Greece Struggles Against Default

November 12th, 2012
in econ_news, syndication

Econintersect:  The Greek parliament approved the latest austerity measures for the Riots-AthensSMALL2013 budget last week, even in the face of violent rioting in the streets.  But now the Greek banks cannot find enough collateral to cover the €5 billion ($6.5 billion) treasury bill auction scheduled for Tuesday (13 November).  According to the Financial Times the banks can only raise about €3.5 billion.  The auction is required to cover the government's expenditures until the next international aid package of €31.5 arrives.

Follow up:

A further problem arises because the Tuesday treasury auction will require a temporary €17 billion ceiling for issuance and that has not been approved by the ECB (European Central Bank).  The ceiling is supposed to be reduced this month to €12 billion, according to the Financial Times.

Meanwhile some are saying that Greece still has a social payment system which is bloated relative to tax revenues, which are, of course shrinking further under austerity.  See the comments of Greek blogger Nikos Tsafos:

Readers have challenged my recent posts on austerity—and my argument that Greece has yet to practice it—in various ways. Either, people say, the data is incorrect or it is irrelevant. Let me try one more time.

This is the starting point. On one hand, we say “the state is being starved and cannot perform basic functions.” On the other, Greece still have a *primary* budget deficit, which means that we still cannot raise enough money to pay the bills even if we just ignored the debt. So we have a contradiction: we cannot both being starved and be eating too much. It does not add up.

There are two hypotheses: either revenues are too low or spending is too high. There is no other way for us to have a budget deficit.

The following video from CBS News shows some of the violence and discusses the European situation.

John Lounsbury

Sources:









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.















 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved