The Greek Austerity Myth

FEB 10, 2015 23

Daniel Gros

BRUSSELS – Since the anti-austerity Syriza party's victory in Greece's recent general election, the “Greek problem" is again preoccupying markets and policymakers throughout Europe. Some fear a return to the uncertainty of 2012, when many thought that a Greek default and exit from the eurozone were imminent. Then as now, many worry that a Greek debt crisis could destabilize – and perhaps even bring down – Europe's monetary union. But this time really is different.

 One critical difference lies in economic fundamentals. Over the last two years, the eurozone's other peripheral countries have proven their capacity for adjustment, by reducing their fiscal deficits, expanding exports, and moving to current-account surpluses, thereby negating the need for financing. Indeed, Greece is the only one that has consistently dragged its feet on reforms and sustained abysmal export performance.

A “Merkel Plan” for Europe

JAN 19, 2015

By Bill Emmott

http://www.project-syndicate.org/commentary/europe-modern-marshall-plan-by-bill-emmott-2015-01

LONDON – Ever since Europe’s economic crisis erupted more than four years ago, politicians and pundits have clamored for a grand solution, often invoking the example of America’s postwar Marshall Plan, which, starting in 1948, helped to rebuild Western Europe’s shattered, debt-ridden economies. But the political moment has never been ripe. That could be about to change.

Europe’s situation today bears some similarities to the 1940s. Burdened by the public debts resulting from past mistakes, eurozone governments know what they need to do but not how to do it. They mistrust each other too much to collaborate. Meanwhile, demand in most of the European Union is weak, ruling out the economic growth needed to repay debts and offer hope to the 25 million unemployed.

The Real Social Challenge Is Kickstarting Growth

19/01/2015 by George Pagoulatos

http://www.socialeurope.eu/2015/01/social-challenge/

It is impossible to meaningfully address Europe’s social challenges for the present, medium and longer term without addressing the central challenge of economic growth. We are now in a situation where adverse longer-term trends are nested in a highly unfavourable current and medium-term economic environment.

Why Grexit would not help Greece - debunking the myth of exports

by Guntram B. Wolff on 6th January 2015

http://www.bruegel.org

The genie is out of the bottle: Europe is again discussing the possibility of Greece leaving the euro. With it, the debate has re-emerged whether this would be helpful or not for Greece and whether there would be contagion to other euro area countries. A big question is, of course, how the Greek financial system would survive an exit with a debt restructuring; how long it will take until Greece would regain access to financial markets; and how big the benefit of a debt restructuring is given the relatively low interest load. The absence of external help would be a further factor weighing on Greece. All these factors speak clearly against an exit from the point of view of Greece but they are not discussed in this blog.

Is Greece losing its reform drive?

By Hugo Dixon JUNE 23, 2014

Reuters

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

Is Greece losing its reform drive? Prime Minister Antonis Samaras has stuck to a harsh fitness programme for two years. But just as it is bearing fruit, he has sidelined some reformers in a reshuffle. There is only one viable path to redemption for Athens: stick to the straight and narrow.

The Greek economy is not out of the woods yet, although the measures taken to balance public finances and restore the country’s competitiveness are having their effect.

From Greek Crisis, to Turnaround

Structural reforms and increased competitiveness, not currency devaluation, are getting the economy back on track.

The Wall Street Journal

By GEORGE A. PROVOPOULOS

May 19, 2014 1:27 p.m. ET

Several years ago a chorus of voices predicted that Greece would have to exit the euro zone. The doomsayers had it that Greece would not be able to make the fiscal and economic reforms needed to keep the country in the euro, nor would it be able to save its banking system in the face of an unprecedented sovereign-debt crisis. According to the doomsayers, attempts to bring down the budget deficit and restore competitiveness would lead to painful and politically unacceptable consequences, while a collapse of the banking system was inevitable. Recently, however, the sirens of doom have been silenced. How did that happen?

