurozone bond, debt issued jointly by all member countries, to which Germany is implacably opposed, the conclusion is unavoidable: Greece is heading for a pyrotechnic default and an ignominious exit from a currency union that it should never have joined. I suspect that Petros Themelis knew that all along.

Jeff Randall’s documentary 'Greek Myths: Birth of a Crisis’ will be broadcast on Sky News on Friday August 26 at 7.30pm

It’s the corruption, stupid! - Telegraph

Sunday, August 21, 2011

Europe's debt crisis won't end until Greece defaults


Once considered a small manageable problem, Europe's debt crisis has grown into a major international crisis. Europe will have to resolve the Greek problem that sparked the crisis.

A man walks past a display board of a currency exchange office in Bucharest Aug. 19, 2011. The European debt problem, once a Greek crisis, has become an international crisis, which is pulling down stocks markets around the world. Bogdan Cristel/Reuters

By Jeff Cox, Staff Writer / August 20, 2011

Allowing deeply indebted European countries the chance to restructure their obligations seems to be the most direct approach to resolving the problem, yet has been met with resistance that likely will only prolong the crisis.

The reason: What once was thought to be a minor problem involving only some smaller peripheral nations in the European Union is now increasingly being recognized as a global train wreck about to happen.

"The problem in Europe is that the banking and national interests have been uncommonly incestuous over the years with banks in France owning the debts of companies in Spain and Spanish sovereign debt, while the banks in Spain own the debts of French companies and the French sovereign," Dennis Gartman, hedge fund manager and author of The Gartman Letter, wrote Friday. "In that environment, as one area of the economy contracts, others do also in a rush to liquidity and to the detriment of all."

The eurozone debt dilemma has been one of the root causes of market turmoil over the past two months, even though the problems have been known since at least early 2010.

RELATED: Think US debt is high? Take a look at Europe's most indebted nations.

Until recently, the popular narrative was that the debt burdens in smaller nations like Greece and Italy would be contained and not cause widespread contagion. That belief, though, has waned amid revelations that some European Union banks are having trouble raising capital. The ability to raise money would be critical in the event of defaults, as banks holding the restructured debt would have to recapitalize.

Suddenly, a problem that looked small and manageable now has much broader implications.

"We are finding out here that all economic activity requires a leap of faith and a sense of psychological assent that can shred at a moment’s notice, taking the cloth of society and tearing it asunder," Gartman said. "This is the perfect storm of a crisis of confidence and at the moment all confidence is lacking and waning."

Dual reports this week indicating that a European bank had borrowed $500 million from the European Central Bank, and that the Federal Reserve was looking into the stability of the EU financial system, helped shake confidence further.

The market already had been in the midst of a seven-week rout fueled by the stalemate in Washington over the debt ceiling and concerns that the US was heading back into recession.

RELATED: Think US debt is high? Take a look at Europe's most indebted nations.

The overhang of the eurozone crisis has fueled anticipation that economic problems are accelerating—and is drawing calls from numerous quarters that the EU stop denying the severity of the debt problem and start employing solutions.

The idea is that once Greece defaults the country, and others in the same boat, will be able to restructure their debts in an affordable manner. While the cascading defaults will cause pain, they also will pave a way back to stability for the indebted countries.

"How does this thing end? It ends when the politicians stop kicking the can down the road and they allow Greece to default and they allow Greece to exit the euro," William Browder, CEO of Hermitage Capital Management, told CNBC. "At the end of the day, I don't know how many cans they're going to kick down the road."

The extent of contagion from allowing a default, though, is an unknown, making employing a solution elusive.

One estimate is that the ECB has a 444 billion-euro ($634 billion) total exposure to the peripheral PIIGS—Portugal, Italy, Ireland, Greece and Spain.

On the US side, domestic banks have little direct debt exposure to PIIGS debt but they do have counterparty risk to European banks, which analyst Dick Bove at Rochdale Securities recently put at just over $190 billion, including about $10 billion from Greece.

Greece has gone to the ECB for about 60 billion euros in funding to cover a loss in private-sector deposits. However, Italy also has sought funding even though it has suffered no drop-off in deposits, a move that added to the mystery of how deep the debt problem runs.

"The latter is also the key reason why the Italian crisis has triggered global risk aversion and stressed other markets as well," analysts at Bank of America Merrill Lynch said in a note.

That stress is likely to continue until policymakers are willing to grapple with the difficult decisions that ultimately will have to be made.

"We hear rumors of problems in funding, on the part of various European banks, from the largest to the smallest and we do not doubt that for a moment," Gartman wrote. "Of course some banks are finding it difficult—if not nearly impossible—to fund themselves. We are at that moment in time when the strangest things take place."

RELATED: Think US debt is high? Take a look at Europe's most indebted nations.

Europe's debt crisis won't end until Greece defaults -

Saturday, August 20, 2011

THAT TIME HAS COME: Greek Military Junta of 1967-1974

Posted by el greco at 12:56 AM | Labels: Hellas, Rusjournal

Heroes of Modernity: The Greek Military Junta of 1967-1974

Matthew Raphael Johnson

21April1967emblem When one sees the years the military government ruled in Greece, one can see why this particular sort of rule was important, necessary and why the Regime despised with such vehemence. Like all such governments the Greek military revolt came in the wake of failed liberal democracy, chaotic public morals and a general decline of civilized behavior, not to mention the disintegration of the economy and a drying up of the valuable tourist trade. Military leaders considered themselves the only source of rectifying the situation, and hence took action. Their accomplishments and rationale have yet to be defended in English.

I. The Background

After the Second World War, Greece was a major battle ground between the forces of Stalin and that of Greek tradition and Orthodoxy. The vary fact that every single article written on this coup refers to “communists” rather than Stalinists is telling. These were not Menshiviks, but the most murderous group in history, in the USSR, responsible for upwards of 30 million deaths. Greece, was therefore, in a fight for its life. Has the Stalinists taken over, millions of Greeks would have been liquidated. This was the nature of the battle, and a major Civil War broke out between Greek patriots and Stalin-backed rebels that only ended close to 1950. Of course, there would have been no support whatsoever for Stalin had the wartime government of Greece ben even remotely competent in dealing with the economy. Inflation skyrocketed and bred discontent among the normally conservative Greek population. All in all, the Stalinists were relatively small–being able to field about 10,000 men, though of differing nationalities–though lavishly funded from abroad, both from Yugoslavia and the USSR. When Stalin broke with Belgrade, much of the Marxist’s funding was cut off, thereby leaving their organizations to wither, and proving, incidentally, they had little internal support.

Greece was considered a major prize for Stalin. She is strategically located and possessed of much natural wealth. Thankfully, Stalin failed, and the Greek anti-communists defeated Stalin’s rebel forces in 1949. However, it was made clear that some of the western powers, though often enamored with Stalin, were dedicated to protecting Greek sovereignty, and the British were instrumental in organizing certain elements in the Greek military forces; elements, with rather divergent political outlooks, in order to protect Greek independence from the USSR and her imperialist agenda under Stalin.

Unsurprisingly, Greek Stalinists were banned and many were forced to leave the country. Establishment sources considered this a “persecution” of the communists, but considering the agenda of Stalin, it was a mere act of self-defense, and a rather pallid one at that.

Regardless, it became clear that the Greek military was a conservative institution, though it was equally clear that not all officers were. The top brass of the Greek armed forces were conservative in the general sense of that word, most of whom cut their teeth fighting Stalin and his imperialist designs. In the early 1960s, after years of conservative governments (normally led by the National Radical Union, a strongly popular anti-communist party) elected by the Greek people, a liberal republican was elected, the ill-fated and pompous George Papandreou, Sr. This occurred after the assassination of the even more pompous George Lambrakis, a self-styled pacifist who had no difficulty with Stalin’s aggression. This assassination was considered shocking to the Greek people, who reacted and elected a slightly more liberal parliament. The significance of Lambrakis was that his funeral led to large leftist demonstrations, as the left had regrouped after the military victory of the Greek nation in the late 1940s. Now, the Greek military needed to deal with violent demonstrations led by unrepresentative elements from the Greek population. Certainly, given the time period in the mid-1960s, the Regime was up to something, and the world was beginning to feel the dawn of the famed Aquarian Age.

The “constitutional crisis” came to a head when the liberals, now running Greece, clashed with the moderately conservative king, Constantine II. With a few defections from Papandreou’s side, the king was able to bring down his government, while the king himself struggled to form a few of his own, with little success. Strong leadership was necessary, and none was forthcoming. Papandreou, for his part, made no secret of his republicanism, and hence, his desire to radically restructure Greece’s rather popular style of government. Papandreou provoked the king with his tirades against monarchy, and thus bears full responsibility for the constitutional crisis, a crisis one might say certainly crossed the prime minister’s mind.

