Greece: Er, do you think we could get an extension on those austerity benchmarks?

posted at 6:01 pm on August 22, 2012 by Erika Johnsen

And now for an update on what’s happening with the ongoing European debt crisis (which, as President Obama is constantly reminding us, is one of the many “headwinds” facing global economic recovery) after the summer slowdown. Debt-wracked Greece, already under obligation to implement major austerity measures after receiving Euro bailout money, is asking for a timeline extension to allow their economy to absorb the spending cuts at a more gradual pace — kind of a lot to ask from a country walking on a razor’s edge of credibility, if you ask me, but EU leaders say they’ll investigate whether Greece has earned an extension next month. The Guardian reports:

Greece’s hopes of being granted more time to hit the targets imposed by its international creditors have received a setback when EU leaders refused to make a decision until next month.

German chancellor Angela Merkel and Luxembourg prime minister Jean-Claude Juncker both warned that Greece’s future depends on the verdict of its troika of lenders, who will announce in September whether Athens is meeting the terms of its existing bailout programme.

Greek officials say that a two-year extension would not require a formal third bailout.

The estimated €20bn cost could be funded by tapping an IMF loan facility, more short-term debt, and by postponing debt repayments, they say.

Do you suppose that merely delaying the inevitable dosages of tough medicine will make them any less unpleasant when they finally happen? I realize this is a sparknotes-style version of things, but you have got to put a stop to the vicious cycle, Greece — money has to come from somewhere, and Germany in particular is not appreciative.

German Chancellor Angela Merkel faces one of the toughest choices of her career in the coming weeks: whether to risk the unraveling of the euro zone or her government.

After a summer lull, Greece is again Ms. Merkel’s biggest headache. The Greek government, struggling with depression-like conditions that have pushed the economy to the brink, is likely to need many billions of euros of additional aid to avoid bankruptcy.

If Athens doesn’t get the money, it may be forced to leave the euro, an outcome that would undermine financial markets’ tenuous confidence in other vulnerable southern euro members, including Spain and Italy. …

Since the euro-zone crisis began in Greece in late 2009, critics have accused Ms. Merkel of playing for time, putting off difficult decisions until the last minute. Greece’s penury could force her hand, however: Athens could run out of cash by October unless European authorities and the International Monetary Fund release its next slices of international aid. But for the IMF especially, that requires the bailout math for coming years to add up.

Kind of a cruel twist of fate that Germany is one of the few euro nations that’s handled it finances with a modicum of sanity in recent history, and they’re the ones being pushed and pulled in every direction and covering everybody else’s behinds. But, then again, it’s not like nobody could’ve predicted that this whole Eurozone idea would turn out to be a hot mess, could they?

The euro is the world’s first currency invented out of whole cloth. It is a currency without a country. The European Union is not a federal state, like the United States, but an agglomeration of sovereign states. European countries are plagued by rigidities, including those in labor markets—where language differences and the protection of trades and professions in many countries impede labor mobility. That makes it difficult for their economies to adjust to cyclical and structural economic shifts.

For such reasons, when the euro was created in 1999, Milton Friedman famously predicted its demise within a decade. He was wrong about the timing, but he may yet be proven right about the fact.


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Obama wants till November at least.

rob verdi on August 22, 2012 at 6:06 PM

The euro is the world’s first currency invented out of whole cloth. It is a currency without a country.

This is all correct. The Euro is “scrip” and should be treated as such. No conversion to real money or acceptance as money outside the Eurozone….

ScottG on August 22, 2012 at 6:07 PM

Milton Friedman was right about the timing. The Euro is a dead currency walking. Politicians are keeping it in a comatose state in the hopes of finding a cheap funeral home.

joana on August 22, 2012 at 6:09 PM

Kind of a lot to ask from a country walking on a razor’s edge of credibility

They careened off that edge long ago.

squint on August 22, 2012 at 6:09 PM

Get a bunch of socialist morons together to form a currency and presto…….they all go down together. Now we have Greece trying to Greek the Germans…….grease up Helmet and Helga, it’s going to hurt if you don’t.

