Greece debt crisis: Athens accepts harsh austerity as bailout deal nears

Greek cabinet reportedly backs a package of reforms and spending cuts worth €13bn to secure third bailout and modest debt writeoff

The Greek government capitulated on Thursday to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an emergency meeting of EU leaders on Sunday.

Athens is understood to have put forward a package of reforms and public spending cuts worth €13bn (£9.3bn) to secure a third bailout from creditors that could raise $50bn and allow it to stay inside the currency union.

Proof That Merkel Is Europe’s Economic Bully

This is precisely why it’s oft said here that all roads in Europe lead to Berlin.

Germany is back with a Fourth Reich and has subjugated the entire European continent. If you’re looking for Nazis in Panzers, you’re roughly 70 years too late, as economic and political means were used. The leaders in Europe will continually push for integration and more integration until the United States of Europe dream is realized, even by economic and political force if necessary. Some nations will eventually leave while some, such as Greece, will stick around because they believe in the fantasy. There will be roughly ten in the end.

 

She’s the most dominant leader in the euro zone with virtual veto power over decisions

“The lesson of this crisis is more Europe, not less Europe,” Angela Merkel said in 2012 as the integrity of the region’s monetary union was threatened by financial instability, touched off by Greek debt, that was spreading through the euro zone’s weaker economies. By “more Europe,” the German chancellor meant a deepening of the continent’s noble mission—peaceful integration to ensure prosperity and democracy—of which the common currency, the euro, is the ultimate symbol.

In the intervening three years, Greeks have come to understand “more Europe” as something different: “more Germany.” That was one of the few clear messages sent in a referendum on July 5 that had everything to do with Greek voters’ views on how Merkel had imposed her vision of Europe on the zone and if their troubled nation would be better served as part of its grand project, or not.

The First Defeat

ATHENS/BERLIN/PARIS (Own report) – Germany’s imposition of its austerity policy suffered a first serious defeat in yesterday’s Greek referendum. Over 61 percent of the Greek voters rejected an agreement with the creditors that would have provided for a continuation of the German austerity measures. This defeat is all the more serious for Berlin, because German politicians had massively interfered in the Greek referendum debate. The decision whether there will be new negotiations – and if so, under what conditions – must now be taken. Whereas many Greeks celebrated the rejection of the austerity dictate yesterday evening, German politicians declared that it is “difficult to imagine” new negotiations with the government of Prime Minister Tsipras (the German Minister of the Economy, Sigmar Gabriel). Greece is heading toward a Grexit and a “humanitarian catastrophe” (Martin Schulz, President of the European Parliament). Paris however is risking conflict with Berlin. Yesterday evening, the governing Parti Socialiste (PS) took a clear stand “against the austerity measures,” which has “shriveled Greece’s Gross Domestic Product and driven a large number of Greeks into poverty.” Today’s meeting between the German chancellor and the French president may produce the first decisions.

Greece Can Stay in Euro Even With ‘No’ Vote, Schaeuble Tells Lawmakers

Need any more hints that Greece isn’t going anywhere? Whether its within the EU or a newly formed United States of Europe, it will be a German vassal state.

Please see the source link for the video.

 

 

German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece would stay in the euro for the time being if Greek voters reject austerity in a referendum scheduled this week, according to three people present.

Schaeuble also said the European Central Bank would do what’s needed to protect the euro if Greeks voted against the bailout terms in the July 5 referendum, according to the people, all of whom participated in the closed-door meeting on Tuesday. They asked not to be identified, citing the private nature of the discussion.

Euro Crisis Ripping Europe Apart

It’s not just about economics; it’s about anger.

“The wars of peoples will be more terrible than those of kings,” Winston Churchill warned Britain’s House of Commons in 1901, correctly forecasting the horrors of World War i. The thrust of his message: “Democracy is more vindictive than cabinets.”

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Churchill’s insight also explains the growing hatred in Europe today. If the solution to the Greek crisis was up to bureaucrats, it would still be tricky, but emotions would be much more subdued. Few people get too emotionally invested into what happens with other people’s money.

ECB risks crippling political damage if Greece forced to default

If Greece is forced out of the euro in acrimonious circumstances – a 50/50 risk given the continued refusal of the creditor core to acknowledge their own guilt and strategic errors – the country will not only default on its EMU rescue packages, but also on its “Target2” liabilities to the European Central Bank.

In normal times, Target2 adjustments are routine and self-correcting. They occur automatically as money is shifted around the currency bloc. The US Federal Reserve has a similar internal system to square books across regions. They turn nuclear if monetary union breaks up.

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A Greek default – unavoidable in a Grexit scenario – would crystallize these losses. The German people would discover instantly that a large sum of money committed without their knowledge and without a vote in the Bundestag had vanished.