In Greek politics at the time, it was generally agreed that the king had full charge of the army, which in leftist eyes, was a major problem in that the coercive power was in his hands. With all things leftist, the world is about power and the fulfillment of their ideological fantasies, and therefore, a constitutional crisis needed to be provoked to destroy the monarchy and thus bring the army into their control. Therefore, Papandreou, in the fit of anger, demanded to be appointed defense minister–guaranteeing that the left would achieve its goal–the army always being a thorn in the left’s side. The king, as all knew, refused, and eventually accepted the resignation of Papandreou from his post as prime minister.

Just as significant, strikes and street protests developed, supporting one or the other side in this scandal, as it became clear liberal democracy had failed. The king’s governments could not stand, and the parliament, as well as the people, were split. The slight majority of the liberals was ended by the defection of a few of his “apostates” (as they are called), leading to a situation where a basic 50-50 split ensued. Certain leftists, in other words, could not abide the arrogance of Papandreou. No government, it seemed, could receive a vote of confidence, and the Greek economy began to suffer as a result of the political instability. By 1967, governments were lasting a week or so and the country was sinking into poverty and hyperinflation; unemployment was rising and out of control, and investment was drying up due to high rates of interest.

What happened alarmed the world: The major liberal party, without a shred of scruple, formed an alliance with the Socialist Party, considered by many to be a cover for the banned Communist Party, which even liberal historians think is true, at least in the fact that the ancient Stalinists were supporting the Socialists openly. Since no party could form a government by itself, such a solution was considered proper, and the more conservative elements of the Greek population were aghast.

Therefore, very quickly, the notion of a communist threat was made clear. Since, by this time, in 1967, Marxism was responsible for the deaths of 30 million in the USSR and another 30 million in China, such a threat was severe indeed (in fact, 1967 was the midst of the “Cultural Revolution” in China). It was this that led to the coup of 1967.

II. The Coup

Democracy had failed–again. A split population, an obvious decline in public morals, a failing economy, strikes and street protests, squabbling politicians, pompous speech making, institutionalized lying, threats, and endless other problems created by the democratic system had the Greek people outraged, and the coup was received with cheers from the population, as is normal and ordinary for these sorts of events.

The Coup took place on April 21, 1967, just short of the elections that everyone knew would be inconsequential and simply prolong the agony that had become Greece. Arrogant politicians were arrested en masse as the creators of Greek poverty and misery. It should be noted that the officers that took over were relatively low ranking, as far as these things go. Two Colonels were the leaders, Nikolas Makarezos and the undisputed leader George Papadoupolos. One general was involved, Brigadier Stylanos Pattakos, but he was a minor figure behind the colonels. It is also worth noting that these men were populists by conviction, considering the political crisis to have been created by corrupt politicians out of touch with Greek life, a sentiment echoes by the overwhelming majority of the population, regardless of background. This included the king, with Papadoupolos considered to be too young for the job, though the Colonels respected the institution of monarchy in general.

Most of the coup’s members were of the agricultural classes and looked to the city with disdain. For them, the city was the basis of corruption, big money and oppression. As always, the Establishment, both left and right, was close to big money and was thus an urban phenomenon. Therefore, in the propaganda war, the military did not have a chance in terms of elite public opinion. True to their populism, the first to be arrested was the chief of the army, a very cosmopolitan figure, General George Spantidakis. Unsurprisingly, the U.S. immediately condemned the coup, referring to it as a “rape of democracy.” The coup itself was supported by lower level officers and rejected by the upper brass, including all politicians, who saw their power ebbing away to the increasingly wild cheers of the population.

The Colonels, effectively arrested the generals, a military and political move with social and economic effects. This was a populist move, and was meant to signal that the nation of Greece will no longer be an oligarchy. The policies initiated by the Colonels bears this notion out. The king, isolated and surrounded by sympathetic military leaders, was forced to legalize this government (which improved the military’s imag in the eyes of the population). Relations between the monarchy and Papadoupoulos were extremely poor, though the Colonels were monarchists in theory.

