EU, Greece reach deal to stave off default

posted at 9:20 am on February 21, 2012 by Ed Morrissey

If this seems like deja vu, it only means you’ve been paying attention:

After months in which Greece teetered on the verge of bankruptcy, European officials agreed Tuesday to give the country a second massive bailout in exchange for harsh austerity measures, as grim new estimates about the country’s economy pushed off a resolution until what some officials called the last possible day to reach one.

The decision buys time for the Mediterranean country to try to fix its staggering problems, and gives assurances to the world that a Greek default — and its possibly disastrous ripple effects — will be forestalled, at least for now. If Greece had been cut loose, it would have defaulted in late March, and doubts about the viability of larger countries such as Spain and Italy might have grown.

Under the terms of the deal, private bondholders will take a larger loss than had previously been planned in an attempt to get Greece’s debt to what European officials consider a sustainable level by 2020. The officials also agreed to reduce the interest they charge Greece for the long-term loans.

We’re saved! Er … again.  And like the last bailout, the markets seem to believe that this won’t solve the problem of Greece in the long run, either:

After 13 hours of talks, euro zone ministers finalized a 130 billion euro ($172 billion) agreement after forcing Athens to commit to unpopular budget cutbacks and private bondholders to accept deeper losses, ensuring the government can meet a debt repayment due next month.

The deal was offset by worries the austerity plan will severely weaken Greece’s already shrinking economy and make it harder to repay its debts. The sharp cuts in the value of bonds held by private creditors also mean it will be hard for the country to borrow from capital markets again.

“There seem to be some reservations really about possibly the implementation near term … and the parameters that we saw in the package overall are not that far from what the market really expected,” said Adam Cole, global head of currency strategy at RBC Capital Markets in London.

“There are still some hurdles to get over in terms of the degree of private sector participation and whether or not that means that the Greek government has to use the collection action clauses that it’s setting up in the next few days. And that uncertainty will overhang the markets for a couple of weeks,” he added. He noted that waiting for ratification by some individual parliaments will also weigh.

The problem Greece has is that it shouldn’t be borrowing from capital markets at all, not with its debt ratio above 100% of GDP.  The austerity measures should have taken place long before the first bailout and the government forced to produce a surplus to lower its debt load.  The Greeks didn’t have the strength to follow that path when it could have saved them a lot of the pain they must endure now, and it’s far from clear that the Greeks will remain committed to that painful path of fiscal discipline in the near term, let alone the necessary long-term approach needed to gets its fiscal house in order.

The UK got that message a couple of years ago, and today announced that they have generated their largest monthly surplus in four years, thanks to their own austerity program.  How did the opposition react to this success?  By calling for an end to the austerity program:

Britain looks set to beat its own deficit-cutting target this year as local spending cuts helped the government to post the largest budget surplus in four years in January, safeguarding the country’s top-notch credit rating.

The figures will provide relief to Chancellor George Osborne after Moody’s warned last week that Britain could lose its triple-A rating if anaemic growth undermined its tough austerity programme.

Tuesday’s data fuelled calls for Osborne to ease back on austerity. The Labour party as well as some politicians within the coalition government have called for tax cuts to boost growth – but analysts said big giveaways in next month’s budget were unlikely as the road ahead remained tough.

Even the success is limited; the projection was that the UK would have an annual deficit of 8.4% of its GDP, and the surpluses will only dent that, not put the UK on a net-surplus path.  And even that‘s too much for some of the British to bear.  If the Greeks, the Brits, and the Americans can’t figure out that governments cannot borrow in massive amounts indefinitely, then there will be no bailout to rescue any of us.


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I can’t hear you
-double down president

He thinks he can do it better

cmsinaz on February 21, 2012 at 9:23 AM

Greece now faces an austerity programme that will not only very likely exacerbate an already severe recession but may very well still leave it requiring an additional bailout in the years ahead. This point will no doubt not be lost on politicians from [the] New Democracy and PASOK [parties] as they watch their ratings slump and voters turn to the anti-bailout leftist parties ahead of the April election. This, and the fact that there is a risk that Greece may not be able to return to the markets at any point in the foreseeable future will also weigh heavily on the thoughts of Dutch, German and Finnish politicians in the weeks ahead.

jake-the-goose on February 21, 2012 at 9:25 AM

BREAKING……

Greece just side-swipped an Ice-Berg,still in heavy ice-fields,
it remains treacherious!!
(sarc)

canopfor on February 21, 2012 at 9:26 AM

The EU should just push them overboard and get it over with. We all know it’s going down, why make it worse by pushing it off a few months or maybe even a year?