David in ATL on August 22, 2012 at 6:09 PM

Do the Europeans really want to piss the Germans off…again?

GarandFan on August 22, 2012 at 6:13 PM

Back in early June, a gentleman by the name of George Soros (where have you heard that name before? Oh, yeah. He’s the guy who made his billions betting against the British pound in the early ’90′s) gave the Eu/euro till September 1, 2012 to get a true solution to the smorgasbord of problems facing the European Monetary Union and euro currency in place or they would face teh dissolution of both the EMU and the euro.

With less than two weeks to go to the deadline, how does Soros think this will play out?

Well, he has been buying a lot of gold based investments in the last two months.

Soros? What else is he known for ????

Oh yeah, pushing the U.S. towards amore European approach to everything.

PolAgnostic on August 22, 2012 at 6:15 PM

The euro is the world’s first currency invented out of whole cloth. It is a currency without a country. The European Union is not a federal state, like the United States, but an agglomeration of sovereign states.

They wanted to be the great counterbalance to America. Guess that didn’t pan out, did it?

squint on August 22, 2012 at 6:18 PM

Best medicine – cut the addict off – and work through the pain..

jake-the-goose on August 22, 2012 at 6:20 PM

They do whatever it take to push default past our election. They have to try to save their Socialist buddy over here.

michaelo on August 22, 2012 at 6:33 PM

“Greece: Er, do you think we could get an extension on those austerity benchmarks?”

…Gee, I sure hope the euro-trash socialists don’t run out of ban-aids to put on their massively hemorrhaging failed socialist entitlement states (aka, the california’s of europe.)

TeaPartyNation on August 22, 2012 at 6:37 PM

Europe, do you have any idea how much more in big boo doo the US is going through under bho? In less than four years bho had put more debt under our nation that the WHOLE OTHER PRESIDENTS SINCE WE BECAME A REPUBLIC! And just like you Europe nothing is gonna happen till WE get someone who will put a stop to this krap here? I might suggest you do the same?
L

letget on August 22, 2012 at 6:46 PM

Greece is doing everything they can — including rounding up and detaining and then deporting all of their Illegal Undocumented Illegal Immigrants.

Give em a break — they’re trying.

/

FlatFoot on August 22, 2012 at 6:50 PM

Watch and learn, because we will have to use these lessons eventually in dealing with California.

slickwillie2001 on August 22, 2012 at 7:06 PM

Greek officials say that a two-year extension would not require a formal third bailout.

The estimated €20bn cost could be funded by tapping an IMF loan facility, more short-term debt, and by postponing debt repayments, they say.

Just because you’re not asking for a third bailout from the EU doesn’t mean you aren’t asking for a third, a fourth, and a fifth bailout from other parties.

This is the same genus, if not the same species, of scam that turned their budgeting to sh!t initially. All this does is guarantee some pols and cronies get a little more time to milk the system.

Dusty on August 22, 2012 at 7:18 PM

Both the Euopean Union and the Euro Zone have seemed to me to be irrational constructs since their inceptions.

Our constitution is several pages of clear prose, although the supreme court has managed to obfuscate the clear charter.
The EU starts with several hundred pages of something Pelosi could have writen. The EU is an irrational construct with
a meaningless charter.

The Euro Zone is club to give very expensive bureaucrats first class world wide travel. It is also a means to remove
funds from Germany, Finland and the Netherlands to be given to others who have a whole month of vacation even if they
are employed.

It also has the function of removing funds from far removed countries, such as the USA, by way of the IMF.

burt on August 22, 2012 at 7:37 PM

She already said no.

And France is on schedule to implement that 75% tax on the wealthy.
They’re flooding out to points unknown.

BuBye Eurozone been good to know ya.

Speakup on August 22, 2012 at 7:37 PM

BuBye Eurozone been good to know ya.

Speakup on August 22, 2012 at 7:37 PM

Um, can we have your nukes before, you know, the Muslims take over?