The monarchy, as a result, attempted to oust the Colonels from power. The plan was simple: Constantine was to fly to the north (near Salonika, significantly the Jewish capital of the Balkans), with a military force loyal to him. The Navy and Air Corps strongly supported the king, at least at the higher levels. The king sought to create an alternative northern government and receive international recognition as a result. The result was unfortunate for Constantine: the army was split, the lower level officers refused the commands of loyal generals stationed in Salonika, and the king’s plans failed. Generals were arrested by lower level officers and these officers then took control over their units; Constantine went into exile in Rome.

It is widely admitted that CIA cash was placed on Constantine’s movement. U.S. foreign policy in such areas is normally (such as in El Salvador) to split the difference between two movements. On the one hand, finance does not like nationalist movements, but they also do not like many forms of Marxism (though this is not universally true, as in South Africa or Namibia). Therefore, the Regime usually places its bet on the center, whatever that might be. Duarte’s party in Salvador, Constantine in Greece.

The junta, or the Revolutionary Council, as they termed themselves, faced opposition from the United States, the middle classes (read urban intellectuals and businessmen) and international finance. They were strongly supported by labor and, especially, agriculture. Even the worst enemy of the Council accepts this as a fact. In the 1970s, Papadopoulos established a new constitution that made Greece a republic. Unfortunately, what brought the Council down was an invasion of Cyprus by Turkish troops. Some believe that this was a NATO concept to destroy the Council, but more others claim that this was a result of the support of right-wing paramilitaries in Cyprus by the Greek junta. Either way, this invasion was a victory for the Turks, and was a major setback for the junta.

III. The Successes of the Revolutionary Council

The name the Colonels gave to themselves was not mere rhetoric. These men were ideologically driven in the best of senses, as they saw Greece government by a small urban clique allied with international finance and capitalism. They saw, as a result, the despoliation of labor and agriculture, both created and resulting from the disastrous economic policies of the previous democratic oligarchy. Regardless of one’s view of the coup itself, the fact remains that the Colonels remained consistently popular with the broad masses of the population until the Turkish invasion of Cyprus in 1973. A hostile critic of the junta writes this:

To gain support for his rule, Papadopoulos was able to project an image that appealed to some segments of Greek society. The son of a poor family from a rural area, he had no education other than that of the military academy. He publicly stated contempt for the urban, western-educated "elite" in Athens. Modern western music was banned from the airwaves, and folk music and arts were promoted. The poor, conservative, religious farmers widely supported him, seeing in his rough mannerisms, simplistic speeches, even in his name ("Georgios Papadopoulos" is one of the most common names in Greece) a "friend of the common man". Further, the regime promoted a policy of economic development in rural areas, which were mostly neglected by the previous governments, that had focused largely in urban industrial development.

Colonel Papadopoulos was a man of his word. Outside of the hostile rhetoric of this critic, the fact is that the Colonel was disgusted at the obvious connection between democracy (in the vulgar sense of the term) and oligarchy. This is seen everywhere modern liberal democracy has been tried.. It is the ideology of the rich and the official ideology of international finance. It is even the case that many in the middle class, at least in the 1960-s, were convinced that the military government was better than that embarrassment of liberal democracy, overseen by a young and inexperienced monarch.
The greatest achievement of the coup was in economic growth and development. Greece is poor. It is one of the poorest countries in Europe. Under democracy, the economy stagnated, and Greece experienced high interest rates, high unemployment and negative economic growth. Foreign investment proceeded apace, but those profits went abroad. Under the Colonels, all of this was reversed. Another hostile critic of the Junta says this, no doubt while gritting his teeth: “The 1967 - 1973 period was marked by high rates of economic growth coupled with low inflation and low unemployment. GDP growth was driven by investment in the tourism industry, public spending, and pro-business incentives that fostered both domestic and foreign capital spending.” This is the primary reason why the Council maintained the popularity of the general population. Another reason is that the communists were thrown in prison by the thousands. As they were (at least at one time) planning in creating a GULAG system in Greece, it is little wonder.
Additionally, the Junta is aware of the hippie movement, supported by capital in the US. It banned this particular elite social experiment it, as did Franco’s Spain, with both governments, incidentally, blaming US policy for this social invasion.
Here is an example of a movement banned in Greece by the Junta, proving its popularity. There was a rock group known as “Aphrodite’s Child” in Greece at the time, they were banned and forced to flee to Paris, no doubt to the cheers of the agricultural classes in the country. Here is one write up about the band:

