Wednesday, November 30, 2011

Greeks Balk at Paying New Property Tax


Published: November 27, 2011

Mayor Iraklis Gotsis of Nea Ionia, a suburb of Athens, said he would fight the tax bills in court and have municipal lawyers defend residents. /Angelos Tzortzinis for The New York Times

NEA IONIA, Greece — Ioannis Chatzis is 86 and lives in a tiny, single room, surviving on a pension that is just enough to pay for food and care for his bedridden wife.

But in its latest push to raise cash, the Greek government sent him a new $372 real estate tax bill, incorporated into his October electric statement.

Mr. Chatzis says he is being asked to choose between lights and paying for his wife’s medicines, since he cannot afford both on his $720-a-month pension.

“This is how we are treated,” he said recently, his face a mixture of fury and despair. “I have nothing left to give. I will not be paying it.”

Mr. Chatzis is far from alone in that vow, and it is not certain that the Greek government will do anything about the tax rebels.

As the first due dates approach on the Greek government’s novel idea of linking electricity to tax payments, a growing resentment is settling over many parts of this country — one that some local officials believe could even shake its political stability.

Already there are pockets of resistance popping up in dozens of areas, including this northern suburb of Athens, where Mayor Iraklis Gotsis has promised to fight the tax bills in court. He has also organized a group of electricians willing to reconnect — illegally — anyone who is cut off. “This thing on top of all the other taxes and salary cuts has made people snap,” Mr. Gotsis said recently. “It is the drop that made the glass full.”

Many Greeks consider the new tax, which makes no exceptions for the unemployed or the elderly and is much higher than any real estate tax they have paid before, to be one more sign of the tough austerity measures they are suffering under as a requirement for European aid. European finance ministers will meet Tuesday to decide whether to release the next $10.6 billion allotment to the Greek government.

In the past, most Greeks paid real estate taxes when they bought, sold or inherited property. They also paid comparatively small yearly taxes to municipalities. Someone in Mr. Chatzis’s circumstances might have paid less than $133 a year in total. Now he will have to pay an additional $373 this year and the next.

In September, under pressure to come up with $2.6 billion to close a budget gap, and losing the battle against tax cheats, Greek officials settled on the idea of linking a new real estate tax to bills from the government-owned power company.

The new tax, which they say they will levy again next year,  is based on square footage, the age of the building and the average value of a neighborhood, and has nothing to do with the taxpayer’s income.

But lately, even the government seems to be having second thoughts about the tax. Last week, the power company announced that it would send out cutoff notices, but said that it would hold back on taking any such measures until the government had considered the circumstances of the affected families. Meanwhile, union workers occupied the power company’s billing center, preventing any new bills from going out.  Some Greeks just do not believe that the government will ever have the nerve to cut power to thousands of homes. They say it will be yet another change of course, as is so often the case here. Deadlines are set and then rescinded. Tough tax laws are put forth and then amnesties are offered.

“I honestly don’t believe they will do this,” said Pantelis Ksiridakis, the mayor of a wealthier suburb, who described the policy as a form of blackmail that may work for the rich, but is crushing to the poor. “They are pushing people to the limit with this.”

“This is a tax that nobody expected, and they are demanding cash. No structured payments,” he added.

In Nea Ionia, Mayor Gotsis has offered to have municipal lawyers defend those who cannot, or will not, pay the tax; about 1,000 residents have come forward so far.

Most, he said, fall into the first category. Greece’s creditors, he said, forget that large numbers of Greeks, even if they have evaded taxes at the margins, are not wealthy. About 25 percent of the small stores in Nea Ionia have closed in the last two years, hit hard by the country’s deepening recession and rising unemployment rate.

Vangelis Avlonitis is one of the electricians who has volunteered to restore power, if the mayor asks him to. His  shop is not far from Town Hall and is decorated these days with the neon signs he made for his customers before their shops went out of business.

Mr. Avlonitis says he is barely scraping by himself. But for others it is much worse. One neighbor stopped by last week and told him her pension was $440 a month and her tax bill was $480.

“This is ridiculous,” he said, pointing out a ladder he had bought in case the power company cut the electricity at the poles.

Not everyone in this suburb is refusing to pay. Some say they will find the money because they believe  their country is in trouble. One man, who  declined to give his name, said he, too, had lost his business — a snack shop — last year. But he is surviving on the income from a few properties he owns and will pay the new tax.

“We have to help the state,” he said. “The tax is unfair. We are not the first ones who should be paying. The ones who have Swiss bank accounts should be paying. But that is still how things are here.”

The Greek government has struggled to improve tax collection. At first, officials were optimistic that they could capture at least a portion of an estimated $27 billion in unpaid taxes each year.

Various experts have put Greece’s shadow economy at about 25 percent of its gross domestic product, compared with less than 8 percent for the United States.

But last year, Greek officials collected even less than the year before. Some of the decline in revenues resulted from the decline in the economy. But some new tax collection strategies — incentives to collect receipts so that fewer business could work off the books, for instance — backfired and actually reduced people’s tax bills.

And the state seemed to make little progress in getting the scofflaws to pay. Some 70 percent of the tax collected came  from salaried employees and retirees, who have little way to hide their income. Meanwhile, 7 out of 10 self-employed workers, including doctors, dentists, engineers, accountants, taxi drivers and small business owners, indicated on their tax forms that they had made less than $16,000 a year, a figure that most experts find laughable.

The Greek Public Power Corporation  recently announced that of the 86,000 bills that came due recently  — a tiny fraction of the 5.5 million households in Greece — 73 percent had been paid. Its press release struck an optimistic tone, suggesting the rate of payment was similar to the usual rate.

But critics point out that such a percentage  means that the government could be facing the prospect of tens of thousands of shut-offs in the middle of winter.

Some of the rebellious pushback has bordered on the humorous. For instance, the Health Ministry in downtown Athens was in the dark for four hours last week, courtesy of the power company’s union workers.

Since government ministries owe the power company $180 million, the union argues, why shouldn’t they suffer cutoffs?

There are also half a dozen legal protests pending. And a YouTube video describing how to reconnect your electricity if you get cut off has gone viral.

  In Nea Ionia recently, Mr. Chatzis, sitting near an electric heater at a friend’s hardware store, was fretting about the tax bill and remembering the years he spent as a prisoner in World War II after resisting the Axis occupation of his country. “Now it seems like the fascists are back again,” he said of the pressure on Greece to raise more revenue and narrow its budget deficit. “What did we fight for?”


Dimitris Bounias and Nikolas Leontopoulos contributed reporting.

Greeks Balk at Paying New Property Tax -

Sunday, November 27, 2011

Greek economy in dire shape


Wednesday, November 16, 2011 » 01:23pm

Greece's economy shrank 5.2 per cent in the third quarter, highlighting the depths of the crisis as parliament debated approval of a new government under Lucas Papademos.

Athens is racing against time to adopt deeply unpopular reforms demanded by its European Union and International Monetary Fund creditors before the release of bailout loans needed to avert bankruptcy in mid-December.

Papademos' transition government, formed last week with the backing of the socialist, conservative and right-wing nationalist parties, is expected to carry a vote of confidence on Wednesday but must hold early elections in a few months.

Hoping to delay a possible default, the Greek debt management agency on Tuesday raised 1.3 billion euros ($A1.75 billion) in a sale of three-month treasury bills, having to pay slightly higher rates of 4.63 per cent, up from 4.61 per cent in October.

On Tuesday also, there appeared to be some movement on crucial plans agreed at a eurozone summit last month to write off 50 per cent of privately owned Greek debt, with a finance ministry source saying talks with the banks would begin 'this week'.

The Kathimerini newspaper said they would begin in Frankfurt on Wednesday.

But the scale of the task facing the new administration was revealed by the latest growth data from the state statistics agency.

This showed that in addition to the third-quarter contraction that was just short of an annual estimate of 5.5 per cent, the recession was deeper in the first and second quarters than originally estimated.

'It's a very bad signal. Usually during summer, because of tourism, you have a more positive situation,' said Angelos Tsakanikas, head of studies with the IOBE employers organisation, adding: 'It's a lost year.'

One possible reason for the severity of the contraction, as suggested by trade unions, could be because stretched small businesses are no longer declaring the temporary staff they hired over the summer.

The Athens stock exchange endured another miserable day, with the general index closing down 3.57 per cent and the FTSEB banking index falling 9.37 per cent.

In its darkest hour, Greece has turned to Papademos, a former European Central Bank deputy chief, to save itself from ruin and a humiliating eurozone exit.

In his maiden speech to parliament on Monday at the start of a three-day confirmation procedure, the 64-year-old said that reforms necessary to keep Greece in the eurozone would only be achieved through national unity.

'We can address the crisis faster and at a lower cost through national understanding and social cohesion,' he said ahead of the confidence vote, which the government is expected to carry by over 250 votes in the 300-seat chamber.

Greece needs to unblock eight billion euros in loans due from its May 2010 EU-IMF rescue deal which has been frozen since August.

But it must first ratify a follow-up rescue package agreed in October that would slash its huge debt by nearly a third, but which requires Greece to implement further austerity measures.

The new administration has public support, according to polls, but unions and left-wing parties are mobilising to stop the ongoing austerity drive.

On Tuesday, about 200 civil servants and university lecturers demonstrated outside parliament against pay cuts.

'Our incomes have already been reduce by 50 per cent,' the head of the civil servants union Adedy, Costas Tsikrikas, told Flash Radio.

Greek economy in dire shape | Finance | BigPond News

Thursday, November 24, 2011

Second Coalition Leader in Greece Backs Debt-Relief Deal


By NIKI KITSANTONIS Published: November 23, 2011

ATHENS — After refusing to do so for weeks, the leader of New Democracy, the second-largest party in Greece’s interim government, sent a letter to the country’s foreign creditors on Wednesday pledging to support a debt-relief deal. But it was not clear whether the move would break a political deadlock that was preventing Greece from receiving badly needed rescue funds.

Without that $10.7 billion — the sixth installment under a rescue deal that was approved last year — Greece is likely to default on some of its debts in December, which would shake the euro zone.

Foreign lenders have insisted that the leaders of all three parties in the new unity government — including Antonis Samaras of New Democracy — make a written commitment to the second bailout deal. Mr. Samaras, who sharply criticized the terms of the deal before the formation of the unity government, has resisted doing so, saying his spoken assurances should be good enough.

In his letter on Wednesday, he said he would back the decisions made at the European Union summit meeting on Oct. 26, when the deal was negotiated, and would support “the economic policies linked to those decisions.”

Still, he repeated his party’s conviction that “certain policies have to be modified,” saying it was the only way to draw Greece out of a deepening recession. He did not elaborate.

The leaders of the so-called troika of foreign lenders supporting Greece — the European Commission, the European Central Bank and the International Monetary Fund — have demanded stiff cuts in Greek public spending, payrolls and pensions as a condition for advancing the money that Greece needs to avoid defaulting on its debts, run up during years of budget deficits. The austerity measures are deeply unpopular and have led to mass demonstrations that have sometimes turned violent. The austerity plan ultimately fractured the Socialist government of former Prime Minister George A. Papandreou, leading to the formation of the unity government. Mr. Papandreou has supplied a written commitment of support, but the leader of the third party in the coalition, Giorgos Karatzaferis of the right-wing LAOS party, has yet to do so.

The Bank of Greece said in a report on Wednesday that the new debt plan was Greece’s “last such opportunity” and that “what is at stake is whether the country is to remain within the euro area.”

Second Coalition Leader in Greece Backs Debt-Relief Deal -

Wednesday, November 23, 2011

Mish's Global Economic Trend Analysis: Showdown in Greece; EU Gives Deadline on Signatures; Samaras Won't Sign, Sends Letter Instead, Seeks Policy Changes


European officials have had enough of the technocrat leadership in Greece. They have given a week for Antonis Samaras, the leader of New Democracy party, and member of the coalition to sign a document saying he will support the European Union debt plan.
He says he will support the plan (with modifications). The EU wants a signature now, with no changes.

Does a Signature Even Matter?

Other than pigheadedness on behalf of the EU, does a signature even matter? Why? The next government can easily vote to undo whatever this government does. Will Samaras remain in power? Is his signature binding on the next parliament (or even this one)?
I will have more questions in a moment but first consider a couple of articles.

EU Gives Deadline on Signatures

Ekathimerini reports EU sets deadline for signatures

European officials insisted on Tuesday that party leaders in Greece’s coalition government must provide written guarantees expressing their commitment to a new European Union debt plan before a Eurogroup summit next Tuesday to unlock crucial rescue funding. But center-right New Democracy appeared unmoved and the right-wing Popular Orthodox Rally (LAOS) -- the third party in the coalition -- appeared to harden its stance against the country’s creditors.
Sources in Brussels told Kathimerini that the EU decided to send Athens the ultimatum after talks between European Commission President Jose Manuel Barroso and New Democracy’s vice president Stavros Dimas, who is also foreign minister, failed to secure a shift in the stance of ND president Antonis Samaras, who has refused to offer written guarantees to Brussels, saying his word should be enough.
Eurogroup chief Jean-Claude Juncker, who received Greek Prime Minister Lucas Papademos in Strasbourg, said he hoped party leaders would fulfill EU demands by Tuesday. “Would there be no cross-party agreement, that disbursement of course could not take place,” Juncker said, referring to an 8-billion-euro loan without which Greece faces default next month.
There was pressure from elsewhere too. Dutch Finance Minister Jan Kees de Jager said his country would bar further aid unless Samaras changes his tune. “We want to see a signature from Mr Samaras… otherwise, as far as I am concerned, they will get no money. Absolutely not.” But ND spokesman Yiannis Michelakis indicated that ND’s leader was unmoved. “I have nothing to add on the issue of the signature that is being asked of Samaras,” he said.
Meanwhile the leader of LAOS, Giorgos Karatzaferis, shifted from his earlier suggestion that he would do “everything necessary” to secure crucial loans, saying that instead of signing a letter, he would write an article outlining his commitments in his party’s newspaper.
Samaras Won't Sign, Sends Letter Instead
Athens News reports Samaras won't sign, EPP letter published
As the pressure mounts on the major Greek party leaders to provide written support for the October 26/27 eurozone deal, New Democracy (ND) president Antonis Samaras has reiterated his stance that he will not sign such a statement.
ND party spokesman Yiannis Mihelakis stressed on Tuesday that he has nothing further to add on the issue of Samaras' signature over commitments requested by the EC-ECB-IMF 'troika'. Mihelakis added that Samaras has made specific statements saying he backs the October 26 EU summit agreement, adding that no request has been made on behalf of the European Union as regards the ND leader’s signature.
In the letter, Samaras underlines the fact that he supports Prime Minister Lucas Papademos and the targets of fiscal adjustment but notes that “certain policies have to be modified”.
Policy Changes?
Who blinks first? Samaras or the EU?
While pondering that question, consider this logic from my friend Bran who every day sends me links like those above.
Bran writes ...
Imagine a US bill launched by the Democrats affecting international shipping. Suppose the bill gets a mixed vote and passes.
Along come the Chinese who are part beneficiaries of the bill and they then insist not just the President sign it, but also demand the head of the Republican party to do so, or they will not abide by their reciprocally enacted legislation.
Just imagine that setup and tell me how Speaker of the House John Boehner or Senate Minority Leader Mitch McConnell might react.
Even if the Congressional leaders did sign such a document, would it be binding on the next Congress?
In the case of Greece, elections will be held early next year (supposedly). With all these demands and all this political posturing, one has to wonder.
I for one hope Samaras holds firm and does not sign. The quicker the Eurozone blows up, the better it will be for everyone.