Lost in Jersey on February 21, 2012 at 9:28 AM

How much money can you pump into a black hole? (All of it, actually, and black holes tend to suck in everything else around them too.)

dogsoldier on February 21, 2012 at 9:29 AM

in exchange for harsh austerity measures,….

OH NOES! No more Baklava Thursdays!

csdeven on February 21, 2012 at 9:29 AM

It’s unbelievable that government thinks it can get away with living like a trailer park deadbeat, up to its eyeballs in debt.

Why do banks lend governments any money at all any more?

Spannerhead on February 21, 2012 at 9:32 AM

Now the UK is looking to privatize their healthcare system to further reduce entitlement spending. They’ve been down that path and are trying to come back. It’s almost criminal that this stuff isn’t being reported to the masses here.

Van124 on February 21, 2012 at 9:33 AM

Rick Santelli cracked me up this morning. He said the comparison of one fiat currency to another is pointless. He also said that if the Greeks had their own currency, instead of the Euro, they would be more likely to do the things necessary to fix their problems. Rick said that the way it is now, there is no incentive for the Greeks to not ask for bailouts because the Germans want to keep the value of the Euro up.

No wonder soccer is so popular over there – they are masters at kicking things/balls down the road/field.

platypus on February 21, 2012 at 9:34 AM

It’s unbelievable that government thinks it can get away with living like a trailer park deadbeat, up to its eyeballs in debt.

Why do banks lend governments any money at all any more?

Spannerhead on February 21, 2012 at 9:32 AM

We called that “idiot rich”. They have the latest video game system, iPhone, and an 80″ TV, but they sit on the bare floor, have no furniture, and have to bum rides to go to the store.

csdeven on February 21, 2012 at 9:35 AM

No wonder soccer is so popular over there – they are masters at kicking things/balls down the road/field.

platypus on February 21, 2012 at 9:34 AM

That might explain soccer’s growing popularity in the U.S.

Fallon on February 21, 2012 at 9:36 AM

The FireWall is Going Up!!

BBCNormanS tweeted:
********************

PM on Greek bailout,
********************

“Greece had made its choice and now we must focus on next step which is constructing a firewall to prevent contagion”

Submitted 12 mins ago from twitter.com/BBCNormanS
http://www.breakingnews.com/
============================

canopfor on February 21, 2012 at 9:38 AM

No wonder soccer is so popular over there – they are masters at kicking things/balls down the road/field.

platypus on February 21, 2012 at 9:34 AM

platypus:Wait a tic,Obama loves to Kick the Can,down the road,
Mmmmmmmmmm!:)

canopfor on February 21, 2012 at 9:40 AM

“We bashed our head against a wall and it didn’t break down, so let’s try that again!”

Stupid is as stupid does.

Logus on February 21, 2012 at 9:41 AM

Why do banks lend governments any money at all any more?

Spannerhead on February 21, 2012 at 9:32 AM

It’s mainly central banks (like the Fed) that do this. But Greek bonds are paying double digit interest right now so it is advantages for investment managers (pension funds, etc.) to buy those Greek bonds and hope the bailouts continue.

Just remember that when the 401k crash came here in the US, no investment guys were punished for their bad investment choices (beyond losing their jobs in a few cases). Actually, a lot of them got rewarded via TARP.

platypus on February 21, 2012 at 9:41 AM

Countries like Greece, Spain, Portugal and Italy have run up huge debt with their big spending ways, now expecting the rest of the civilized world to bail them out. These people need to live within their means, just as you and I have to do in our personal lives. The Euro was a bad idea from the get go. There is a reason why you needed a wheel barrow of Drakma and Lira to buy a loaf of bread, and putting their currency on the same level as Germany was a huge mistake.

The party is over, socialists. It’s time to pay the piper, and not with my money.

simkeith on February 21, 2012 at 9:43 AM

Why do banks lend governments any money at all any more?