The rock group Aphrodite's Child began in Greece in the sixties. Bass-player and singer Demis Roussos was a member of The Idols and We Five, while keyboardest Vangelis Papathanassiou was a member of The Forminx who had several hits in Athens in 1964 and 1965, playing British invasion influenced rock. In 1968 during the dictatorship, Vangelis, Demis and drummer Lucas Sideras left Greece for England where being a rock band is less oppressive. They don't even get in the country due to problems with work permits and end up in Paris. It works out for them. The band puts out an album and several of the songs rise to #1 on the French charts. It seems everything they touch turns to gold and each release becomes a hit. In 1970 they begin their most ambitious work, a double album based on the Book of Revelations called 666. The record company is horrified by the contents, in particular a song in which actress Irini Pappas simulates (or maybe it's not simulated) masturbation. Vangelis refuses to remove the offending track and the record company delays the album's release.

This is first, clearly against the social interest of Greece, and it, more significantly, is clearly the result of western pressure, where such ideologies have derived from American sources. This is the sort of trash the junta was set at destroying, and is another major source of the Council’s popularity. All of this material is coming in through U.S. official sources, specifically the U.S. military radio station AFRS. The Council responds to all of this by drafting the offending kids into the army. This simple, country sort of approach is part of Papadopoulos’ appeal. The single best aspect of Junta policy, however, was the treatment of agriculture. Papadopoulos’ was the son of a poor farmer, and he knew first hand the contempt that urban politicians hold the farmers in. During the democratic oligarchy (called “democracy” in the west) farming was a dangerous occupation. Much like in America, farmers were going into bankruptcy in large numbers. They had the utmost contempt for bankers and leftists, but certainly had no truck with the “conservatives” represented by Constantine and “moderate” elements. The Revolutionary Council maintained a rock solid popularity from agriculture, still in 1970 the largest aspect of the Greek nation.

First, the Greek government under the Colonels cancelled most agricultural debt, being careful to distinguish family farms from western-owned combines by limiting the amount of money to be written off, numbering about $100,000, a large sum, but too small for large combines and agri-business. Second, some support for struggling farmers is sent. Third, it becomes easier for farming families to send their children to college, and they are given free textbooks. In fact, all college students are given free books and reduced tuition. College students, as usual, respond with riots and well rehearsed condemnations of “militarism.” For tourist development, extremely low interest loans were granted by the junta. The financial community went bonkers. For small business start ups, the same sort of loans were granted. But much of this liquidity was reserved for tourism, which had fallen off un der the oligarchy. Unfortunately, the oil shock negated many of these gains, though this is no the fault of the regime, and much public support was lost by the end of the system in 1974.

Insofar as finance is concerned, this might well be the central issue. Greece under the junta was quite willing to back out of the U.S., liberal dominated global trading order by making sure the Greek currency remained unconvertable, hence unaffected by "market" pressures. As soon as the west's puppet Papandreou returned to take the helm from his posh post at Harvard, his first act was to render the currency "floatable," and hence vulnerable to outside manipulation.

IV. Conclusion

The Greek military moved in the late 1960s for a few reasons: primarily, it moved so as to end the absurd stalemate in the Greek parliament. Secondly, to stop the re-legalization of Marxism in Greece through the liberals bringing to power of the Socialist Party. Third, the failing economy was destroying Greece, embarrassing her worldwide. Fourth, the military moved because of the destruction of Greek Orthodox morals among the young population, particular from official US sources blaring music and jokes designed to offend conservative Greek sensibilities. And fifth, the military moved to take power to rescue the pathetic condition of the farmers, drowning in debt. If these are the reasons, then the junta succeeded, and maintained a strong and prosperous Greece while they were in power. The Council failed due to reasons beyond its immediate control, the situation in Cyprus and the oil shock of the early 1970s. Without these, Greece would be a freer country today.