Mish's Global Economic Trend Analysis: Showdown in Greece; EU Gives Deadline on Signatures; Samaras Won't Sign, Sends Letter Instead, Seeks Policy Changes

Tuesday, November 22, 2011

EU Helps Greece Recover $81B of Unpaid Taxes From Swiss Banks


Written by Bruce Walker

Monday, 21 November 2011 10:17

According to the Swiss newspaper The Local, last week "[t]he European Union said ... it is helping Greece negotiate with Switzerland in a bid to claw back some of the €60 billion [$81 billion] in unpaid taxes believed to be hidden in Swiss banks."

Horst Reinchenbach, the German head of a task force advising Greece on its economy, acknowledged that the group of European Union experts had made "few concrete steps" forward, adding, "Solutions are being explored to provide Greece with an adequate way to increase tax revenue....

Another EU official, speaking on condition of anonymity, stated, "We want Greece to get the best deal possible using EU and IMF [International Monetary Fund] experience and legal support." The official commented that of the missing €60 billion in taxes, just half is "theoretically collectible" and only €8 billion is likely to be recovered "sooner or later." 

The European Commission report states:

Even though the actual prospects for collection are very low, the very size of these tax arrears casts a doubt over the efficacy of the overall tax administration. A number of areas for rapid progress have been identified including debt collection, large taxpayers, dispute resolution, and tax audit. There are additional areas for development such as management and organization of the tax administration, risk and revenue analysis, taxpayer services.

The report noted that Greece had backlogs of 165,000 tax files yet to be processed. Last week, the Greek Finance Ministry announced that tax collections for the first 10 months of 2011 were 4.1 percent lower than collections for the corresponding period of last year.

Greece's public debt today stands at €370 billion or 160 percent of its GDP.

It is believed that Greece is trying to follow patterns set by Germany and Britain to recover tax revenues hidden in Switzerland. If, however, the amount of uncollected debt equals one-quarter of the entire GDP of Greece, then the problem may not be delinquent and hidden taxes, but rather the level of taxation itself. The Heritage Foundation reports that Greek taxation is equal to 33.5 percent of its GDP, and two other organizations have noted similar percentages: The Organization for Economic Cooperation and Development put the number at 29.4 percent and Eurostat, the statistical organization for the European Community, said that taxation in Greece is at 32.6 percent of GDP.

As a matter of fact, the nations of the European Community that are in serious economic trouble have very high ratios of taxation to GDP. The Heritage Foundation lists Portugal at 37.0 percent; Italy at 42.6 percent; Ireland at 30.8 percent; and Spain at 37.3 percent.

Analysts have observed that perhaps the problem of the so-called PIIGS EU member-states (Portugal, Italy, Ireland, Greece, and Spain) is that they tax away too much of their wealth. If that is the case, then collecting more tax revenues in Greece will not solve any long-term problems and may in fact drive investment capital away from the ancient nation.

Photo: Credit Suisse headquarters in Zurich

EU Helps Greece Recover $81B of Unpaid Taxes From Swiss Banks

Monday, November 21, 2011

Greek creditors clash with political chief Antonio Samaras over refusal to sign austerity pledge

By Katherine Rushton 2:40PM GMT 19 Nov 2011

Greece's creditors hit an unexpected hurdle on Saturday, after one of the three leaders in the new Greek coalition refused to sign a pledge that he will back austerity measures - claiming his word is his bond.

IMF represantative Poul Thomsen (right), ECB representative klaus Masuch (second left), EC director Matthias Morse (left) in Athens on Saturday for talk with the Greek government.

IMF represantative Poul Thomsen (right), ECB representative klaus Masuch (second left), EC director Matthias Morse (left) in Athens on Saturday for talk with the Greek government. Photo: EPA

International lenders, weary of Greece's failure to deliver on austerity measures aimed at saving it from financial ruin, have called for the written commitment amid fears that politicians may backtrack on the fiscal measures ahead of the country’s elections next February.

However, Antonis Samaras, leader of New Democracy, Greece’s main conservative party and one of the three in the country's new coalition, said there is no need for him to offer a written declaration because he can be trusted.

The Troika, which is composed of the European Commission, the European Central Bank and the International Monetary Fund, and monitors Greek compliance with rescue deals, discussed the issue with Mr Samaras on Saturday. However, the Harvard-educated economist, known for his fiery rhetoric, refused to budge.

“Regarding the discussion we had with the troika and specifically on the written reassurances, I repeated to them my position on the issue," he told reporters.

He added that New Democracy had already proven its commitment to the terms of the bailout by backing the coalition led by technocrat Prime Minister Lucas Papademos and its new budget.


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Mr Samaras agreed to back Mr Papademos's coalition in return for early elections that opinion polls suggest he would win, albeit without a majority. In recent days, he has stressed that his support for the cabinet is temporary, pending a February poll.

His refusal to sign the agreement puts at risk the next €8bn tranche of aid for Greece, which is needed by December if the country is to avoid defaulting on its debt repayments.

However, analysts expect Mr Samaras and the Troika to come to a compromise agreement that will allow both parties to save face.

"One way or another, there will be a way to bypass this problem. I believe there will be a solution that will not force Samaras to give a written commitment, and it will come soon," said Costas Panadopoulos, head of the pollster, ALCO.

The international lenders also met Mr Papandreou on Saturday, but he made no immediate comment after the talks.

Mr Papademos is scheduled to fly to Brussels on Monday to brief senior EU officials on the latest developments in Greece. Mario Monti, Italy's new premier, faces a show-down with EU president Herman van Rompuy on Tuesday followed by three-way talks with Germany and France on Thursday.

Greek creditors clash with political chief Antonio Samaras over refusal to sign austerity pledge - Telegraph

Saturday, November 19, 2011

Greek budget deficit to fall more than expected


Greece's budget deficit will be lower than expected next year, despite a shrinking economy, after spending cuts and a write-down on the country's debt agreed as part of a European bail-out.

Greek budget deficit to fall more than expected

The amount of interest the Greek government must pay on its debts will fall to €12.75bn in 2012.

Agencies 12:06PM GMT 18 Nov 2011

Greece's deficit is now expected to fall to 5.4pc of GDP in 2012, down from 9pc this year, and below the previous forecast of 6.8pc.

The improvement is even more remarkable because Greece's economy is expected to shrink by 2.8pc next year, worse than the 2.5pc contraction predicted only last month.

The fall in the deficit arises from the expected cancellation of €100bn (£86bn) in privately-held Greek debt agreed last month, as well as savings achieved by the government.

The amount of interest the Greek government must pay on its debts will fall to €12.75bn in 2012, from €16.38bn this year following the debt deal, which is still being thrashed out but is due to be implemented early next year.

Without the deal, made by eurozone leaders with the banks as part of a wider rescue package agreed during an all-night summit in Brussels last month, the payments would have been €17.9bn, according to the budget figures.


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Greek budget deficit to fall more than expected - Telegraph

Friday, November 18, 2011

Greece: Athens uprising anniversary demonstration descends into violence


Running battles between police and protesters marred a march to commemorate the date of a student uprising in the country in 1973, which saw 50,000 people take to the streets of Athens.

10:57PM GMT 17 Nov 2011

Left wing groups, unions and students marched in honour of the 38th anniversary of the uprising at the Athens Polytechnic University in 1973 against the dictatorship then ruling Greece, which saw many students die but which eventually helped lead to the fall of the military regime.

After beginning peacefully, Greek riot police fired tear gas against demonstrators taking part in the march in Athens and fought pitched battles with the protesters who used the anniversary to voice their anger over recently agreed austerity measures.

The trouble came just a day after a national unity government led by technocrat Lucas Papademos took office, charged with implementing the tax increases and public spending cuts designed to prevent Greece from crashing into default.

More than 50,000 people marched through the capital, banging drums and chanting "EU, IMF out" in a challenge to Mr Papademos's fractious coalition, which is made up of three parties.

Masked youths threw petrol bombs and stones at police, in what has become a familiar pattern of confrontation in the Greek capital over the past two years.

Unions claim that a wide-ranging package of cuts designed to cut the country's 370 billion euro debt, which amounts to 160 per cent of GDP, is sending Greece into a "death spiral".

Many Greeks say the new government lacks legitimacy because it was not elected. "This government is unconstitutional, we have not voted for it," said Vassilis Papadopoulos, 49, a bank employee. "It does not represent us."

Video: Greece: Athens uprising anniversary demonstration descends into violence - Telegraph

Tuesday, November 15, 2011

EU crisis: The Greek Austerity Diet will only leave them feeling fed up

 Boris Johnson

By Boris Johnson

6:38AM GMT 14 Nov 2011

Bullying the benighted nation into submission for the sake of saving the euro will backfire, writes Boris Johnson.

The Greek Austerity Diet will only leave them feeling fed up; Herman Van Rompuy at the end of the recent EU summit; EPA<br />

Herman Van Rompuy: this is not the time for elections Photo: EPA

OK, that’s it. I can take the taunts no longer. I am inventing a new diet: it’s called the Greek austerity diet. And I am putting myself on it right away. The moment of revelation came last Friday when we were out there in Monaco to argue that London should host the World Athletics Championship in 2017.

Even though we won the bid, there was a nasty moment for your correspondent. We were all walking along some corridor in the glitzy hotel, when we went past some gilt mirror — and I saw the awful contrast between the hard-bodied core members of the team, and the portly periphery. There was the Lord Coe, lean and chiselled as a whippet; there was heptathlete Denise Lewis and supersonic sprinter Jodie Williams, without an ounce of fat between them; and there were assorted other athletes and ex-athletes, all looking pretty darned svelte. And there, alas, was I.

For some reason, it had been decided that we should all wear identical dove-grey suits, and I am afraid my measurements must have been supplied from a younger and fitter self. As I went past the glass, I could see some spherical Scandinavian businessman staring back at me with bloodshot eyes, his thighs straining at the trouser fabric like bursting sausages — and I realised it was me. Then this morning I read a cruel piece in one of the Sunday papers that says I look as though I am no stranger to a bacon sarnie; at which I smote the board, and cried, no more. It’s time for the Greek Austerity Diet ©. It’s time for a programme of savage cuts on the carbs, and steep retrenchment of the alcohol consumption. You can wave a cake under my nose and I will push it moodily away. As for cheese, it is now officially the food of the devil.

I know it will be tough. These austerity drives always are. I must brace myself for that hallucinatory feeling you get in mid-afternoon, when you haven’t had quite enough for lunch. My stomach will rumble with protest, like the crowds in Syntagma Square. My psyche will crave chips, like an army of Greek civil servants yammering for their ancestral right to retire at 50. As I cycle past London Bridge station, my nostrils will be filled with the tormenting aroma of Cornish pasty — like the torment that afflicts a Greek customs officer when he thinks of the Porsche he has had to sell, the mistress he has pensioned off, the villa he has been forced to flog to a nice man from Düsseldorf.

There will be times when the withdrawal symptoms will be so bad that I say to myself that this can’t be worth it, and that we might as well abandon the regime, just as there are constant threats to the existence of the government in Athens; and yet I will soldier on with the Greek Austerity Diet — olives, tomatoes, onions, and not even a lump of feta — with all the implacable logic of the new “technocratic” governments that are shortly to be installed in Athens, Rome and elsewhere. Polite opinion will be united: that it is the best thing for all of us. And I am not at all sure that polite opinion will be right. At least I know that my diet is a good idea. But there is (of course) the world of difference between an individual decision to go on a diet, and the agenda of economy now being forced on the peripheral euro members; and the first and most obvious difference is that my Greek Austerity Diet is entirely a scheme of my own devising. I voted for it. My own body politic took the decision. It is a plan entirely calibrated to suit my own interests, as far as I interpret them. I don’t have Angela Merkel leaning over me and cracking her whip, and barking at me to hurry up. I don’t have Herman Van Rompuy, President of the EU Council, saying things like “This is not the time for elections, this is the time for decisions!”


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The biggest difference between my diet and the Greek austerity programme is that the Greeks are being blatantly deprived of the right to decide the matter for themselves. It is a bitter irony that the Greeks were admitted to the EU in the hope of entrenching democracy, after the rule of the colonels. Now the Greeks find that their democratic freedoms are being trampled upon by the EU itself. Of course they need to cut their budgets and to reform their bloated public sector; but it is a recipe for disaster to embark on such a programme without democratic consent.

You have to be careful with these diets. I have a friend — normally the soul of geniality — who has just been through something called the Dukan diet, and he has lost loads of weight; but he has told me of his positively lycanthropic symptoms when he goes past the bakery. There are many who argue that the EU-imposed austerity measures are counter-indicated, and that they are only deepening the recession and making Greek difficulties worse.

In a sense, it doesn’t matter if that analysis is right or wrong. What matters is that many Greeks already believe it — and they will therefore resent the programme all the more for being devised without their democratic approval. Many years ago Margaret Thatcher made a much-deplored speech in which she warned against the creation of “identikit Europeans”. Everybody said that it was absurd to talk in such terms. But her warning was spot on.

We are using fiscal bullying to try to turn the Greeks and Italians into Germans. The whole European enterprise is now devoted to keeping the euro alive on the utterly specious grounds that the currency is synonymous with “Europe”. We are nailing shut the exits of William Hague’s famous burning building. British taxpayers going to be shelling out ever more in bail-out dosh, much of which will ultimately go to banks and bankers’ bonuses. And all the while the southern EU members will be put on ever tougher austerity regimes that frankly don’t suit their needs. No matter how hard I diet, I won’t look like a championship athlete. The Greeks can’t become Germans, and it is brutal to force them to try.

EU crisis: The Greek Austerity Diet will only leave them feeling fed up - Telegraph

Saturday, November 12, 2011

Left and Right should join forces against the great euro takeover

 Charles Moore

By Charles Moore 8:09PM GMT 11 Nov 2011

As the EU crisis nears its moment of truth we need democrats – not technocrats – in charge.

Activists have set up a fireplace near the Euro sculpture in front of the European Central Bank in Frankfurt - Left and Right should join forces against the great euro takeover

Activists have set up a fireplace near the Euro sculpture in front of the European Central Bank in Frankfurt Photo: AP

'The moment of truth is approaching,” said David Cameron on Thursday. But what is the truth?

In the view of those who run Europe, the truth is that its single currency must be saved. In very ancient Greece, Homer tells us, the giants tried to scale Heaven by piling Mount Ossa on top of Mount Olympus, and then adding “wooded Pelion”, another mountain in those parts, on top of that. They failed, of course, and “piling Pelion on Ossa” became a by-word for reinforcing failure.

In very modern Greece (two days ago), a new prime minister was chosen. Lucas Papademos is not an elected politician. He is the former governor of the Bank of Greece, and it was part of his job a decade ago to persuade the European Union that his country had met the budget deficit criteria which would permit entry to the euro. It hadn’t, but he said it had. Greece joined. Now, partly because of this original fiction, Greece is bust. Yet the answer, strongly approved by the euro-giants, who were disgusted by the earlier suggestion of a referendum, is to pile Papademos on Papandreou.

In modern Rome, it is proposed that Mario Monti succeed Silvio Berlusconi as prime minister of Italy. Mr Monti is sometimes described as a politician, but, again, he does not sit in his country’s parliament: on Thursday, the President of Italy suddenly made him a senator-for-life. He has, however, spent nine years as a European Commissioner. His postal address is Rue de la Charité, Brussels. The euro-giants love him too.

These changes are welcomed by the powerful because they mean rule by “technocrats”. Let’s call in those clever chaps who have already proved they know how to pile Pelion on Ossa and get them to pile up several more mountains, summit upon G20 summit! Then we can reach Heaven at last!

There is, one must admit, a weird logic in this. One reason the eurozone is tottering is that markets know that its members (by which they mean Germany) could produce the mere two trillion euros required to calm things down, but are refusing to do so. The markets are goading them to see if they are serious. They, naturally, would like to prove that they are.

But what I want to shout out, like the man in the hall in an old-fashioned election meeting, is “What about the workers?” So long as the economies of Europe were on a fairly even keel, normal people did not pay much attention to the great plans to reorganise their continent. But now, as the European Commission itself admitted this week, these plans have stopped growth. They are beginning to do so not only in the eurozone, not only in near-neighbours such as Britain, but right across the world. While the trouble persists, no one knows whether to invest in production and trade. The “safe havens” of gilts outside the storm become bubbles, and therefore cease to be so safe. America and China are both making their displeasure felt.

I caught Mr Papademos saying on television that it was only by remaining in the euro that Greece could return to “financial prosperity”. True, you cannot have a sound economy without sound money. But what is emerging in this crisis, as is always characteristic of depressions, is that an obsession with the strictly financial comes into conflict with the broader economic good. Possibly, though I doubt it, Greece and other “Club Med” countries can find ways of staying in the euro. But they will do so – are already doing so – at a punitive cost to their citizens. Every country needs its central banker, but are they and their like really the men for the hour of national salvation? Aren’t they the representatives of the class that has failed?

You often hear Greens complaining about “our obsession with economic growth”. Now that citizens are beginning to lose their wage rates, their jobs, their houses, their pensions, their futures, we shall all be reminded of why that “obsession” makes sense. However badly a country such as Greece has run itself (it has, it has), however much Italy needs “structural reform” (it does, it does), however much every country south of the Rhine may be reprehensibly late-rising, unshaven, garlic-reeking and generally un‑Germanic, they cannot correct their own errors if their debt compounds and their currency is overvalued. The one size that is supposed to fit all is, in reality, the one size that fits Germany.

Our leaders keep saying how vital it is to keep the euro afloat. There can be no doubt that its sudden collapse would have terrifying consequences. But the remedy of throwing more and more troops into the valley of the shadow of financial death may be no remedy at all. The most diligent eurozone workers – and British workers, too, if we are not careful – will end up like poor Boxer in Animal Farm, nobly making every sacrifice for something that cannot be achieved.

There is surely a case here for common cause between Left and Right. Historically, the Left has gained its stature by standing up for the downtrodden. The European Union, and even more the eurozone, is the classic bankers’ ramp against which the Left always warned. Yet, probably because it hated Mrs Thatcher so much, the Left switched to supporting the euro, and thus betrayed the underdog.

The Right originally supported European integration because it would undermine trade-unionised siege economies and fend off Communism. But the euro turns out to be opposed to the competition which is the lifeblood of free markets, and gives privileged status to an alliance of bureaucrats, politicians, bankers and central bankers which then protects itself with the “too big to fail” argument. That alliance now finds perfect expression in the Frankfurt Group. As an exceptionally brave central banker, Mervyn King, said in an interview with this paper earlier in the year: “The concept of 'too big to fail’ should have no place in a market economy.” The euro is very, very big, and very nearly failed. Yes, fiscal union is an answer, of a sort, to the problems the euro has now. But it is surely not the answer that believers in markets should prefer.

Left and Right alike – Left and Right in their anti-establishment forms – should agree that this is not the time for technocrats and Frankfurters. I have a more original idea. How about a few democrats?

The truth whose moment Mr Cameron sees approaching is that since Europe has to be rebuilt, the construction must be revalidated by its component nations and their citizens.

When Mrs Thatcher fought against the Delors plan for a single currency more than 20 years ago, her arguments were right, but the tide of the times was against her. Her opponents, above all Helmut Kohl, had personal prestige, and appeared to represent the triumph of a new order to replace Soviet Communism and bury the ghosts of the Second World War. Most people therefore trusted them.

Today, that trust is broken. “Credit” means belief, and belief has now collapsed financially, politically and morally. So, even in Britain, which is mercifully outside the currency, the old government line of “Trust us to sort this complicated problem out in the national interest” is a provocation not a reassurance. The national interest lies in devising a European settlement which our Government is positively eager to put to the British people in a referendum. If our Government sees this, the principles that should guide the coming, inevitable renegotiation will become clear.

Left and Right should join forces against the great euro takeover - Telegraph

Greece’s dysfunctional politics: Tomorrow and tomorrow


How not to form a government

Nov 12th 2011 | ATHENS | from the print edition

IT TOOK several days of back-and-forth talks, missed deadlines and public and private outrage, but Greece finally has a new prime minister. On November 10th Lucas Papademos, a former vice-president of the European Central Bank, was named to replace George Papandreou, who had pledged to stand down four days earlier. The decision meant Greece had come full circle in less than a working week: on November 7th Mr Papademos had looked like a shoo-in for the job before negotiations went sour.

It may have taken a while to reach, but the choice at least looks sensible. Mr Papademos, an academic economist and a member of no political party, has the reputation to reassure Greece’s bail-out partners, and his financial expertise should prove useful when it comes to implementing the complexities of the looming 50% haircut private holders of Greece’s bonds must suffer, under a deal struck in Brussels on October 26th.

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The last casualty of this week’s wrangling was Philippos Petsalnikos, the speaker of parliament. A German-speaker skilled at keeping Greek lawmakers in order, he looked like a dead certainty to replace Mr Papandreou on the afternoon of November 9th. Mr Papandreou even delivered an emotional valedictory television address to the nation (although he did not name Mr Petsalnikos as his successor). Yet later that day Mr Papandreou (pictured, above, with President Karolos Papoulias) was forced to withdraw Mr Petsalnikos’s candidacy amid a threatened rebellion by backbenchers in his Panhellenic Socialist Movement (Pasok). They blamed Mr Petsalnikos for helping Mr Papandreou put together his ill-fated proposal for a referendum on Greece’s new €130 billion ($178 billion) bail-out package. That plan had been shot down by euro-zone leaders at the G20 summit in Cannes, triggering Mr Papandreou’s decision on November 6th to step down (see Charlemagne).

Mr Papademos’s “first” candidacy fell foul because he wanted to choose his own economic team. This proved unacceptable to Pasok, largely because it would probably not have included Evangelos Venizelos, Mr Papandreou’s finance minister, who is not popular among EU and IMF officials. Greece's conservative opposition party New Democracy was not keen on Mr Papademos either; he wanted an open-ended term rather than stick to an agreed February 19th deadline for elections.

Mr Venizelos threw his hat into the ring at the last moment, after running a whispering campaign against Mr Papademos. An ambitious constitutional lawyer, he is keen to succeed Mr Papandreou as Pasok leader. But he needs a position from which to build his campaign.

Mr Papademos kept a dignified distance from the chaotic politicking of the last week. But he reportedly added two more conditions. He wants support from New Democracy, which was reluctant to take up more than a few cabinet posts in the new government. And in line with a European Commission demand, he insists that both party leaders should sign a letter of commitment to the new bail-out terms.

Mr Papandreou is willing to sign up. But Antonis Samaras, New Democracy's leader, caused consternation in Brussels by apparently refusing to do so following objections from his party (though a later statement left open the possibility). Mr Samaras annoyed Angela Merkel, the German chancellor, and other European conservatives by opposing Greece’s first bail-out. He says he supports the second one, but EU officials are still unconvinced.

Over the next few weeks Mr Papademos will struggle with the country’s first coalition government in modern times. Left-wing parties rejected Mr Papandreou’s call for national unity. They plan to take their opposition to the streets.

from the print edition | Europe

Greece’s dysfunctional politics: Tomorrow and tomorrow | The Economist

Friday, November 11, 2011

Reaction: Lucas Papademos named new Greek PM

Chris Williamson, chief economist at Markit 1:40PM GMT 10 Nov 2011

Former ECB vice-president Lucas Papademos will head Greece's new crisis coalition, and will have to scramble to save the country from default and an exit from the eurozone. Here are analysts' comments on his appointment.

 Lucas Papademos - Greek economist who was Governor of the Bank of Greece from 1994 to 2002 and vice-president of the European Central Bank from 2002 to 2010 - is reportedly going to be sworn in as Greek prime minister today.

Lucas Papademos, former ECB vice-president, will head Greece's new crisis coalition.

Quote I can't see the unions and the population willing to support an unelected technical government that is demanded by the European Union and even more so Germany.

There's the danger that an interim technical government will not be able to implement policy purely because, down the road, there will be general elections and things will be reversed, so there is a great risk of a state of limbo.

The markets prefer a technical government but if that technical government doesn't have the population behind it, it's difficult to see how this will be resolved.


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Jennifer McKeown, senior European economist, Capital Economics

Quote It suggests that some of these measures will be pushed through but in the long run the situation will not improve until Greece leaves the euro zone and devalues its currency.

It's going to be extremely difficult for them to implement these measures because there will be very strong public opposition to them.

Platon Monokroussos, EFG Eurobank economist

Quote This is clearly a positive market development coming at a difficult time for Greece and the euro area. The new government, which will enjoy very strong support in parliament, is expected to rigorously implement the Oct. 26-27 bailout agreement and the economic policies supporting it.

The new Prime Minister is a broadly and internationally recognised and appreciated policymaker and this is likely to help restore Greece's credibility with its euro area partners and with financial markets.

Costas Panagopoulos, Alco Pollsters

Quote After three days of comedy, Greece has today a prime minister who is fully qualified to succeed in the task he has been assigned to.

The fact that the parties finally managed to cooperate is also very positive. I hope that the big gap between political parties and Greek citizens will now start narrowing.

Dimitris Mardas, economics professor, Aristotle University of Thessaloniki

Quote It was the best solution out of the dozens that were proposed. From now on it is up to him whether he will do what he wants or succumb to pressure from the two parties to follow a different policy. But his personality tends to rule out the latter.

Reaction: Lucas Papademos named new Greek PM - Telegraph

Eurozone crisis: stained hands of banker tasked with cleaning up the Greek mess

 Damien McElroy

By Damien McElroy, Foreign Affairs Correspondent

10:03PM GMT 10 Nov 2011

Greece installed a former central bank chief as its new prime minister on Thursday night, despite criticism that he was one of those responsible for getting the country into its current mess.

Greece installed a former central bank chief as its new prime minister on Thursday night, despite criticism that he was one of those responsible for getting the country into its current mess.

Lucas Papademos appointment as prime minister was seen as an attempt to restore confidence in Greece's ability to deliver austerity measures, cement a European debt deal and stave off national bankruptcy Photo: REX

Lucas Papademos, who was governor of the Bank of Greece for eight years, was appointed leader of an interim government, backed by the four largest parties, following the resignation of George Papandreou.

However, there was an angry reaction on the streets to the choice of Mr Papademos, who was one of the key players in Greece's entry into the eurozone a decade ago – a process allegedly underpinned by statistical fraud about the real state of the country's economy.

He also went on to serve as vice-president of the European Central Bank. Banners at a Communist Party-led demonstration denounced Mr Papademos as puppet of the big banks.

His appointment as prime minister was seen as an attempt to restore confidence in Greece's ability to deliver austerity measures, cement a European debt deal and stave off national bankruptcy.

Speaking after accepting the role, Mr Papademos, 64, said membership of the euro would eventually deliver monetary stability and ensure Greece made the adjustments needed to restore economic growth. He warned that hard choices would have to be made by his government in the coming weeks. "I am not a politician but I have dedicated most of my professional life to exercising financial policy both in Greece and in Europe," he said.


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"Greece is at a crucial crossroads – the course will not be easy. But the problems, I'm convinced, will be solved.

"They will be solved faster, with a smaller cost and in an efficient way, if there is unity, agreement and prudence."

The Greek stock market jumped sharply when Mr Papademos arrived at the presidential palace to begin talks with the head of state and political leaders. But his appointment was only settled at the last minute after five days of political wrangling in which his name was proposed then withdrawn several times.

"On Tuesday morning he thought he had a deal," a Greek official said. "But by Tuesday afternoon it appeared it fell through and he didn't know why. Papademos wanted to be in control, not a figurehead."

Mr Papademos will lead a government backed by both the governing socialists and the opposition conservatives that will operate until early elections, tentatively set for February.

Commentators were quick to point out the irony in placing Greece's eurozone survival in the hands of a man who helped ease the country into the single currency in the first place.

As head of Greece's central bank from 1994 to 2002, the sober banker reduced inflation and presented figures showing the budget deficit had been brought down to European limits. However, it has been alleged that secret deficits were being run up and that Athens had hidden the extra borrowing through money market manipulation.

Greece used a form of currency swaps to raise the equivalent of €2.4 billion in the run-up to joining the currency in 2001 and bring its budget deficit down to the annual limit of three per cent. But the arrangements reduced government revenue over time, as airport taxes and lottery proceeds were secured against the debt.

Nicolas Sarkozy, the French president, acknowledged last week that the original cover-up had led to the current crisis. He said: "It was an error because Greece entered with false figures; it was not ready."

Panagiotis Gennimatas, a leading banker, called for Mr Papademos to answer questions about his role in the falsified statistics.

"Over a decade and in full agreement with governments he was supplying false information to the European institutions, so that Greece could enter the monetary union," he claimed.

The European Commission, the European Central Bank and the International Monetary Fund had issued an ultimatum to Greek politicians to back a technocrat-led national government last week.

That demand came after Mr Papandreou shocked the institutions underwriting his debt-ridden government by proposing a referendum on a €130 billion European debt deal that took months to work out. The interim government's mandate should see it pass the bail-out deal to ensure the country receives its next, critical instalment of loans. Under the new deal, private bondholders will forgo 50 per cent of their Greek debt holdings so the country can bring its massive debts under control.

Eurozone officials were withholding the next instalment of loans, without which Greece faces default in a matter of weeks, until Athens formally approves the new debt deal.

"Although this will be a transitional government, its workload will be extremely intense. A second programme of financial assistance must be rapidly concluded," a joint statement from the EU presidents José Manuel Barroso and Herman Van Rompuy said.

Many Greeks view austerity as a double-edged sword that has triggered a collapse in living standards. Shuttered shops and the emergence of soup kitchens on the streets of Athens provide unmistakable evidence of the collapse of the domestic economy. The political crisis has been a further blow to Greek self-confidence.

Eurozone crisis: stained hands of banker tasked with cleaning up the Greek mess - Telegraph

Lucas Papademos - Profile


183rd Prime Minister of Greece

Taking office
11 November 2011

Karolos Papoulias

George Papandreou

Personal details

11 October 1947 (1947-10-11) (age 64)
Athens, Greece

Political party

Sana Ingram

Psychiko, Athens, Greece

Alma mater
Massachusetts Institute of Technology


Vice President of the European Central Bank

In office
31 May 2002 – 31 December 2010

Wim Duisenberg
Jean-Claude Trichet

Preceded by
Christian Noyer

Succeeded by
Vítor Constâncio

Governor of the Bank of Greece

In office
26 October 1994 – 31 May 2002

Preceded by
Ioannis Boutos

Succeeded by
Nikolaos Garganas

Lucas Demetrios Papademos (Greek: Λουκάς Παπαδήμος, Greek pronunciation: [luˈkas papaˈðimos]; born 11 October 1947) is a Greek economist who was designated as Prime Minister of Greece in November 2011 heading an interim coalition government. Previously, he was Governor of the Bank of Greece from 1994 to 2002 and Vice President of the European Central Bank from 2002 to 2010. He was also a visiting professor of public policy at the Kennedy School of Government at Harvard University and a Senior Fellow at the Center for Financial Studies at the University of Frankfurt.


Education and career

Born in Athens, Papademos attended the Massachusetts Institute of Technology, gaining a degree in physics in 1970, a masters degree in electrical engineering in 1972, and a doctorate in economics, in 1978.

He followed an academic career at Columbia University where he taught economics from 1975 until 1984, and then at the University of Athens from 1988 to 1993.

He has served as Senior Economist at the Federal Reserve Bank of Boston in 1980. He joined the Bank of Greece in 1985 as Chief Economist, rising to Deputy Governor in 1993 and Governor in 1994. During his time as Governor of the national bank, Papademos was involved in Greece's transition from the drachma to the euro as its national currency.

After leaving the Bank of Greece in 2002, Papademos became the Vice President to Jean-Claude Trichet at the European Central Bank from 2002 to 2010. In 2010 he left that position to serve as an advisor to Prime Minister George Papandreou.

He has been a member of the Trilateral Commission since 1998.

He is a member of the Academy of Athens. He has published numerous articles in the fields of macroeconomic theory, the structure and functioning of financial markets, monetary analysis and policy as well as on subjects concerning the economic performance, financial stability and economic policy in the European Union.[5] He has also delivered addresses on the Greek debt crisis.


Prime Minister

Papademos was named Prime Minister of Greece on 10 November 2011 after the head of the governing party, George Papandreou, decided to step down, and allow a provisional coalition government to form with the task to take Greece out of a major political crisis caused by the country's debt crisis. It is unknown whether or not he will serve his term as an elected member of the Greek parliament.


  1. ^
  2. ^ a b "Harvard Kennedy School"

    . Harvard Kennedy School.

    . Retrieved 6 November 2011.

  3. ^ a b "Lucas Papademos: profile"

    . The Telegraph. 2011-11-03.

    . Retrieved 7 November 2011.

  4. ^ "Trilateral Commission Membership List"

    . The Trilateral Commission.

    . Retrieved 7 November 2011.

  5. ^ "Lucas Papademas"

    . Eurofi (

    . Retrieved 7 November 2011.

  6. ^ "Video: The European Economic Crisis Seminar Series: The Case of Greece - Keynote"

    . Center for Strategic and International Studies. 11 April 2011.

    . Retrieved 7 November 2011.

  7. ^ "Lucas Papademos named as new Greek prime minister"

    . BBC.

    . Retrieved 10 November 2011.

Greece's new leader Lucas Papademos steels nation for tough future

 AFP November 11, 2011 8:39AM

Lucas Papademos

Newly appointed Prime Minister Lucas Papademos leaves the Greek Presidential palace in Athens, saying the crisis-hit country was at a crossroads as bankruptcy loomed. Source: AFP

GREECE'S new leader, Lucas Papademos, has steeled his country for tough times ahead, as he assured Greeks of the need for the euro after being named to head a crisis government.

But Athens' European peers, who had watched with anxiety as power-sharing talks dragged on for four days, insisted on "strong cross-party" reassurances from the new team that will be sworn today.

Welcoming the designation of a new interim prime minister, EU president Herman Van Rompuy and European Commission chief Jose Manuel Barroso said: "It is important for Greece's new government to send a strong cross-party message of reassurance to its European partners that it is committed to doing what it takes to set its debt on a steady downward path."

Giving his maiden speech moments after receiving a mandate from Greece's president, Mr Papademos, a respected former vice-president of the European Central Bank, said the crisis-hit country was at a crossroads as bankruptcy loomed.

"The Greek economy is facing huge problems despite the enormous efforts made," the 64-year-old told a huge crowd of journalists outside the presidential mansion after political leaders took four days to appoint him.

"Greece is at a crucial crossroads ... the course will not be easy," he said.

He called on Greeks to pull together as the country faces up to its worst economic crisis in decades.

"The problems will be resolved faster ... if there is unity, cooperation and wisdom," Mr Papademos said.

The Athens market gained ground when his appointment was announced, but later slumped to losses.

Mr Papademos, who played a crucial role in Greece's entry into the eurozone nearly a decade ago, emphasised its benefits after weeks of speculation that Greece's problems could force it out of the 17-nation currency club.

"I am convinced that the participation in the eurozone is a guarantee of fiscal stability and a factor in economic prosperity," he said.

Named to lead a transitional government until elections, Mr Papademos said the new team's main task was to implement the terms of a vital EU bailout deal, but said "no exact time" had been set for polls, initially pencilled in by the main political leaders for February.

His first job is to persuade the European Union and International Monetary Fund to disburse an eight-billion-euro ($A10.7 billion) of aid from a 2010 bailout deal that is needed by December 15.

Then he must force through painful austerity measures exacted as the price for a second EU bailout package which gives Athens 100 billion euros in loans, the same amount in debt reduction and a further 30 billion euros in guarantees.

Drawing a firm line in the sand, crisis-weary France and Germany last week gave Athens a stark choice: pass these belt-tightening measures or leave the euro.

And highlighting the parlous position of the Greek economy, the European Commission said it had abandoned all hope of a climb out of recession next year, tipping another 12 months of economic contraction for the incoming government.

The previous EU forecast of 1.1 per cent growth was ripped up - with a 2.8 per cent contraction now expected in 2012 after a brutal 5.5 per cent recession this year.

Meanwhile, Greek statistics showed unemployment in August - the peak of the country's busy tourism season - at 18.4 per cent with over 900,000 people out of work.

Greece's new leader Lucas Papademos steels nation for tough future | The Australian

Thursday, November 10, 2011

Greece waits for new PM as parties bicker


Pressure mounted on Greece's two main political parties this afternoon to wrap up three days of critical power-sharing talks and name a new prime minister to take over at the helm of an interim government.

Papandreou was due to meet with Greece's president at 3pm GMT - but the meeting was delayed.


3:52PM GMT 09 Nov 2011

Over the past couple of days, attention has focused more on Rome than on Athens amid concerns that Italy's economy was heading the same way as Greece's.

The fear that Italy is running out of time to get a handle on its debts hit markets in Europe hard Wednesday even though Italy's Premier Silvio Berlusconi pledged to stand down, echoing a similar decision from Greek Prime Minister George Papandreou.

Greek officials defended the time it was taking for the new unity government to be established. Greece's big two political parties, the Socialist PASOK party and the conservative New Democracy, are renowned for their opposition to each other and have rarely worked together since the rejection of the monarchy in 1974.

Papandreou was due to meet with Greece's president at 3pm GMT - but the meeting was delayed by an hour to 4pm, the president's office said. No reason for the delay was given.

However, a person with close knowledge of the talks told The Associated Press that no decision had been finalized an hour before the meeting had originally been scheduled for. The person spoke on condition of anonymity because the talks were ongoing.


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Papandreou's office said the premier spoke by telephone with French President Nicolas Sarkozy this morning and discussed "the developments in Europe and the eurozone," as well as the power-sharing negotiations in Athens.

Papandreou informed the French president "of the imminent (formation) of a new government in Greece supported by the majority and the opposition," Sarkozy's office said.

Former European Central Bank vice president Lucas Papademos had been widely tipped as the strongest candidate for interim prime minister. But two officials from the main parties said that by Wednesday afternoon another strong candidate had emerged - current Parliament speaker and former justice and public order minister Philippos Petsalnikos.

Both officials spoke on condition of anonymity because a final decision had not been made.

By early afternoon, the conservative opposition was issuing angry statements demanding a swift conclusion to the talks, and blaming the embarassing delay on the current government.

"The solution is in the hands of Mr. Papandreou," said a statement from the New Democracy party. "No further delay is conceivable. We must finally finish this."

Earlier, deputy government spokesman Angelos Tolkas had said the new government would be announced later in the day, but gave no indication who the new prime minister would be. Similar comments had been made on Tuesday, too.

"This process is new to the country," Tolkas told television channel Skai in the morning. "So I think three days was a reasonable time for the consultations to be made and for each side to make the necessary concession."

On Tuesday, Papandreou's ministers offered their resignations as part of the process of creating the new government, which is only expected to last until February when early elections are to be held.

The new government will be tasked to secure the country's new €130 billion European rescue package and then get it through parliament. That approval will allow the release of a €8 billion loan installment from its existing bailout. Without the funds, Greece will go bankrupt before Christmas, potentially wrecking Europe's banking system and sending the global economy back into recession.

The political crisis erupted last week, when Papandreou said he would put the new European rescue package to a referendum. Other eurozone nations were horrified by the delay, markets around the world tanked and Greece's international creditors froze the payment of the next bailout installment.

On Monday, eurozone finance ministers said the heads of the two main parties had to commit in writing to the terms of the country's bailouts before Athens can receive the next loan installment.

Government officials in Greece say the written agreement requires the signatures of Papandreou, New Democracy leader Antonis Samaras, the Bank of Greece governor, the new coalition prime minister and the new finance minister - a demand that has prompted an angry response from Greece's conservatives.

