Greece gets its EU/IMF bailout

posted at 9:30 am on May 3, 2010 by Ed Morrissey

After much delay and debate, the EU has finally decided to ask the IMF to partner on a bailout for Greece. The bankruptcy of the government in Athens threatened to destabilize the economies of several EU members, but Germany in particular objected to subsidizing the Greeks until Angela Merkel finally submitted over the weekend. Greece promised austerity measures, but after a day of violent protests, some wonder whether they have the political will to adhere to them:

Greece on Sunday announced a long-awaited deal with the European Union and International Monetary Fund for a $145 billion financial rescue, an unprecedented package aimed at preventing a far broader debt crisis from engulfing other nations in Europe.

The agreement is a financial lifeline for a country staggered by repeated budget deficits and economic malaise. In exchange for the loan, Greek government officials have promised to continue an array of reform measures that, among other things, already have cut pensions and raised taxes.

Greek Prime Minister George Papandreou is leading the effort to sell the austerity measures to his constituents, seeking to overcome opponents who unleashed a violent public backlash over the weekend, as tens of thousands of protesters took to the streets. …

It is the first time the nations that use the euro will come to the aid of one of their own since the creation of Europe’s principal currency 11 years ago. The bailout aims to stave off the possibility, raised by economists and investors, that Greece’s troubles could in turn spook investors in Portugal, Spain and Italy, preventing national governments from being able to repay their debts and spreading a financial contagion that could stifle the European economy for years. The three-year package is also the largest international rescue to be backed by the IMF.

It remains far from certain whether the bailout will work. Facing violent protests at home, Greece may yet be forced to roll back spending cuts, unraveling the deal. Also, bailing out Greece alone may not be enough. In past economic crises in Asia and Latin America, for instance, the IMF ultimately was forced to rescue not one but several nations in order to restore investor confidence.

Communists in Greece staged massive May Day rallies this weekend, opposing the deal and the austerity measures.  Molotov cocktails got tossed at police at some of the demonstrations.   The Greeks are not happy about the coming cutbacks in government services and the higher taxes to which Papandreou committed in order to get the emergency loan.

The rest of the EU is equally unhappy about providing them the money.  None of the EU nations are exactly awash in cash, and all of them have the same problems as Greece: high debt and massive government spending.  Spain and Portugal are also on the cusp of failure, and investors have turned up their noses at bonds from both countries, forcing them to pay ruinous interest rates on debt.  The IMF and the EU cannot possibly bail all of them out, especially when even Britain is now getting warned over its high deficits.

American voters might be interested to see the scope of this bailout.  It’s about a sixth the size of Porkulus, the Obama administration’s efforts to stimulate our economy, and just a little over a tenth the size of our annual budget deficit — and yet the EU and IMF have just about exhausted themselves to provide it.  If we don’t fix our own problem, no one will be coming to our rescue.


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I wonder who lit the match thrown on that pile of cash!

jeanie on May 3, 2010 at 9:32 AM

Let me guess, they will be back asking for more money in one year because they did not fix the problem, too many social programs.

WoosterOh on May 3, 2010 at 9:33 AM

If we don’t fix our own problem, no one will be coming to our rescue.

But…we’re too BIG to fail…

Fletch54 on May 3, 2010 at 9:33 AM

In Greece, workers get 14 months of pay annually! Retirees the same.

No wonder they are broke!

honsy on May 3, 2010 at 9:34 AM

They are pi$$ed that the government is going to have to cut back from the jobs that have a 32 hour 4 day work week with only 5 weeks of vacation per year and 100% employer funded pension plans. And people wonder what went wrong.

Johnnyreb on May 3, 2010 at 9:34 AM

Greece gets its EU/IMF bailout

As will California.

Doorgunner on May 3, 2010 at 9:34 AM

Here it comes.

petefrt on May 3, 2010 at 9:35 AM

Communists in Greece staged massive May Day rallies this weekend, opposing the deal and the austerity measures.

Austerity isn’t in their vocabulary. Bunch of irresponsibe pricks

blatantblue on May 3, 2010 at 9:36 AM

Who in their right mind would still want that “global government”, the EU looks like its going down…fast. This is gonna get ugly.

becki51758 on May 3, 2010 at 9:38 AM

Yeah, they try to change the irresponsible policies that led them to this place and the sheep that are used to handouts revolt. How long before that comes to our shores?

search4truth on May 3, 2010 at 9:39 AM

With Greece, and, in the future, Spain, Italy, and Portugal pulling the rest of Europe down, with bailouts, we will all see why the European Union was a disastrous idea from the start.