V. Select Bibliography

E. O'Ballance, The Greek Civil War, 1944-49 (1966)

G. Finlay, A History of Greece (7 vol., 1877; repr. 1970)

A. G. Papandreou, Democracy at Gunpoint (1970)

D. Dakin, The Unification of Greece: 1770-1923 (1972)

D. Eudes, The Kapetanios, Partisans and Civil War in Greece, 1943-1949 (tr., 1972)

A. F. Freris, The Greek Economy in the Twentieth Century (1986)

T. Bahcheli, Greek-Turkish Relations Since 1955 (1988)

R. Clogg, A Short History of Modern Greece (1988)

Y. A. Kourvetaris and B. A. Dobratz, A Profile of Modern Greece (1988)

J. V. Kofas, Intervention and Underdevelopment: Greece During the Cold War (1989)

T. Boatswain and C. Nicolson, A Traveller's History of Greece (1990).

THAT TIME HAS COME: Greek Military Junta of 1967-1974

New Rift Over Terms Threatens Greece Bailout


ATHENS—Europe's latest bailout for Greece is in danger of fraying over whether countries giving Greece aid should receive cash collateral.

The European Commission on Friday pressed euro-zone members to resolve the issue quickly or risk disrupting the bloc's bailout efforts. European equities continued to fall Friday as concerns over the economic outlook and the euro-zone debt crisis persisted.

A fresh rift over terms of Greece's bailout would further damage Europe's credibility, just as the region's leaders have been scrambling to convince investors that they can bring the Continent's debt crisis under control.

After it emerged this week that Greece had agreed to give Finland a hefty cash deposit as security for Finland's portion of the Greek bailout package, other European countries have begun to ask for a similar favor.

"Now, other countries are deciding that they'd like some collateral too," said Nick Matthews, euro-zone economist at Royal Bank of Scotland. "When you've got financial markets that are already concerned, the last thing you want to be seeing is a suggestion that some elements of the program are being renegotiated."

The more cash that Athens has to set aside to reassure its euro-zone creditors, however, the greater the burden for Greece—and for lenders such as Germany and France, which aren't seeking collateral.

The €110 billion ($158 billion) bailout package for Greece could be disrupted if other countries seek to imitate Finland's deal on collateral, the commission, the European Union's executive arm, said.

Finland and Greece announced a deal Tuesday under which Greece would deposit about €500 million in an escrow account with the Finnish government, as a precondition for Finland agreeing to release funds from the euro-zone's bailout fund.

The bailout fund's loans are guaranteed by the euro zone's solvent member states. The latest Greek bailout deal is politically contentious in Finland, where many voters and lawmakers opposed further aid loans. To assuage fears that taxpayers' money will be lost, the Finnish government insisted on obtaining collateral from Greece in return for underwriting the rescue loans.

Finland's quest for special treatment has drawn criticism from other euro-zone members, including Austria, the Netherlands, Slovakia, Slovenia and Estonia. Several officials from those countries have said that if Finland can get collateral from Greece, then others should, too.

Meanwhile, Greece's challenge in closing its gaping budget deficit is growing deeper. The Greek government said on Friday that the country's recession is worse than expected. Some Greek officials suggested gross domestic product could fall by more than 5% this year, instead of less than 4% as officially forecast.

A deeper-than-expected recession is likely to worsen Greece's budget shortfall, potentially forcing the country to slash spending and raise taxes by even more than planned.

Demands from a string of Greece's European creditors for collateral risk sending a signal to markets that political solidarity within the euro zone is at risk, Mr. Matthews said. That could further hurt investors' confidence in European policy makers, which already has taken a beating in recent weeks as governments have failed to agree on fundamental overhauls of the euro zone that would shore up its members' finances and improve the coordination of their economic policies.

A spokesman for EU Commissioner for Monetary Affairs Olli Rehn said countries must avoid "excessive collaterization" and attaching too many conditions to the rescue package for Greece agreed on July 21.

"It's up to euro-area member states to assess if this bilateral deal between Greece and Finland corresponds to [the] spirit of [the aid package] and does not introduce any element that may be considered a distortion," the spokesman said.

Austrian Finance Minister Maria Fekter, who has repeatedly called on Greece to speed up its privatization plan, said Thursday that she has circulated a proposal for a wider Greek collateral arrangement.

Under the Austrian proposal, euro-zone countries would get collateral from Athens depending in part on the amount that those countries' banks contributed to the aid package.

Countries' growing reluctance to expose their taxpayers to the risks of lending to Greece comes just as Germany and France are trying to cajole other euro members into greater economic cooperation. Earlier this week German Chancellor Angela Merkel and French President Nicolas Sarkozy proposed tighter policy coordination between euro-zone governments, in a quest to reassure markets about the cohesion and survival of the currency bloc.