Spannerhead on February 21, 2012 at 9:32 AM

Spannerhead:Ugh,you had to mention that,heres the Auto/Bank
Bailout Loot tracking,for Team Hopey/Changey!!
===========================================================

Where is the Money?
Eye on the Bailout
*******************

Scorecard Recipients Programs What’s Here
Bailout Recipients
Last update: Feb. 10, 2012
***************************

We’re tracking where taxpayer money has gone in the ongoing bailout of the financial system. Our database accounts for both the broader $700 billion bill and the separate bailout of Fannie Mae and Freddie Mac (go here for the Federal Reserve’s emergency loans to banks).

Note: Subsidies for the mortgage modification program are listed separately from other commitments. So, for instance, Bank of America is listed twice – both as a bank and as a mortgage servicer.
==========

http://projects.propublica.org/bailout/list

canopfor on February 21, 2012 at 9:46 AM

It’s time to pay the piper, and not with my money.

simkeith on February 21, 2012 at 9:43 AM

Good luck with that.

platypus on February 21, 2012 at 9:47 AM

I wonder how Turkey figures into all of this.

Turkey has been flexing its muscle in the area, economically, diplomatically and militarily. They offered a while back to help Greece financially iirc. They also made some previous efforts to smooth out some of the lasting issues over Cyprus. Turkey is evidently interested in and heading towards some sort of neo-Ottoman “empire” and Greece was at one time part of that picture.

Greece is certainly weak, as is the EU, but I cannot see Turkey willingly taking on Greece’s debt unless there’s something more in the picture besides the Greeks owing Turkey a veritable blood-debt and becoming some sort of modern March-land/border province.

Logus on February 21, 2012 at 9:47 AM

Iceland rejected the globalist banking lies, and took on the usurpers in order to maintain national sovereignty.

All bail-outs ultimately hang Taxpayers to substantiate and enable the very fraud that destroys the world’s economies/economy.

There’s only one POTUS candidate denouncing the economic piracy and resulting hardships placed upon taxpayers by the Federal Reserve and other globalist central-monopolizing bankers.

The other candidates will just say what they think voters want to hear, but will officially persist with the horrible federal policies destroying American life.

maverick muse on February 21, 2012 at 9:49 AM

Logus on February 21, 2012 at 9:47 AM

Yes. Given Cypress, we’ll see just how far Greece goes, selling islands. One thing to sell to private interests, another to their historically contentious neighboring nation.

maverick muse on February 21, 2012 at 9:52 AM

Communists want chaos in a Democracy, from chaos comes control.

Speakup on February 21, 2012 at 9:53 AM

There are no longer welfare states . . . now there is an entire welfare world. When the whole world is on the dole, who will pay the bills and feed the parasites?

rplat on February 21, 2012 at 9:54 AM

Whenever discussion around annual deficit of percentage of its GDP is explained to any liberal it always feels like a surreal environment. I just can’t understand why they don’t get we can’t keep spending like this.

It’s like explaining to a stubborn two year old (barely remember those days), the consequences of their actions will cause this to happen. The two year old continues their action, just like a liberal does.

Conservative4Ever on February 21, 2012 at 9:54 AM

Speakup

Yes.

btw, So many communist nation names include “democratic” or “republic”. How many combine “democratic republic”?

maverick muse on February 21, 2012 at 9:55 AM

Under the terms of the deal, private bondholders will take a larger loss than had previously been planned in an attempt to get Greece’s debt to what European officials consider a sustainable level by 2020. The officials also agreed to reduce the interest they charge Greece for the long-term loans.

General Motors shareholders get the shaft with U.S. Government bailout placing unions in ownership—loss of billions to taxpayers.

Federal Reserve reduces interest rates to the banking industry and sells bonds that will be worthless for decades.

Welcome to the U.S. Republic of Greece.

Rovin on February 21, 2012 at 10:00 AM

There are no longer welfare states . . . now there is an entire welfare world. When the whole world is on the dole, who will pay the bills and feed the parasites?

rplat on February 21, 2012 at 9:54 AM

Christ will. 2000 years ago, He paid the spiritual debt and He’ll come back and pay the physical one as well. It’s all described in Daniel and Revelation (and a couple other places in Scripture).