Plus, the EU is anti-diversity!

Really Right on May 3, 2010 at 9:44 AM

So what happens if Greece doesn’t get its collective sh-t together? And if they do, are they required to pay this money back? With interest? I don’t see this ending well for anyone in Europe.

Doughboy on May 3, 2010 at 9:46 AM

With Greece, and, in the future, Spain, Italy, and Portugal pulling the rest of Europe down, with bailouts, we will all see why the European Union was a disastrous idea from the start.

Really Right on May 3, 2010 at 9:44 AM

This is one of the two big reasons why our forefathers warned sternly against ‘foreign entanglements’; we could end footing ruinous bills for irresponsible nations.

The EU will be the next League of Nations.

Dark-Star on May 3, 2010 at 9:51 AM

Greeks celebrate bailout by blowing up Athens HSBC bank branch.

Emperor Norton on May 3, 2010 at 9:55 AM

Start packing your bags, European Jews, history is getting ready to repeat itself. The scapegoat list for the coming downfall is being written and you are at the top of the list.

But hey, a modern incarnation of feudalism can’t be all bad, think of the improvement in the castle-building industry.

Bishop on May 3, 2010 at 9:55 AM

Communists in Greece staged massive May Day rallies this weekend, opposing the deal and the austerity measures. Molotov cocktails got tossed at police at some of the demonstrations. The Greeks are not happy about the coming cutbacks in government services and the higher taxes to which Papandreou committed in order to get the emergency loan.

Amazing. Not surprising but amazing none the less. This is what happens to people when they are bought and paid for by the government. Entitlement.

Dash on May 3, 2010 at 9:56 AM

It’s about a sixth the size of Porkulus, the Obama administration’s efforts to stimulate our economy, and just a little over a tenth the size of our annual budget deficit

oh goodness we’re screwed

deidre on May 3, 2010 at 9:58 AM

The Greece bailout is not a done deal.

flyfisher on May 3, 2010 at 10:00 AM

American voters might be interested to see the scope of this bailout.

They might also be interested to see the logical destination at the end of the path Obama and Democrats are herding us down.

Midas on May 3, 2010 at 10:00 AM

the Chinese will bail us out. but it is not austerity measures they will seek when they do. They will physically send Chinese here to physically take over every part of our country.

oh, but I guess I sound too John Birch-y for the assholes in our federal govt.

kelley in virginia on May 3, 2010 at 10:02 AM

Yeah, they try to change the irresponsible policies that led them to this place and the sheep that are used to handouts revolt. How long before that comes to our shores?

search4truth on May 3, 2010 at 9:39 AM

Interesting phrasing there. You could be describing the AZ immigration law and it’s immediate fallout/reaction.

Midas on May 3, 2010 at 10:02 AM

are comments getting lost? or is it because I said the Chinese will physically seize us when they bail us out?

kelley in virginia on May 3, 2010 at 10:04 AM

Interesting phrasing there. You could be describing the AZ immigration law and it’s immediate fallout/reaction.

Midas on May 3, 2010 at 10:02 AM

That’s quite possible. Such a reaction will surely come when the welfare system doesn’t have enough of whitey’s money to write the monthly checks.

Dark-Star on May 3, 2010 at 10:06 AM

kelley,

Don’t buy the U.S. media hype–or communist statistics. The Chinese have big financial problems of their own.

flyfisher on May 3, 2010 at 10:06 AM

Germany should have held firm. This bailout will serve only the Communists who wish to destroy Europe, as is.

OldEnglish on May 3, 2010 at 10:09 AM

are comments getting lost?

Who cares? The important thing is that the Hot Air logo on the home page is now clickable, and brings you back to the home page!

Emperor Norton on May 3, 2010 at 10:10 AM

flyfisher: China does hold more of our debt than any other country, right? what will happen?

kelley in virginia on May 3, 2010 at 10:13 AM

flyfisher on May 3, 2010 at 10:00 AM

Thank you for the link, flyfisher. Sanity may yet prevail.

OldEnglish on May 3, 2010 at 10:14 AM

“The agreement is a financial lifeline for a country staggered by repeated budget deficits and economic malaise.”

Gee. Sounds vaguely familiar…

KS Rex on May 3, 2010 at 10:16 AM

None of the EU nations are exactly awash in cash, and all of them have the same problems as Greece: high debt and massive government spending.

Not all, Ed.

ernesto on May 3, 2010 at 10:18 AM

$145 Billion?That\’s chump change. We\’ll be spending that on Obamacare every year.

cntrlfrk on May 3, 2010 at 10:19 AM

While you work and save for your retirement at 65 be happy knowing that your tax dollars are being laundered through the IMF to help Greek public employees retire at 52.

jukin on May 3, 2010 at 10:22 AM

Welcome to the USA in about 10 years if we don’t get the Socialist Democrats out of power and reverse course as soon as possible…

CCRWM on May 3, 2010 at 10:30 AM

The U.S. makes up about 20% of the IMF. Now the U.S. taxpayer bails out the world.

When and where does it stop?

voiceofreason on May 3, 2010 at 10:31 AM

flyfisher: China does hold more of our debt than any other country, right? what will happen?

kelley in virginia on May 3, 2010 at 10:13 AM

Oh, we will never pay that debt, not with honest dollars. They are screwed. And unless The Won hands them our country (okay, I’ll admit there’s always that possibility), there isn’t a whole lot they can do about it. There’s an old line that I will paraphrase and it goes something like this: If I borrow $100,000 from the bank, it’s my problem. But if I borrow $2.5 trillion from the bank, it’s their (China’s) problem. They will squawk and moan, but in the end, what can they do? We will eventually default on almost all of our national debt, it’s just a matter of math (and time). China will have to get in line with every other creditor.

Don’t think I’m cavalier about borrowing because I’m not. We need to stop TODAY. But there is a point when default becomes inevitable and I think we are now long past that point. Eventually the merry-go-round will stop and the fallout won’t be pretty.

flyfisher on May 3, 2010 at 10:35 AM

Thank you for the link, flyfisher. Sanity may yet prevail.

OldEnglish on May 3, 2010 at 10:14 AM

Germany should run–and they may yet.

Actually, Germany should get out of the Euro right now and tell the rest of Europe to lump it. The Euro is circling the bowl. As bad off as we are (we’re screwed), I’d rather be us than Europe (they’re screwed worse).

flyfisher on May 3, 2010 at 10:40 AM

I got my copy of Generation Zero last week and was finally able to watch it…it is extremely enlightening and depressing…we have got to stop the spending and the borrowing and the printing of money…we have to stop the political class from bailing out WAll Street bankers who take huge risks from which they get to profit and we the people lose…because its our money, main streets, that they are giving to poeple who are taking these great risks because there is no possibility of loss thanks to the pols whom they own… the American middle class is unser seige…

CCRWM on May 3, 2010 at 10:42 AM

Communists in Greece staged massive May Day rallies this weekend, opposing the deal and the austerity measures. Molotov cocktails got tossed at police at some of the demonstrations.

Just shoot the bastards.

RustBelt on May 3, 2010 at 10:52 AM

flyfisher on May 3, 2010 at 10:00 AM

Not very smart of them to announce a deal that hasn’t been fully approved. Riots for this, riots if they don’t get approval, and riots if it does go through and the heavier taxation begins.

So in this story they admit that heavier taxation will slow business growth in Greece but in the story today about the US debt commission they try to spin “pro growth” taxation. Amazing.

journeyintothewhirlwind on May 3, 2010 at 11:10 AM

It’s about a sixth the size of Porkulus, the Obama administration’s efforts to stimulate our economy, and just a little over a tenth the size of our annual budget deficit — and yet the EU and IMF have just about exhausted themselves to provide it. If we don’t fix our own problem, no one will be coming to our rescue- morrissey

Very good point

Actually, Germany should get out of the Euro right now and tell the rest of Europe to lump it. The Euro is circling the bowl. As bad off as we are (we’re screwed), I’d rather be us than Europe (they’re screwed worse).
flyfisher on May 3, 2010 at 10:40 AM

The EU is worse off because expectations were ridiculous: national health for all, a universal dole for anyone with a EU passport etc. It is supposed to be almost impossible to fire anyone in Spain, so hiring is a last resort. Imagine if they pour the money in, and Greece still defaults

the American middle class is unser seige…
CCRWM on May 3, 2010 at 10:42 AM

The the middle class was already raided big time. Everyone was guided into the maximum home they could handle, because the home was called the main savings for the middle class. Americans needed to be mobile to follow the jobs, average job lasting five years. They relied on trading homes, and they traded up growing equity with each move. The home crash was coming but no one told the middle class, and the last two glory years before the re-set, television was flooded with ads for home refis and equity loans. Remodeling with equity loans was part of the system to prep the home for the next move. This was not greed. This was the advice of the experts.

When home prices crashed (amd they would have crashed soon anyway as the boomers retired) the middle class was plucked like a group of helpless chickens – and Obama is going for the last pinfeathers

Then comes China. China is trapped in unsustainable growth. China has built a financial ponzi scheme predicated upon ours, with military as plan B. One thing for sure, China doesn’t do charity

entagor on May 3, 2010 at 11:11 AM

CCRWM,

I’m interested to see that film. How do they deal with the Federal Reserve? I don’t know if I believe that fiat money is inherently corrupt, but I do believe that without the Federal Reserve, our social welfare state would be impossible.

flyfisher on May 3, 2010 at 11:14 AM

Angela Merkel finally submitted over the weekend.

Merkel may have caved, it remains to be seen if the German government, courts, and people will as well.

jarodea on May 3, 2010 at 11:18 AM

. Remodeling with equity loans was part of the system to prep the home for the next move. This was not greed. This was the advice of the experts.

Yes… it…was greed.

At some point you (rhetorical “you”) signed a piece of paper that had a number at the bottom. That number was about 50% of your monthly income. I decided to not get in over my head, turns out I should have so I could just walk away.

WitchDoctor on May 3, 2010 at 11:40 AM

Yes sir,we’ve got to do all we can for those illegals.They are soooo helpless,sooo pitiful.

ohiobabe on May 3, 2010 at 11:47 AM

Sorry,wrong headline.My bad:(

ohiobabe on May 3, 2010 at 11:48 AM

A world wide collapse all to the benefit of communism, cheerfully brought to us by American Democrats.

Slave mongers love a vacuum.

Speakup on May 3, 2010 at 11:50 AM

“None of the EU nations are exactly awash in cash, and all of them have the same problems as Greece the United States: high debt and massive government spending.”

.
There.

mrt721 on May 3, 2010 at 12:26 PM

Then there’s Obama’s money to the IMF. So, I guess, we’re essentially the ones bailing out Greece, eh?

Sultry Beauty on May 3, 2010 at 12:46 PM

The solution for too much debt in Greece? More debt.
Yeah, right, that’s always worked before.

Germany should indeed leave EU but EU is Germany’s market. Tar baby time.

Or may that’s ra*ist?

Caststeel on May 3, 2010 at 2:30 PM

I hope Greece fails.

El_Terrible on May 3, 2010 at 3:04 PM

Hmmmm.

What makes you think we’re on the outside looking in?

Who the hell do you think is backstopping the IMF!?

memomachine on May 3, 2010 at 3:20 PM

Greece is going bust regardless of any IMF deal. Between the corruption and the labor unions Greece will probably not even accept this deal. I have no idea how Greece could export enough to even attempt to pay back this massive loan over the next 30 years.

This means that the Greek government IS going to fail.

The real question is WHO will be replacing that government?

Freddy on May 3, 2010 at 3:35 PM

Greece Bailed Out To Get In Even More Debt

In essence Greece will go from having “only” a 133% Debt/GDP ratio to an insane 149% in 2013 before presumably dropping to 144% lower in 2014, still a good 11% higher than currently. Greece just got bailed out so it can get into even more debt! What psychopath of the Keynesian school thinks that this unbelievable trajectory is anything but a complete and utter waste of money? German, and US taxpayers, are merely giving Greece money so it can increase it debtor status with French and a few other European banks. To say that this is a viable solution is something that only those who bow at the altar of Alan Greenspan can do.

Rae on May 3, 2010 at 3:44 PM

“If we don’t fix our own problem, no one will be coming to our rescue.”

Rescue!? Isn’t this what war is for? Religion, silly bloodline feuds, border disputes, and of course, sovereign bankruptcy. When the Japanese or Chinese, or Canadians(?) start carving up the bankrupt states of Rhode Island, New York, New Jersey, and California, are we just supposed to hand them over? Hell no, and to prepare properly for this eventuality, we shouldn’t be bailing out banks, but using whatever cash we have to build up our military in preparation for fending off creditors. Please tell me that I’m not the only one who sees this obvious outcome… Bolsheviks in Russia, 1917, Nazis in Germany 1933, that was both their exit strategies, and damn effective at least for the short term. Quick fix for both inflation and any pesky contractual debts is an act of war and dragging in all your friends and enemies.

geotopia on May 3, 2010 at 7:52 PM