Greek Finance Minister Evangelos Venizelos defended the collateral deal with Finland, noting it was foreseen in the July 21 accord between European leaders. "We were obligated to hold bilateral negotiations with Finland to see if, on a bilateral level, we could satisfy Finland's demands, and without creating problems" for the bailout, Mr. Venizelos said in a radio interview.

If other countries object to the Greco-Finnish deal, then European leaders might have to take a collective decision on the issue, Mr. Venizelos suggested.

He also said official forecasts for Greece's economic performance this year were "optimistic," though the contraction could be deeper than expected. He didn't commit to a new forecast.

Two other senior Greek officials involved in economic planning said the economy could contract by up to 5.2% this year, rather than 3.8% or 3.9% as previously forecast. They said a sharper-than-expected recession could push Greece's 2011 budget deficit to 8% to 8.5% of GDP, above the official target of 7.6%. Greece might also remain in recession in 2012, the officials said.

Austerity measures have hurt the Greek economy more than expected, while delays in collecting taxes and difficulties in reducing rampant tax evasion are also contributing to higher-than-expected budget shortfalls, the officials said.

Separately, Spain's Finance Minister Elena Salgado outlined new policies to help the country's economy and cut the budget deficit, including a lowering of the rate of value-added tax levied on purchases of newly built housing. She said lower VAT—4% down from 8%—will be applied only until the end of this year, and seeks to cut the large number of properties built in recent years that remain unsold.

—Alkman Granitsas
and Costas Paris
contributed to this article.

New Rift Over Terms Threatens Greece Bailout -

Friday, August 19, 2011

Comparing Europeans


Ready for the big bang?

By Nikos Vatopoulos

The riots in England sparked a flurry of commentary in Greece, most of which, in an effort to understand the complex web of causes that created this explosion, concluded more or less with one common theme: comparing the reaction of the average Greek to that of the average English person to a situation that has diverged from the day-to-day.

Of course this was not the first time that the people of Britain have kept a cool head during a crisis and shown a willingness to contribute toward its resolution.

In the 1970s, during one of the worst financial periods in the country’s recent history, the British were happy to keep their lights switched off and light candles instead, even in shops.

“Keep calm and carry on” is the motto.

For Greeks, in stark contrast to the average levelheaded Briton, any break from what each individual has come to view as his or her version of normalcy, sends shock waves through the entire social and political system. This effect is much more pronounced in 2011, when people are really in the trenches and the changes are coming at them so fast and so unpredictably that even the British are caught unawares.

The important thing, however, is not to do everything you can to dodge the unpredictable, firstly because it’s unavoidable by its very nature and secondly because there is a lot you may end up missing out on in the process.

The issue is about how you react to a situation that comes out of nowhere and changes the tempo of your life.

Here, it is not the leadership of a country that will be judged by its reaction, but the nation.

Composure, it is well known, is nowhere among the many virtues of Greeks. Does this mean that they have some kind of natural bent for self-destruction, just like the British have a natural inclination for balance?

Being drawn to the bad and feeling the urge to destroy anything that has been painstakingly constructed is an intrinsic element of human nature. We have seen both manifested on many different occasions in Europe and we will most probably see them manifested again.

But if the world is in the process of experiencing a big bang, then where will we stand? Huddled in some corner trying to avoid the meteor shower or choosing to do something productive instead? , Friday August 12, 2011 (22:23)  

To the Germans

By Nikos Konstandaras

This is not a time to flatter the Germans, nor to accuse them of past wrongs and present obsessions, nor to plead with them. We are neither friends nor enemies - we are partners. And though we are in the same boat, we hear more and more often that many Germans – from top policy makers to media moralists and opinion polls – would like to see Greece sink, like Plato’s Atlantis. The European Union, the greatest achievement of collective humanity, is being jeopardized by the loss of nerve of a handful of politicians and economists, in Germany, in Greece, throughout our wary continent. And this at a time when simply sticking to the course hewn over the past years, with the necessary adjustments demanded by the time, may lead to a society larger, wealthier and even more beneficial to its members.