But there will be pain. Lots of pain.

platypus on February 21, 2012 at 10:00 AM

There are no longer welfare states . . . now there is an entire welfare world. When the whole world is on the dole, who will pay the bills and feed the parasites?

rplat on February 21, 2012 at 9:54 AM

Duh. Rich people of course. All we have to do is raise taxes by 100000% on the rich and all will be well.

angryed on February 21, 2012 at 10:03 AM

When the whole world is on the dole, who will pay the bills and feed the parasites?

The whole world IS on the dole.

Parasites require Hosts.

Don’t trust a parasite or a pirate.

The question is, as THE Host, what are American Taxpayers going to do about being eaten alive by our own elitists? Elitists are convinced that they “deserve” being insulated from prosecution for failing their sworn duties to uphold the Constitution, for breaking contract law, for disregarding rule of law, for usurping our Civil Liberties as if we humans do not hold evident our unalienable natural rights.

We only have our vote. There is only one constitutional candidate fighting this parasitic paradigm.

maverick muse on February 21, 2012 at 10:05 AM

Greece needs to default and leave the Euro – austerity while keeping a strong currency they can’t devalue is all pain and no gain. I never understood how were countries like Greece supposed to grow within the Eurozone. What are they going to sell? Sun and beaches… but the Turks have it too and with a much cheaper currency.

joana on February 21, 2012 at 10:06 AM

Kicking the can down the road!
Who else does that?

KOOLAID2 on February 21, 2012 at 10:07 AM

platypus on February 21, 2012 at 10:00 AM

The refiner’s fire, hm.

maverick muse on February 21, 2012 at 10:08 AM

Speaking of the US of A!

Surging gas prices threaten to derail economic recovery
February 20, 2012, 8:47 p.m.
****************************

The average cost for regular gasoline in California has climbed past $4 a gallon, with prospects for even higher prices ahead. The recent dramatic increases nationally and statewide could hurt consumers and, in turn, the broader economy.

Reporting from Washington and Los Angeles— Just as the recovery is finally looking real, surging fuel prices are once again looming as a major threat to the financial health of U.S. consumers and the broader economy.

The price surge has been particularly steep in California, in part because of maintenance at some refineries that make the state’s cleaner-burning gasoline. Statewide, average pump prices for regular gasoline crossed the $4 mark over the weekend and reached an average of $4.031 a gallon Monday, up 5% in just the last week and nearly 9% higher than a month ago.

“It doesn’t bode well for the consumer,” said Jeff Spring of the Automobile Club of Southern California. “By April or May you might see some isolated instances where you’re seeing $5″ gas per gallon.
(More…..)
===========

http://www.latimes.com/business/autos/la-fi-gas-prices-20120221,0,2040833.story

canopfor on February 21, 2012 at 6:43 AM

canopfor on February 21, 2012 at 10:10 AM

Kicking the can down the road!
Who else does that?

KOOLAID2 on February 21, 2012 at 10:07 AM

KOOLAID2:

A Failure of a Jack*ss,er,a Socialist ProgTard,er,I mean,
HopeLessNess/ChangeLessNess thats occupying the Oval Office!

canopfor on February 21, 2012 at 10:13 AM

Communists want chaos in a Democracy, from chaos comes control.

Speakup on February 21, 2012 at 9:53 AM

Do people realize that is was the National ideology of Socialism from the Left that got them into this in the first place?

Chip on February 21, 2012 at 10:15 AM

Greece needs to default and leave the Euro

Yes, likely so. But do consider what the EU/NATO will do to Greece (or any rebel) for not giving up the ghost on command. Notice when the UN issues a decree against Greece for whatever excuse, confiscating the Greek Central Bank, boycotting all trade and sending in foreign military interventionists to subdue the civil unrest, and revise the cradle of democracy to be another host for the parasitic globalist empire.

maverick muse on February 21, 2012 at 10:16 AM

How soon till we see riots in the streets of Greece? Again.

William Teach on February 21, 2012 at 10:16 AM

Meanwhile…..the MeltDown of Europe might happen yet!

O/T.WTH..WTF…why have inspectors…what a joke!

Iran:
******

UN inspection team ‘has no plans’ to visit nuclear sites, only holding talks with officials in Tehran

Submitted 24 mins ago from http://www.google.com
http://www.breakingnews.com/
============================

Iran says UN nuke inspectors will not visit sites
44 minutes ago
***************

TEHRAN, Iran (AP) — A U.N. team visiting Iran has no plans to inspect the country’s nuclear facilities and will only hold talks with officials in Tehran, Iran’s Foreign Ministry spokesman said Tuesday.

The remarks by Ramin Mehmanparast cast doubt on how much the U.N. inspectors would be able to gauge whether Iran is moving ahead with its suspected pursuit of nuclear weapons.

The two-day visit by the International Atomic Energy Agency team, which started Monday, is the second in less than a month amid growing concerns over alleged Iranian weapons experiments.

Iran denies charges by the West that it seeks atomic weapons, insisting its nuclear activities are for peaceful purposes only, such as power generation.

Mehmanparast said the visiting IAEA team was made up of experts, not inspectors. He told reporters that the IAEA team was holding discussions Tuesday in Tehran to prepare the ground for future cooperation between Iran and the U.N. watchdog. He said this cooperation is at its “best” level.

“The titles of the members of the visiting delegation is not inspectors. This is an expert delegation. The purpose of visit is not inspection,” said Mehmanparast. “The aim is to negotiate about cooperation between Iran and the agency and to set a framework for a continuation of the talks.”

Visits to individual Iranian nuclear sites were also not part of the IAEA earlier visit three weeks ago.
(More…..)
=============

http://www.google.com/hostednews/ap/article/ALeqM5jtZn8DMTTJW7Qeyzeouq_L5S2sYg?docId=dce5d7c4680d4e848b74aa92396f768e

canopfor on February 21, 2012 at 7:19 AM

canopfor on February 21, 2012 at 10:25 AM

O/T,

US Supreme Court to take new look at affirmative action for 1st time since 2003
******************

Submitted 15 mins ago from hosted.ap.org
http://www.breakingnews.com/
============================

Feb 21, 10:10 AM EST
High court to take new look at affirmative action
***************************************************

WASHINGTON (AP) — The Supreme Court will once again confront the issue of race in university admissions in a case brought by a white student denied a spot at the flagship campus of the University of Texas.

The court said Tuesday it will return to the issue of affirmative action in higher education for the first time since its 2003 decision endorsing the use of race as a factor in admissions. This time around, a more conservative court is being asked to jettison that ruling and outlaw affirmative action in the university setting.

A federal appeals court upheld the Texas program at issue.

The case will be argued in the fall.
(more…)
=============

http://hosted.ap.org/dynamic/stories/U/US_SUPREME_COURT_AFFIRMATIVE_ACTION?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT

canopfor on February 21, 2012 at 10:32 AM

canopfor on February 21, 2012 at 10:33 AM

As Greece has not lived up to any previous agreements, I see this as simply more promises to be broken.

JIMV on February 21, 2012 at 10:36 AM

How soon till we see riots in the streets of Greece Libya France Britain America? Again.

Tomorrow?

Bonus Army approaches a replay mode.

No one is immune to the blow back, especially not those closest to the source.

maverick muse on February 21, 2012 at 10:40 AM

No wonder soccer is so popular over there – they are masters at kicking things/balls down the road/field.

platypus on February 21, 2012 at 9:34 AM

We call it PUNTING here.

Archivarix on February 21, 2012 at 10:42 AM

EU, Greece reach deal to stave off default

Er … incorrect, there. The EU and Greece reached a deal where they agreed on the default that has taken place.

Don’t fall into that ridiculous trap of thinking that there has been no default. That is beyond stupid. Bondholders had over half of their principle stolen from them. That is a default … to anyone with more than two brain cells to rub together.

If this is not a default, then explain to me what a default is. Hint: You won’t be able to answer this, because the word “default” has had all meaning sucked right out of it. Default is a totally meaningless term, now. We should probably just get rid of it (at least it’s use to describe financial obligations and those breaking those obligations).

ThePrimordialOrderedPair on February 21, 2012 at 10:42 AM

This is going to end really, really bad.

dddave on February 21, 2012 at 10:45 AM

Why do Liberals insist that 1+1=POTATO?

jukin3 on February 21, 2012 at 10:46 AM

Now the UK is looking to privatize their healthcare system to further reduce entitlement spending.

