Tag Archives: Austerity

Greeks withdraw $894 million from Greek banks in one day

I found this article from MSNBC on The Other McCain.

Excerpt:

Political leaders in Athens were due to discuss an emergency government Wednesday to deal with a possible run on banks as it emerged Greeks withdrew almost $900 million in a single day, fearing their country could crash out of the euro currency by the end of the week.

An interim government would take the country through to new elections on June 17, triggered by the collapse on Tuesday of talks to form a coalition between winners of the inconclusive May 6 election.

Greeks are withdrawing euros from banks, apparently afraid of the prospect of rapid devaluation if the country leaves the European single currency and returns to the drachma.

President Karolos Papoulias warned of “great fear that could develop into a panic,” the minutes of Papoulias’ negotiations with political leaders showed, according to Reuters.

[…]Several banking sources told Reuters similar amounts had also been withdrawn on Tuesday. Nevertheless, there was no sign of panic or queues at bank branches in Athens on Wednesday. Bankers dismissed suggestions that a bank run was looming. A senior executive at a large Greek bank told Reuters: “There is no bank run, no queues or panic. The situation is better than I expected. The amount of deposit withdrawals the president mentioned referred to three days, not one.”

[…]Greeks have already been withdrawing their savings from banks at a sharp clip – nearly a third of bank deposits were withdrawn between January 2010 and March 2012, reducing total Greek household and business deposits to 165 billion euros.

What I find really striking about stories like this is that Greece just had an election. 75% of them want to stay in the European Union and keep the Euro as a currency. But that can only happen if they accept that they are spending too much and they are not producing anything. They have to cut spending, lower taxes and deregulate so that there is economic growth. So what did they do? They voted against austerity. They think that by refusing to meet the conditions of the people who can bail them out, that they will get a bailout. It’s just insane. Like whipping a thirsty camel with the expectation that whipping can somehow satiate its thirst and cause it to get up and keep moving.

Greece and France vote against fiscal responsibility

Greece is the most fiscally irresponsible country in Europe. Recently, their socialist government has been receiving bailouts from the  more responsible nations of the EU, especially Germany. These bailouts have come with the requirement that austerity measures be imposes. The spoiled Greeks have now voted against austerity measures, which will certainly imperil future bailouts, and will probably lead to the collapse of Greece and its withdrawal from the European Union.

Here’s a story that explains what happened on the weekend.

Excerpt:

The two mainstream parties that approved the second international £110 billion rescue loan and its stringent requirements for cuts were heavily punished as support surged for the Left and Right.

The shattering of the political status quo threw into doubt Greece’s commitment to meeting the terms of its debt and could spread instability throughout the euro zone.

Weeks of uncertainty are likely to follow as numerous parties vie to cobble a majority coalition, with a fresh election within two months a distinct possibility.

There will also be fears that ensuing political instability will see a return to the street violence that has scarred Athens since the debt crisis surfaced two years ago.

Exit polls said the conservative monolith New Democracy would finish first with a maximum of 20 per cent, while Pasok, the main socialist party, would suffer a dramatic fall to 13-14 percent, a third of what it received when winning the 2009 election. Voters held both responsible for years of mismanagement and corruption.

[…]Greeks angry at record unemployment, collapsing businesses and steep wage cuts ignored warnings that a vote against the harsh terms of the bailout would push Greece towards bankruptcy.

“The exit polls confirm what has been patently clear for some time: there’s no political consensus for the kind of reforms that Greece must implement if it wants to remain in the euro zone,” said Nicholas Spiros of Spiro Sovereign Strategy.

Othon Anastasakis, director of southeast European studies at Oxford University told Reuters: “Greeks are sending a very strong message abroad, which is enough with austerity.”

As they voted, many Greeks expressed their rage at the parties who accepted the harsh conditions of two bailouts that have kept the country from bankruptcy.

“My vote was a protest vote because they cut my pension,” said 75-year-old pensioner Kalliopi, her fists clenched in anger. “I live in a basement but pay the same (property) tax as someone who lives in a penthouse,” said Kalliopi after voting.

“I voted for Left Coalition, even if this means elections again in a month. I feel vindicated, things are changing little by little because people decided to speak up,” said 22-year-old student Klelia Avgerinopoulou.

[…]International lenders and investors fear success for the small anti-bailout parties could lead to Greece reneging on the harsh terms of the program, risking a hard sovereign default and dragging the euro zone back into the worst crisis since its creation.

Euro zone paymaster Germany has warned there would be “consequences” to an anti-bailout vote and the EU and IMF insist whoever wins the election must stick to austerity if they want to receive the aid that keeps Greece afloat.

What is most disturbing to me are the quotations from Greek citizens. Their knowledge of economic policy seems to be limited to that of spoiled children.

“The politicians who got us into this mess continue to mock us. Neither of them will do anything, all they are interested in is pulling the wool over our eyes so they can get into power again,” said Yiorgos Vrassidis, 55, after casting his vote at a “Voting for them would be like committing national suicide.”