Certainly, the Greeks have done all that they can to alienate their partners: first by losing their bearings on account of the unprecedented peace and prosperity that EU membership brought a nation that repeatedly had to fight long and bloody wars for independence and unity, whose harsh land was geared toward creating thinkers, warriors and sailors rather than good middle-class burghers; second, through the tireless efforts of Greek zealots, who are not a few, to portray Greece as a country that wants only to take, and bothers neither with shows of gratitude nor with personal or collective responsibility. What is happening in Greece today is the very difficult process of a society having to sort out the good and the bad and trying to build on the good, when, for generations (if not eons) individuals have been conditioned by the dogma, “my side, right or wrong.” Dividing lines now run between members of the same political parties, of families, even within individuals – between those who are furious by the loss of the utopia of borrowed wealth and those who want to push ahead with the reforms that will make Greece achieve its potential both as a country that respects its citizens and as a valuable member of the European Union. What is at stake is all that the responsible citizens of Greece have built, the savings they deposited when their country and compatriots borrowed, and the future of their children. Is this not what most Germans worry about as well? This is why we need the greatest solidarity between us – the battle being waged in Greece is at the heart of the debate in every country.

The great divide of our times is not between nations nor ideologies, but between different mentalities at a continental level. Beyond nationalists of the left and right, are there many serious people who can argue that any country is better off outside the EU than within it? It is increasingly evident that more unites serious Greeks and Germans than that which divides their more selfish and simplistic compatriots.

Unification, like independence, has always been achieved through blood and treasure; in today’s Europe, though, we can do this through negotiation. We Europeans are in the most privileged position to be able to form our closer union without any fundamental disagreements or bellicosity. We all agree on the paramount importance of our democratic principles and the benefits of our symbiotic and, in many ways, osmotic relationship. It is natural that not all our countries are at the same level with regard to wealth, democratic maturity and productivity. Did we really expect that more than 500 million citizens of dozens of nations could come together without any lapses, without complaints, without frustration, downright anger and wrong turns? What we have achieved is more than we could have expected, success is within sight; how can we jeopardize it all? How can Greek union leaders still hold their country back – a country with unemployment touching on 17 percent? How can German policy makers make comments that can only lead the markets to keep questioning their will to save the euro and the union?

Today, individuals are empowered as never before but nations are more vulnerable to forces beyond their control and the world needs pillars of stability. The United States, the economic and military superpower has its own problems, which, in a way, mirror the European inequality between rich and poor, “productive” and “lazy.” The growing but untested powers of China and India face their own social and economic imbalances. Europe has fewer fundamental flaws but is showing a frightening loss of confidence in itself as a superpower in the face of challenges that were only to be expected.

These are not issues that can be determined by opinion polls and populism. They do not have the same weight as everyday political anxieties. Times demand collective efforts and personal responsibility, from all Europeans. Those who are in a position to lead must do so with determination, and the others must do what they can to help. So let’s pull together. , Sunday August 14, 2011 (19:31)  

Comparing government reactions

By Angelos Stangos

It is neither easy nor politically correct to isolate the societal causes that contributed to the riots in England from the government’s reaction to them. It is also irrational to compare those events with the causes behind the recent unrest in Greece and the respective reaction by the Greek government.

While the poor in England have historically been defined by a general lack of professional or social upward mobility, explaining the “sudden” explosion of anger, the same cannot be said of similar explosions in Greece, as the fate of low-income Greeks so far remains brighter than that of their English counterparts.

However, if we venture to compare the reaction to the riots, destruction, looting and violence by the British government to that of Athens, the difference is massive.

On the one hand, from the very start the UK government did not budge an inch -- over social, political or even generational factors -- when it came to imposing the law. In Athens, the law was constantly undermined by statements expressing understanding for the rage of the Indignant movement or the troublemakers. In London, the government showed that it was determined to maintain law and order, whereas in Athens, the usual guilt syndrome was stronger than the government’s will to provide safety and security, even when the violence reached its zenith.

To take the comparison further, the British government displayed no fear over whether clashes between the rioters and the police would result in victims that would then take a toll on its popularity, in stark contrast to Athens. At the same time, there was little fuss about the methods used by the British police to quell the riots, whereas in Greece, populist voices bayed for them to shower the rioters with petals and let them go on their merry way. In Britain, the courts stayed open overnight during the period of the riots in order to pass swift judgment on the guilt or innocence of rioters that had been arrested. Needless to say the same was not the case in Athens.

The biggest difference, however, was that in London citizens rushed to clean up the mess, while in Athens and Thessaloniki they showed their support for the cleanup effort with complete indifference.

There are many conclusions that can be drawn from the comparison, but one thing is certain: Christos Papoutsis would never be made citizens’ protection minister in Britain. , Thursday August 11, 2011 (17:52)