Greece passes reform bill, government majority shrinks to two seats

BY ANGELIKI KOUTANTOU AND RENEE MALTEZOU

ATHENS Sun Mar 30, 2014 8:03pm EDT

(Reuters) - Greece approved on Monday a contentious reform bill to secure bailout aid but the government was forced to expel a dissenting lawmaker, reducing its majority in parliament to just two seats.

A total of 152 lawmakers backed the bill, which incorporates into Greek law hundreds of reform measures Athens agreed earlier this month with the European Union and the International Monetary Fund after more than six months of tough negotiations.

Why regulation — on yogurt and more — is blocking Greece’s recovery

By Peter Gumbel MARCH 11, 2014

Reuters

The news that Greek-style yogurt maker Chobani is looking to sell a minority stake that would value the company at around $2.5 billion should in theory be a big boost for Greece’s beleaguered dairy industry.

Beware Greeks Selling Gifts as EU Frets: Euro Credit

By Nikos Chrysoloras and Marcus Bensasson  Mar 10, 2014 1:35 PM GMT+0200

Bloomberg

The European Commission, the European Central Bank and the International Monetary Fund have expressed a view that the Greek government may repeat past mistakes if it manages to slip the shackles of its bailout program

Greece’s troubles

The troika is back

The Economist

The stand-off between the government and international lenders continues

Mar 1st 2014 | ATHENS

THE scene is familiar: burly Greek bodyguards hustle a trio of foreign bureaucrats into the finance ministry through a side entrance to avoid a cluster of anti-austerity protesters shouting “troika go home”. Hours later tight-lipped representatives of the troika—the European Commission, IMF and European Central Bank (ECB)—head back to their hotel while ministry officials spin their version of the talks: heroic Greek resistance to “excessive” demands made by the country’s international creditors.

Piraeus Port Becomes Hub in Greek Logistics-Industry Push

By Jonathan Stearns  Feb 25, 2014 2:01 AM GMT+0200

Bloomberg

The Greek port of Piraeus could become one of Europe’s top five container-shipping hubs as the government spurs logistics activities in a bid to kick-start economic growth, said Development Minister Kostis Hatzidakis.

Piraeus, now the 11th-largest container-shipping port in the European Union, is expanding as China-based Cosco Pacific Ltd. (1199) operates one of two piers, builds a third and prepares to offer cargo-train shipping to multinational companies including Hewlett-Packard Co. (HPQ) and Huawei Technologies Co.

Greece resumes protracted bailout talks with lenders

BY HARRY PAPACHRISTOU AND LEFTERIS PAPADIMAS

ATHENS Mon Feb 24, 2014 3:02am EST

(Reuters) - Greece resumes bailout talks with its international lenders on Monday, hoping to end six months of wrangling over the release of new rescue loans it needs to avoid default.

At stake is the disbursement of funds to repay 9.3 billion of bonds maturing in May, the biggest single debt redemption Greece faces in the next three decades, according to Thomson Reuters Eikon data.

The review by the European Union and the International Monetary Fund has dragged on since September, with disagreements about the extent of savings and reforms Athens must make to comply with the terms of its bailout.

Greece's Reforms Have Only Cracked the Surface

Powerful vested interests thrive on the levies, fees, subsidies and barriers to entry that Greece needs to eliminate.

The Wall Street Journal

By ARISTIDES N. HATZIS

Dec. 5, 2013 3:15 p.m. ET

Last week Ángel Gurría, the secretary-general of the Organization for Economic Co-operation and Development, visited Athens to present the OECD's latest economic survey of Greece. Since 2010, the report said, Greece "has made impressive headway in cutting its fiscal and external imbalances and implementing structural reforms to raise labor market flexibility and improve labor competitiveness."

But the OECD also emphasized that "more needs to be done." The organization's assessment of competition in four key sectors in Greece, also released last week, identified 555 problematic regulations and 329 provisions.

Kazarian Says Greece Needs Clean Numbers for Investors

By Marcus Bensasson - Dec 6, 2013 2:01 AM GMT+0200

Bloomberg 

Paul Kazarian, the U.S. investor buying up Greek government bonds, calls the European Union’s accounting “completely irrational” and wants to help finance an alternative to allow Greece to return to the debt markets.