Odysseus on August 22, 2012 at 7:54 PM

The USA is Greece in a few years if we don’t get our spending under control and reducing the deficit and debt soon…

That is the BIGGEST reason Obama needs to get defeated in NO-vember…

Khun Joe on August 22, 2012 at 7:57 PM

How many Million (Trillion?) has been or will be peed down the rat hole when it all comes tumbling down after the 1st of the year? Not just for Greece, but for all the PIIGS, not that our economy is in any better shape? If we couldn’t print our own money, we’d already be toast.

Concerned_American on August 22, 2012 at 8:24 PM

Self Restraint

People who can’t discipline themselves will have it forced on them by others.

IlikedAUH2O on August 22, 2012 at 9:25 PM

…we have some Grecian Columns used at the convention in 2008 they can prop themselves up with… for a little bit of time!

KOOLAID2 on August 22, 2012 at 10:08 PM

The whole approach here is backwards. Germany should dump the Euro and let the rest keep it. Solved.

Borgcube on August 22, 2012 at 10:30 PM

Prime Minister Samaras is saying Greece won’t ask for additional money, only more time. I think it is obvious that he wouldn’t get any more money so there is no point in asking.

But a time lag would help some, especially since the way the loans were structured, Greece isn’t supposed to be experiencing a 6.35% contraction, which they have, and they’re going to get clobbered some more before the year is out.

Greece is in an impossible bind, the ‘troika’ of the IMF, eurozone and the European Central bank have insisted upon running the restructuring of Greece’s economics, and very little is going the way the Troika has planned it. That’s what happens when you join a club like the EU, you have to play by club rules.

erix138 on August 22, 2012 at 10:54 PM

Europe, do you have any idea how much more in big boo doo the US is going through under bho?

Personally I think the USA has a stronger position than Europe, if only because the USA is, more or less, one nation under one flag. However, the bigger and faster the ‘train’ the more mess it makes when it goes off the rails, so there is no place for arrogance.

In less than four years bho had put more debt under our nation that the WHOLE OTHER PRESIDENTS SINCE WE BECAME A REPUBLIC! And just like you Europe nothing is gonna happen till WE get someone who will put a stop to this krap here? I might suggest you do the same?
L

letget on August 22, 2012 at 6:46 PM

The real conflict is no longer between ‘Europe’ and ‘USA’ or other nations, it is between rationality and liberal sentimentality, between pragmatism and liberal utopiaism, between coherence and liberal chaos. All parts of the western world have both types of people but everywhere, unfortunately, the liberals seem to be steering the debate.

One reason might be that the liberals united globally a long time ago through the auspices of NGOs and campaign movements (CND, Greepeace, etc). I don’t see that same sort of cross-border co-operation between conservatives, possibly because rational language is much harder to translate than is sentimental and irrational language.

In any case, ‘conservatives’ throughout the ‘western’ world need to get their collective act together ASAP.

YiZhangZhe on August 23, 2012 at 5:18 AM

The real conflict is no longer between ‘Europe’ and ‘USA’ or other nations, it is between rationality and liberal sentimentality, between pragmatism and liberal utopiaism, between coherence and liberal chaos. All parts of the western world have both types of people but everywhere, unfortunately, the liberals seem to be steering the debate.

One reason might be that the liberals united globally a long time ago through the auspices of NGOs and campaign movements (CND, Greepeace, etc). I don’t see that same sort of cross-border co-operation between conservatives, possibly because rational language is much harder to translate than is sentimental and irrational language.

In any case, ‘conservatives’ throughout the ‘western’ world need to get their collective act together ASAP.

YiZhangZhe on August 23, 2012 at 5:18 AM

An excellent summary of the situation. Unfortunately, “conservatives” are not as monolithic in their policy preferences as are the amalgamated (not quite united) left/socialist/Communist groups*; not because rationality is untranslatable, but because the left is more willing to use invective, infiltration, intimidation, and outright force to impose their ideology.

* (they are not true liberals, preserving only the name as a disguise which has fooled all of their casual adherents and most of their opponents).

AesopFan on August 23, 2012 at 9:59 AM