Greece has survived since May 2010 on a €110 billion bailout package from its eurozone partners and the International Monetary Fund. The second rescue package involves private bondholders voluntarily agreeing to cancel 50pc of their Greek debt.

In return for the rescue funds, Greece has endured 20 months of punishing austerity measures. The efforts by Papandreou's government to keep the country solvent have prompted violent protests, crippling strikes and a sharp decline in living standards for most Greeks.

Greece waits for new PM as parties bicker - Telegraph

Deal on new Greek PM falls through

By Kerin Hope in Athens

Antonis Samaras

Getty Antonis Samaras

Greece’s political crisis deepened on Wednesday after Antonis Samaras, the conservative opposition leader, stormed out of a meeting with Carolos Papoulias, the president, amid disagreement over the appointment of a coalition premier.

Mr Samaras left after a deal to give the premiership to the speaker of parliament fell through at the last moment. Several other possible candidates were mentioned by George Papandreou, the departing Socialist prime minister, after the talks had started, according to a person with knowledge of the discussions.

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The presidency said another meeting would be held at 10am on Thursday.

Mr Papandreou had delivered a statement announcing his socialist government’s resignation to make way for a new coalition government but did not name a successor.

Philippos Petsalnikos, speaker of parliament and a former justice minister, was poised to become premier, having emerged as a compromise candidate after fierce infighting inside the PanHellenic Socialist Movement over the candidacy of Lucas Papademos, a former European Central Bank vice-president.

But Mr Papandreou reportedly reintroduced Mr Papademos’s candidacy, along with that of Evangelos Venizelos, the finance minister.

Mr Samaras, leader of the conservative New Democracy party, later said he would be happy with either of Mr Papandreou’s nominations for the premiership but he did not want to be drawn into Pasok infighting.

The new cabinet, which is expected to serve until an early election is held on February 19 was still likely to be dominated by socialists, one official said.

Mr Papademos, a former academic who was once governor of the Bank of Greece, had been tipped as the most suitable person to implement the country’s new €130bn bail-out.

But his candidacy had been undermined by Evangelos Venizelos, the ambitious socialist finance minister, who would have been sidelined if Mr Papademos took over.

Mr Papademos, a visiting professor at Harvard’s Kennedy school of government, flew to Athens on Monday but has not spoken publicly about his candidacy. He could not be reached for comment.

Anxiety mounted among Greek politicians and bankers as the delays continued.

Talks between Mr Papandreou and Mr Samaras have taken place intermittently since Sunday. They have missed two successive deadlines for announcing the new government.

”Any delay in forming a new government threatens to damage further the country’s credibility,” George Provopoulos, central bank governor, told the Financial Times.

It was essential that a strong coalition government pursued the policies that would ensure Greece’s place within the euro area, he added.

Several pro-reform politicians came out in favour of Mr Papademos, saying Greece needed a “person of international stature” to support its adjustment effort.

“We need a prime minister with authority and a strong record both inside and outside the country, with deep knowledge of economics who is equipped to carry out the October 27 [bail-out] agreement,” said Anna Diamantopoulou, the departing education minister.

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Deal on new Greek PM falls through -

Wednesday, November 9, 2011

In Greece, Economic Crisis Brings Rage and Paralysis

By LANDON THOMAS Jr. Published: November 6, 2011

Petros Giannakouris/Associated Press

Pedestrians chatting on a street in Athens on Friday. A crisis atmosphere has brought the economy to a virtual standstill.

ATHENS — The tiny jewellery shop in the working-class Athens neighbourhood was open for business — barely.


The shop’s proprietor, Tasos, who preferred not to disclose his last name, said he had not had a sale in more than three months. Because he cannot afford to pay his electricity bills, there was no light to illuminate his storefront display of jewels.

Like most Greeks here, he has, over the past few months, spent more time watching television than conducting commerce, as Greek politicians veered from one political crisis to another. His imagination has been battered with all possibilities of a disaster, not least the prospect that Greece might leave the euro.

The effect on his small business — which he says may have to close — has been devastating. His regular customers, most of whom he rarely sees these days, owe him 14,000 euros, about $19,300. Those that he does see are looking to pawn their family heirlooms to get by.

“The politicians are playing games with the people,” he said, his eyes red with exhaustion and stress. “This city is boiling. I am not a protester, but soon the top on the kettle will pop.”

That the Greek economy is in a downward spiral from a relentless program of austerity is well known. In October, Greek manufacturing had one of its sharpest declines ever, and this year overall production is expected to contract by more than 6 percent. What has not yet shown up in the official figures, though, is the extent to which the crisis atmosphere has brought the economy to a virtual standstill.

Auto sales have essentially stopped and are at their lowest level since 1993. People who do have cars have trouble with the expenses of operating them. In the last three months, the number of uninsured drivers increased by 500,000, bringing the total to 1.5 million.

Small shops, in many ways the lifeblood of the Greek economy, which relies on domestic demand, are closing by the day. And the heightened speculation that Greece might have to return to the drachma has sped up the flood of money leaving Greek banks: money to be deposited abroad, stashed at home or in one’s car, and most certainly not spent.

Since January 2010, Greek banks have lost $63.5 billion in deposits — or about 20 percent of annual economic output. But bankers here say that in September and October the numbers rose substantially, with estimates ranging from $13.8 billion to $20.7 billion for just these two months.

Dimitris, a retired truck driver who also did not want to have his full name revealed, recently sent his life savings, about $69,000, to Sweden because, as he put it, “Greece is going bankrupt.”

He has no doubt where the blame lies. “I am impressed that the people have not yet stormed into Parliament and burned the politicians alive — like a souvlaki,” he said.

The vitriol toward politicians is in many ways more intense than the outrage expressed toward the European Union and the International Monetary Fund. Politicians here rarely venture out in public, and when they do, even the most obscure member of Parliament is accompanied by at least one bodyguard.

All of it is giving rise to talk that, instead of putting forward another coalition of failed parties and leaders, new people with new ideas outside the political establishment should be brought in.

Among the people mentioned are Lucas D. Papademos, a former vice president of the European Central Bank, and Stefanos Manos, a former economy minister for the New Democracy Party who has long argued that any chance of true reform is hopeless until Greece lays off a large chunk of its inefficient public work force.

Mr. Manos’s latest program is even more controversial. He proposes that as much as $415 billion worth of Greek assets be put into a vast “goody bag,” including plots of land, sites of historical significance and even prized islands, as collateral to secure an immediate loan of about $105 billion from Europe that would be used to buy discounted Greek bonds and pay off debtors. In return, Greece would agree to sell most of the assets in the goody bag within the next 10 years or so and pay back the loan — with a bit left over, he hopes.

“Call me a taboo killer if you will,” he said. “Fire Greek workers, sell Greek islands — politicians here have to overcome their taboos.” And, he added, they have little time to do so. “Everything has stopped here,” he continued. “People are taking their money out of the country. The bomb is ticking.”

For many in Athens, it has already gone off. In the upscale neighborhood of Kolonaki, where much of the Athenian elite live and shop, stores selling luxury goods are shutting down left and right, the result of a Greek consumer strike that includes not just the lower and middle tiers of the economy but its highest as well.

In part, this has been driven by the intense pressure the government has been under to meet targets to secure its next round of loans. With tax collection still a challenge, Greece has imposed heavy value-added taxes on consumers and, most controversially, a special real estate tax has been attached to Greeks’ electricity bills.

But making matters worse, shop owners say, has been the political uncertainty and the constant strikes and riots that can shut down their stores for days at a time.

“Our business is in a free fall — down 70 percent since the crisis,” said Giovanni Urciuolo, the owner of Maurizio’s, a high-end women’s clothing boutique. At the end of the day on a Friday, while the street outside bustles with activity, his store was empty of customers — as it has mostly been during the past two months.

He is closing his flagship Kolonaki store in January and he, too, knows who is to blame. “We hate all politicians,” he said. “We think they are responsible for all this.”

Eleni Varvitsioti contributed reporting.

In Greece, Economic Crisis Brings Rage and Paralysis -