Archive for February, 2010|Monthly archive page

European Lifejacket Offered to Greece

In Economics, Financials, Politics on February 12, 2010 at 12:51

President of the EU Herman Van Rompuy announced yesterday that EU leaders had reached an agreement on helping Greece tackle its debt crisis. EU rules forbid the collective bail-out of a Euro member state but the scale and urgency of the Greek crisis has forced EU leaders to improvise. No deal-specifics have been given yet but it is obvious that rules and foreign involvement will be greater than ever in the Greek economic affairs.

German Chancellor, Angela Merkel and French President Nicola Sarkozy have clearly established their intentions to stand by Greece and assist in solving the problem as soon as possible in order to preserve the sustainability of the Eurozone and the EU as a whole. Greece has been suffering from ballooning fiscal deficits (12.7% of GDP) and mounting debt payments which account for almost 12% of its GDP every year. The government looks for raising 53 billion euros from the debt markets to repay previous debts.

In the midst of all the economic mayhem going on, EU leaders have given hope and courage to the Greek people who have been struggling for decades to enjoy lasting prosperity. The credibility of the Greek government and its economy were smashed after it surfaced that past administrations¬†had been cooking the country’s books to contain deficit and debt levels.

The underlining reason behind this agreement is the realisation of the EU leaders that the Greek crisis has severely impacted European debt and equity markets destabilising the recovery trend of many other member states. Euro has plummeted to a 14-month-low against the dollar as uncertainty for the Greek case is still prevailing within the markets.

Let me just remind you that as distinguished economists, like Krugman and Roubini, have stated, a Greek default is not a realistic scenario. Having said that, the purpose of the aforementioned EU agreement is clearly to calm down the markets and highlight the unity and solidarity of the Union, something that was intensively questioned within the EU parliament per se.

Greece has been Europe’s playing doll and until Europe grows up, that doll will be an everyday experiment.

by the Self-Seeker

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The Greek Crisis: Behind the Scenes

In Economics, Financials, Politics on February 1, 2010 at 12:40

*It’s been a while since I last posted on this blog due to my busy schedule and the global unfortunate events – apologies to the loyal readers.

Greece has been at the centre of interest the past month on its possibility of defaulting on its national debt and jeopardising the sustainability of the monetary union. Investors have been speculating on that scenario on the Greek equity and debt markets which unavoidably makes an impact on the Euro.

My perception of things is the following. Things are indeed bad for the Greek economy. An above 12 percent of GDP fiscal deficit, over 120 percent debt and reluctant banks to lend money and assist in the recovery of the economy can not describe a prosperous economy. I might say this is the worst economic crisis for Greece since the 1999 stock market bubble. Media have accurately drawn this frame for the state of the Greek economy on that front. But,..

Does this justify the ‘pandemonium’ that is taking pace all over the media and the markets. Is really Greece threatening the monetary union to the extend that ejection should be considered? The answer is NO! With great frustration I have noticed certain British papers devoting great share of their front page on the Greek case, exerting harsh criticism on the government and the EU as a whole. It comes as natural to presume that the ‘Greek debacle’ and its exposure in all media is a product of a Eurosceptic-driven propaganda that aims at hurting the Eurozone and subsequently the Euro.

Markets and media are much smarter than we might think. There never was, nor will be in the the short future a possibility of default of the Greek economy (see Roubini, Krugman), yet some people and institutions fill the market with lies and false impressions in an effort to mislead and manipulate it at their benefit and Eurozones’ expense.

What is more, how come people focus on Greece and not on Spain, as professor Roubini said, which is a much bigger threat to the Eurozone? Is it a matter of who can take more punches on the stomach or a matter of who is easier to manipulate and speculate on? Whatever that might be, certain people are playing dirty games against Greece which happens to be the innocent victim of a market conspiracy. I can’t seem to remember last time David was portrayed as Goliath..

by the Self-Seeker