Van124 on February 21, 2012 at 9:33 AM

If they can pull that off it will be astonishing.

It is not going to happen – it a guaranteed vote loser in huge amounts. A large majority likes their ‘free’ (actually very expensive and awful) healthcare.

As for Greece, well they’ll bomb out of the Euro and the EU eventually precipitate a collapse of the EU. What emerges may even look a little different to the vast bloated undemocratic mess that exists today.

CorporatePiggy on February 21, 2012 at 10:55 AM

Er … incorrect, there. The EU and Greece reached a deal where they agreed on the default that has taken place.

ThePrimordialOrderedPair on February 21, 2012 at 10:42 AM

Precisely. But – then again – the left are MASTERS of changing the meaning of words. A rose turd by any other name…

CycloneCDB on February 21, 2012 at 11:34 AM

ThePrimordialOrderedPair on February 21, 2012 at 10:42 AM

^ This.

Through the duration of this story, it has always mystified me how the entire media, and almost all consumers of media have missed the point that Greece HAS defaulted. Not ‘going to’ default, not ‘potentially default’ ‘HAS’ defaulted. Those bondholders are NOT getting their money back = default. For the left-tards reading this blog, it works like this:

You borrow $10,000.00 from a Bank. You spend all $10K. You have no source of income, and no way to pay the Bank back. You borrow as much money as all of your friends will loan you, which turns out to be $4,000.00. You offer the Bank $4K. They correctly say you have defaulted on your loan.

You then point to Greece and say, “But, but..it worked for THEM!”

a5minmajor on February 21, 2012 at 11:40 AM

This Soap Opera continues…

It will only be over when the Sarkozy and Merkel elections are over.

albill on February 21, 2012 at 11:58 AM

They are primarily buying time, bailing out the German and French banks that bought too much Greek debt. Anyway, the US markets continue to climb, and the Dow has broken above 13K for the first time since May 2008. Laissez les bons temps rouler … Happy Fat Tuesday!

TouchdownBuddha on February 21, 2012 at 12:06 PM

Because the first bail out worked so well! Yawn…wake me up in April after they default and their elections seek to nullify this new agreement.
I’ve been to Greece and much as I love the Greek people the entire problem isn’t the fault of their government. Due to the socialist economic policies the people now expect cradle to grave care by their government. At the same time they complain about the crooks who govern them, encourage people to pay in cash so they don’t report their earnings, and want a guaranteed for life job. Don’t even get started on the thousands of third worlders hanging about in Athens. There’s no work but they’re still there. Why don’t they go home? Who is paying for them?
If this isn’t a good example of the failure of socialist economic policy I don’t know what is.

RadioAngel on February 21, 2012 at 1:31 PM

The Dow is flirting with highs in the teens, gas prices are climbing into the stratosphere, Greece is (still) on the verge of economic collapse, and Barrack Obama is poised to be elected President (again). This is giving me some nasty flashbacks…

Blacklake on February 21, 2012 at 1:45 PM

This ends with the government of Greece stepping down and being replaced by a management team selected by the EU.

slickwillie2001 on February 21, 2012 at 1:45 PM

If this isn’t a good example of the failure of socialist economic policy I don’t know what is.

RadioAngel on February 21, 2012 at 1:31 PM

BINGO!!

It’s not the failure of Socialist policies though, its the utter SUCCESS of them that has created the mess.

Socialism destroys society through the destruction of incentive, creating not an “equal” society, but rather an EQUALLY POOR lower class and an elitist ruling class. Precisely what you see all over Europe.

KMC1 on February 21, 2012 at 3:08 PM

It will take an effort of national will to reverse course for the Greeks. Sad to say I don’t think they have it in them anymore. They will go into default and get tossed from the EU, which is porobably the best answer for all concerned.

Spots the Dog on February 21, 2012 at 4:43 PM

Kicking the can down the road!
Who else does that?

KOOLAID2 on February 21, 2012 at 10:07 AM

What happens when you run out of road????

http://www.youtube.com/watch?v=5V3kpKzd-Yw

VikingGoneWild on February 21, 2012 at 6:00 PM