Greek Bail-Out Still in Question

by David on February 2, 2012

As Greece parlays with creditors to eliminate €100 billion in debt from Greece’s books, auditors find that not only that amount must be eliminated, the projected €130 billion in bail-out funds must be awarded by the IMF, and still Greece faces a €15 billion shortfall in its budget.

Even the IMF’s bail-out award has yet to be resolved, as Greece has not formally accepted the strict austerity measures attached to the funding – plus accept EU budget oversight to ensure Greece commits and executes those austerity measures.

Evangelos Venizelos, Greece’s finance minister, says of the creditor negotiations,

“We are just one step, just a formality, from completion.”

The proposed deal will cut €100 billion in bond repayment obligations out of the budget, but it will also leave banks, pension funds and other bondholders with up to 70 percent losses, all while not avoiding the probability of defaulting on other debts.

To have the €130 billion in bail-out funds awarded, Greece must enact stringent austerity measures that equal one percent of their GDP – a requirement that has created protests of blackmail and disrespecting the sovereignty of the country. However, the IMF, the EU nor the European Central Bank are willing to make the payment if the terms are not accepted.

The deeply contrasting projections in the Greek economy have played havoc with deficit estimates, already causing a €15 shortfall, escalating the minimum amount needed from the previously noted €130 billion to €145 billion.

Neither German nor Dutch Parliaments are baulking at approving additional funding, especially considering the resistance to the austerity measures outlined.

The European Central Bank is increasingly in debt from the European crisis, and it is under pressure to forego Greece’s interest payments on the €40 billion it already has invested – on top of additional financial commitments it may assume if the bail-out is paid.

With increasing unemployment and tighter credit standards in Europe, few experts see legitimate hope of weaker eurozone countries staying in the currency treaty.

Should Greek, Spain, Ireland, Portugal and Italy depart the European union, the UK could fall into a two-year recession from the departures’ impact on the GDP.

If any of the five leave, the United Kingdom would still feel the economic impact, and recovery from the decline would find no quick execution.

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Greek Teeters Toward Bankruptcy Without Bail-Out Instalment

by David on January 30, 2012

Greece sits poised on the razor’s edge above bankruptcy unless the European Union grants another bail-out instalment of £100 billion.

Without the bail-out instalment, Greece would default on €15 billion in loans due in March. Lucas Papandemos stated that Greece would face bankruptcy and be forced from the European Union.

Christine Lagarde, Managing Director of the International Monetary Fund, disclosed that leaders were to sign a

“fiscal compact”

…at the summit today.

Germany proposed that Greece austerity and tax issues should be closely monitored by a European Commissioner, a move vehemently opposed by Greece.

The plan caused anger in Athens, with one official calling the proposition

“the product of a sick imagination.”

Greek Finance Minister Evangelos Venizelos adamantly rejected the plan, stating it would undermine the country’s

“national identity and dignity.”

Philipp Rosler, Germany’s economic minister, countered:

“If the Greeks fail to do this themselves, the leadership and monitoring must come in a stronger way from outside, for example, via the EU.”

Greece has been plagued by financial woes since before it became the twelfth EU member by disguising the country’s true financial state. If that weak condition had been known, Greece would not have met the financial standard necessary to join the new currency zone organisation.

As debate continued on the status of the Greek bail-out package, stock markets around the globe showed signs of nervousness and extreme caution with stock prices falling in almost every financial centre.

On the FTSE 100, the two leading industries that reflected stock price drops were banks and mines.

Evraz, producer of Russian steel, saw its stock drop 4.9 percent. Verdanta Resources fell 3 percent; Angofagata fell 3.1 percent, and Eurasion Natural Resources Corporation fell 2.5 percent.

Banks that experienced a drop in share prices included Barclay’s at 2.8 percent, Lloyd’s Banking Group with a 4.3 percent fall, and the Royal Bank of Scotland stock was sliced by 3.2 percent.

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Cameron Maintains Independent Stance at Davos Conference

January 26, 2012

As expected, David Cameron has continued his controversial stance in opposition to European Union economic and financial policies as the World Economic Forum began in Davos, Switzerland. The UK Prime Minister has called the current trend of European taxes and regulation “madness.” Cameron declared that imposing a financial transaction tax could cost thousands of jobs, [...]

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Think Tank Study Reveals Dire Picture for Middle Class

January 23, 2012

A recent study by Resolution Foundation reported that the middle class in the United Kingdom will require a minimum of eight years to recover its pre-2008 disposable income. The study centres on 10 million adults and their 5.2 million offspring, none of whom receive means-tested state support. Within the study’s parameters, annual income levels for [...]

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RBS Bonuses, Investment Bank Destiny Undetermined

January 19, 2012

The Royal Bank of Scotland (RBS) struggled in 2011 with backlash from bad banking reputations, falling profits and declining deposits among its different branches and divisions. RBS also suffered from a credit rating drop in October of last year. Its austerity measures have stretched from job reductions to suspending the annual bonus rumoured to be [...]

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CEBR Says UK in Recession

January 16, 2012

The Centre for Economics and Business Research (CEBR) has stated that the UK has fallen into a double-dip recession and predicts bank rate interest will stay close to 0.5 percent “until 2016.” CEBR believes the extended maximum growth rate of 0.1 percent per year will require the Bank of England to keep the prime rate [...]

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Opinions Still Vary on Economic Impact of London 2012 Olympics

January 12, 2012

Divided opinion rules the outlook for Olympic impact on the British economy. Yay-sayers are expounding on the tourist income and the long-term benefits of displaying British competence, including within the construction field. Nay-sayers are pointing to an inadequate transportation system, snarled traffic, price gouging, peripheral damage to local businesses – such as delivery hardships from [...]

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Cameron Threatens United Front on Financial Transaction Tax

January 9, 2012

Prime Minister David Cameron risked the wrath of the European Union today as he clearly stated for the first time officially that he would veto the financial transaction tax if it was applied only within the European Union. He would consider it if applied globally, however. France and Germany have campaigned extensively for a financial [...]

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Hungary May Be Abandoned by the IMF and EU

January 5, 2012

Hungary faces financial failure possibility if the European Union allows the country to default on its debts. The florint, the currency used in Hungary, fell drastically to a record low against the euro, and bond yields escalated more than 10 percent. Investors feared that Hungary would be abandoned by the EU and become the first [...]

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