Herman Van Rompuy, aka Haiku Herman, points out that a week ago the Leaders of the Euro area met in Brussels. They had two aims in mind: to ensure the financing of the Greek program and improve the sustainability of the Greek debt, and to restore market confidence in sovereign Euro debt. They took important decisions for the future of Greece and for the euro area as a whole. Probably for the first time they covered all the sides and angles of the debt crisis in the euro area. However a number of misunderstandings have arisen over the past few days. Some are due to the complexities involved, some to the requirements of parliaments in certain Member States, and some may even stem from positions taken in the markets. As a consequence Haiku Herman thinks it is useful to clear up a number of issues under discussion. http://venitism.blogspot.com
Van Rompuy says Eurokleptocrats wanted to address the concerns related to the sustainability of Greece's debt. Although the last review by the IMF, the ECB, and the European Commission had concluded that this debt is sustainable, they decided to alleviate this burden. Their decisions were threefold:
* first, they will provide additional funding to support the Greek program up to 2014;
* second, they lowered the interest rate on the public funds they are lending to Greece to close to their cost of funding (i.e. between 3.5 % and 4%), and they extended their maturity to a minimum of 15 years and up to 30 years with a grace period of 10 years. This will reduce the Greek debt by 25 billion euro between 2011 and 2020, which will diminish the debt-to-GDP by 10%.
* Third, they agreed upon and supported the voluntary involvement of private bondholders, with a menu of options (roll-over; exchange; buy-back) covering payments due up to 2020 . The voluntary participation of private creditors - of which we previously aware that this would be considered as selective default, and therefore cannot be considered as a surprise - is unique, unprecedented and restricted to Greece. PSI and debt buy back entail an estimated debt reduction estimated around 26 billions Euros or 12% of GDP
Van Rompuy notes that arguably, Greek debt remains at high level, but much less exceptional if you compare it to the debt level for example in Japan which stands at over 225%. However, all together, these decisions will dramatically reduce the financial needs for Greece up to 2020, giving to the country the time needed to restore growth and recover market access. It will give the time needed to implement the deep reforms which are needed, starting with the savings and tax-collection measures the Greek Parliament voted a month ago. To this end, they also decided to extend huge administrative and technical help to Greece to ensure implementation. In addition, the Commission together with the EIB is front-loading and focussing our assistance on making the Greek economy more growth oriented.
Haiku Herman points out that at the last European Council in June the Latvian Prime Minister distributed his book on how Latvia had undergone successfully major economic challenges and managed to stabilise the situation, with the support of the EU and the IMF. In Belgium, his successors and Van Rompuy reduced my country's debt-burden from over 130% in 1992 to around 85%¨in 2007. So it can be done. There are however two conditions: waste in the economy has to be eliminated, and growth has to be unshackled. If the laws adopted recently by the Greek parliament are implemented, and if our technical and investment assistance yields the expected results Van Rompuy thinks there is more than a fair chance for Greece to come through.
Van Rompuy notes Eurokleptocrats wanted to put an end to speculation about the debt elsewhere in the Euro area. They did two things to that effect:
* First, they made it crystal clear that Private Sector Involvement (PSI) is a once-for-all. They understand that markets always fear the unilateral modification of the terms of contract, even if this is voluntary as is the case now with private creditors alleviating some of Greece's debt burden. PSI will not be used in other cases. And anyway both Ireland and Portugal look well set on the way to recovery. To help them even further along this road, Eurokleptocrats decided as well to reduce the rate and extend the maturity of public lending to the same level as Greece is now benefiting from. In the case of Ireland this represents nearly a halving of their interest burden to around 4%.
* Second, Eurokleptocrats decided to refine and strengthen their tool box. To prevent healthy euro area economies from being cut off from funding through vagaries in the markets, they decided to allow the EFSF and the ESM to intervene on a precautionary basis, providing the possibility to draw on the resources if need be. Moreover Eurokleptocrats are willing to lend money to these countries as well in case they need to recapitalise their banks if these were to come under pressure. Finally Eurokleptocrats decided to allow the EFSF and the ESM to intervene in the secondary markets in exceptional situations to be assessed by the ECB. These new tools have been extensively discussed by public and press. Contrary to some commentaries, the EFSF has sufficient resources available to use these new tools to their fullest effect. And if ever additional resources were needed, Eurokleptocrats have reaffirmed that they stand ready to do all it the takes to safeguard the financial stability of the euro area. Decisions taken in the last year has shown that they deliver.
The bailout for the Cradle of Kleptocracy is taxpayers' hard-earned money blown out with the wind, because the October-18 Mafia continues corruption, squander, marilizardism, incivility, stupidity, charge stacking, and junketing. October-18 Mafia is the most disgusting predator of internet on Earth! Civil society was shocked by the brutality and stupidity of October-18 fiasco, initiated by the Ministry of Foreign Affairs of the government of Greece. That's why October-18 Mafia is the new name of the government of Greece! http://venitism.blogspot.com
Van Rompuy notes that when taking these bold decisions, several countries have gone far beyond their traditional positions and red lines for the simple reason that the Euro and their own economies were at stake. Of course, one may have wished to take these steps earlier in the year. But these decisions represent deep changes to the euro area policy framework, triggering legitimate debates in a number of countries. In addition, what is important is the final outcome. Of course decisions for implementation will need to be taken by mutual agreement, but every time we have proven to be willing and able to take such decisions. Van Rompuy is very confident that where needed national parliaments will approve of these new instruments rapidly. All will act in their own national self-interest.