The founder of Japonica Partners & Co. said in a Dec. 3 interview in Athens that applying International Public Sector Accounting Standards would give bond markets the same kind of audited financial statements that equity investors are accustomed to. Kazarian, who started a tender offer for the Greek securities in June, said the EU method of measuring member states’ public finances overstates the level of indebtedness.

“If you really want to be back in the capital markets and soon, you have to deliver, you have to show some early wins,” Kazarian, 58, said. “Show your debt number, give access to it and verify it, and then have the dialogue: ‘So which number is right?’ Is it a legal definition that has absolutely no economic rationality to it, or is the world-class standard the right debt number?”

EU-IMF postpone visit to Athens in dispute over reforms

BY JOHN O'DONNELL, LUKE BAKER AND HARRY PAPACHRISTOU

(Reuters) - Inspectors from the EU and IMF have postponed a planned visit to Greece, officials told Reuters on Friday, a move that marks a new low in relations between the parties and could delay aid payments to Athens.

The Greek government said it still expects differences with the troika to be bridged.

The decision to postpone the visit may be an attempt by the European Central Bank, European Commission and International Monetary Fund - together known as the 'troika' - to try to bring Athens to heel as frustration grows over Greece's failure to complete the reforms it has promised in return for aid.

It is a potential embarrassment for the Greek government, which wants to be able to show it is hitting its targets and bouncing back before it takes over the rotating presidency of the European Union for six months from the start of next year.

China Reshapes Landscape for Firms From Alibaba to GM

By Jasmine Wang - Nov 19, 2013

Bloomberg

China’s planned economic reforms are poised to reshape the competitive landscape, allowing private companies such as Alibaba Group Holding Ltd. to compete with state-owned banks and easing the one-child policy to bolster demand for products from Nestle SA (NESN) to General Motors Co. (GM)

Plans to change the nation’s financial sector include a new registration system for initial public offerings and allowing qualified private investors to set up small-to-medium sized banks. Tencent Holdings Ltd. (700), Asia’s biggest Internet company, is part of a group applying for a banking license in China.

Greece must step up effort to find 2014 budget gap financing: Eurogroup head

BRUSSELS Thu Nov 14, 2013 4:44am EST

(Reuters) - Greece must step up efforts to reach an agreement with international lenders on how to close a 2 billion euro ($2.68 billion) financing gap in its 2014 budget, the head of euro zone finance ministers Jeroen Dijsselbloem said on Thursday.

Greece’s reform job isn’t even half done

By Hugo Dixon NOVEMBER 11, 2013

Reuters

Greece’s reform job is not even half finished. The government hasn’t done enough to root out the vested interests that strangle the economy. Nor has it cracked down fully on tax evasion or pushed hard enough to privatise state-owned properties.

On the other hand, Antonis Samaras’ coalition is so fragile that it could collapse if the troika – the European Commission, the European Central Bank and the International Monetary Fund – forces it to impose more austerity. That could lead to a new phase in the Greek crisis. The government’s best bet is to make a sharp distinction between structural reform and austerity – and persuade its lenders that it’s so serious about the former that more cuts and taxes aren’t required.

UPDATE 1-IMF approves $2.3 billion aid for Greece

Mon Jul 29, 2013 4:40pm EDT

(Reuters) - The International Monetary Fund on Monday approved a further 1.7 billion euros ($2.3 billion) in funds for Greece's bailout program after completing the fourth review of the cash-strapped euro zone state.

Greece last week adopted the last piece of legislation its international lenders required to release the next batch of rescue loans, after two months of wrangling over unpopular measures to overhaul the economy. The total funds from the IMF, the European Commission and the European Central Bank comprise 5.8 billion euros.

U.S. Treasury Secretary Lew urges Greece to stick with reforms

ATHENS | Sun Jul 21, 2013 11:15am EDT

(Reuters) - U.S. Treasury Secretary Jack Lew urged Greece on Sunday to persevere with tough economic reforms during a one-day trip to Athens designed to demonstrate Washington's support for the crisis-plagued country.