Total bankruptcy would be God's gift to the Cradle of Kleptocracy, because Greece needs a real shock and awe to recover from political corruption. And it looks like God will manifest his benevolence pretty soon! A bankruptcy will also bring the much needed revolution to get rid of Graecokleptocrats. The sooner Graecokleptocracy defaults, the better it will be for all concerned. The bigger the haircut, the worse the pain that follows. The damage being inflicted on Greece is very masochistic. When defaults within the eurozone are accepted, a sensible analysis about how to fix the euro can begin.
Astonishingly, since Eurokleptocrats' Summit the cost of borrowing has increased again for a number of euro area countries. Van Rompuy says astonishingly, because all macro economic fundamentals point in the opposite direction. It cannot be stressed enough that Greece is in a unique situation, not comparable to that of the other Eurozone countries. Italy will generate a primary surplus in 2011 and, with the additional austerity package just adopted will have a balanced budget in 2014. Spain has a low debt stock around 70%, below the EU and the Euro area average, and has taken courageous measures to reduce its deficit and boost growth. In all these cases, the current market assessment of risks are totally out of line with the fundamentals and it is ludicrous that CDS-rankings put these countries in the top tier of default risk countries.
Van Rompuy asserts this is not a crisis about the euro. In the aftermath of the financial crisis of 2008, all developed countries are faced with increased public debt. Given the interdependence of these economies, as we have clearly seen first hand in the European Union, it is in everyone's interest that each country should find a solution to this burden, tailored to their own needs, which will have a direct effect on jobs and growth in the coming years. In light of this Van Rompuy is confident that the US will find a solution to their current stalemate for their own sake and for that of the stability of the financial market-at-large.
The freakish October-18 Mafia is still siphoning in all the money with huge taxes and VAT, and Graecokleptocrats still throw Marilizard Spaghetti and build Marilizard Towers, which will only depress the economy further. You can't just cut your way out of this crisis while continuing political corruption. At some point, the Greek economy needs to start growing again. But this cannot happen in a depressed kleptocracy and marilizardism. Greece should bow to the inevitable, put some Graecokleptocrats in jail, announce a 50% haircut on its debt, drastically cut taxes, especially VAT, abolish marilizardism, and impose a four-year suspension of interest payments on what remains outstanding.
Van Rompuy points out economic growth has picked up in Europe and is on average 2.5% in Western European States. Those countries currently in loan programs will see a return to growth in 2012. As soon as consumers and businesses see that debt levels and deficits are going down, this will have an extra positive effect of boosting consumer confidence and corporate investments. A win-win situation! No way Herman, you are dead wrong!
The Greek government, October-18 Mafia, is the enemy of the Greek people. Premier Papandreou, godfather of October-18 Mafia, hoodwinks that his mafia will go straight, but nobody believes him anymore! Papandreou did not keep his promise to abolish sinecures, government ownership, kleptocracy, Kangaroo Justice, marilizardism, Marilizard Libel, Marilizard Spaghetti, and Marilizard Towers. Christine Lagarde of IMF has made it absolutely clear she does not trust Graecokleptocrats, because they never apply what they vote in the Grand Brothel on Syntagma Square! That's why she sends her inspectors to Athens to see things are done as promised and voted.
Haiku Herman better stick to haikus and leave ecconomics alone! Stimulus funds stimulate government, not the economy. Downturn in a business cycle is painful but necessary medicine for restoring equilibrium to the economic system. Reject further lowering of the interest rate (stimulative monetary policy) or any other attempts (for example, deficit spending or stimulative fiscal policy) to stimulate demand. http://venitism.blogspot.com
Throughout history, there have been hundreds of government bankruptcies. Look at Argentina and Russia, for example. But in none of these cases did the entire financial system collapse. Of course, the financial industry likes being able to collect hefty risk premiums without risk. But, it can't be right for Germany's taxpayers to prop up the banking sector under the guise of saving countries or the euro.
The last two stress tests of European banks are a joke, because they did not take into account the expected bankruptcies of PIGS, especially Greece. PIGS are floundering under the sheer expense of bailing out and reforming their financial system, going belly up. We now know the stress tests were nothing more than a placebo for the market! It was fraud, pure and simple!
The impunity of the 300 Graecokleptocrats of the Grand Brothel on Syntagma Square is the most freakish thing on Earth. Even though Graecokleptocrats looted many billion euros in kickbacks and churning, not a single Graecokleptocrat has ever gone to jail! They are protected by the parliamentary immunity, and nobody can touch them, no matter what. Moreover, they have the nerve to jail dissident bloggers. It's a long way from the 300 Spartans of Leonidas! Allons enfants de la Grece!
Governments of many repressed countries, such as the Cradle of Kleptocracy, use marilizardist tools to manipulate netizens. Marilizard Libel is accusing dissident bloggers of treason, Marilizard Spaghetti is hurling charges against innocent people, Marilizard Tower is a stack of imaginary charges to scare a blogger, and marilizardism is terrorizing dissident bloggers. October 18 is the international day against marilizardism, and October-18 Mafia is the marilizardist government of Greece. http://venitism.blogspot.com
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