He opted for the anti-austerity Syriza, an acronym for Coalition of the Radical Left, which shocked political observers by heading for second place. Three years ago it received just a few percent.

[…]Yianna Kiritsi, who was made redundant 18 months ago, said: “I want Greek people to decide for themselves, not the troika to decide for us. They make decisions for everybody. We are not allowed to take decisions.” Greeks routinely and derisively refer to the EU, International Monetary Fund and the European Central Bank which imposed the debt terms as “the troika”.

Dimitris Davos, a Communist voter, said: “We have to restore our dignity and national sovereignty. This election in Greece will send a strong message from the south of Europe to the rest that we can’t take any more pain. We need to be rid of these loan sharks and bankers.”

France also had elections, and they are taking the same anti-austerity (anti-reality) stance.

Excerpt:

 On Sunday night Mr Hollande had won 51.56 per cent of the vote compared to Mr Sarkozy’s 48.41 per cent with 90 per cent of the ballots counted.

Over 100,000 jubilant supporters gathered at Paris’s revolutionary Place de la Bastille, a pilgrimage site for the Left, chanting “François President”.

Many were too young to remember that it was here that a gigantic crowd gathered for the 1981 victory of the last Socialist president, François Mitterrand.

But even as the festivities got under way, officials close to both Mr Hollande and Mr Sarkozy were fearful of a market backlash against the Socialist’s plans to tax the wealthy and expand jobs in the state sector.

There are concerns that Mr Hollande will be unable to respect fiscal discipline targets while enacting a tax — and-spend programme that would see him create 60,000 more state education posts, partly revoke a pension reform and slap a 75 per cent tax on millionaire owners.

A senior Conservative source told The Daily Telegraph that fears France was about to reverse course would cause turmoil and uncertainty.

He said: “Clearly it’s going to focus a lot of market attention on the French public finances, which are nothing to write home about. I don’t think it is going to make life in the bond markets any easier next week.

“We haven’t chosen austerity because it’s fun. We have to do austerity, and so does France.

“He will have to be very careful about his public spending commitments and the lack of welfare reform.”

So the grown-ups have been voted out and the children are now in power. European voters want their ice cream, and they want it now, and they don’t want to have to behave to get it. How money is earned, how goods and services are produced, and how prices are set, etc. are all irrelevant to them. They have no idea why their goodies are being taken away, and they are having a tantrum.

Conservatives defeat socialists by a landslide in Spain election

Political Map of Europe
Political Map of Europe

The UK Telegraph explains.

Excerpt:

With almost 98 per cent of the vote counted the Popular Party won 186 seats in the 350 seat congress garnering a strong mandate to push through further austerity measures in an attempt to turn around an economy that risks being engulfed by the sovereign debt crisis.

[…]The socialists suffered their biggest defeat since Spain became a democracy more than 30 years ago, punished by an electorate for their perceived bungling of the economic crisis that has left 5 million unemployed.

[…]Alfredo Perez Rubalcaba, 60, the prime ministerial candidate who took the helm of the PSOE when Jose Luis Rodriguez Zapatero said he would not seek a third term, conceded defeat after the party won just 110 seats down from 169 in 2008.

“The Socialist Party did not have a good result. We clearly lost the elections,” he told party faithful in Madrid.

The conservatives won roughly 44 per cent of the votes and the Socialists took 29 per cent, according to official election results.

The Wall Street Journal analyzes the election result.

Excerpt:

Formerly a solid growth engine for the region’s economy, Spain today is grappling with a burst housing bubble, a 21% unemployment rate and borrowing costs near levels that triggered the international bailouts of several fiscally frail euro-zone peers.

Analysts said the election of Mariano Rajoy, the conservative leader who has committed to austerity and economic overhauls, could help improve investor sentiment toward Spain, but won’t fundamentally change perceptions that Spain and other peripheral nations are risky investments. For that, they said, European Union institutions will have to extend more support, possibly by converting the European Central Bank into a lender of last resort.

[…]The groundswell of support for Mr. Rajoy is chiefly the result of a deep economic crisis that has forced Socialist Prime Minister José Luis Rodríguez Zapatero to make unpopular budget cuts and economic overhauls. Earlier this year, Mr. Zapatero said he wouldn’t seek re-election and his party chose the veteran Mr. Pérez Rubalcaba to succeed him.

Analysts said the fact that change in Spain was coming via the ballot box was another sign of a better track record on governance, which has helped to keep Spanish borrowing costs below those of its fiscally frail peers.

Although Mr. Zapatero lacked a parliamentary majority, he was able to deliver all the measures he promised last year, including a public-sector wage cut, a pension freeze and a labor-market overhaul.

As a result, a clear victory for Mr. Rajoy, who has promised to take overhauls much further than his Socialist rivals, is widely expected to shore up confidence in the Spanish economy inside and outside the country.

Many recall the Popular Party-led governments of José María Aznar of 1996-2004 for their far-reaching moves that helped set the stage for a lengthy economic boom. Mr. Rajoy headed various ministries during that time.

At a polling station in Madrid’s Chamberí district, 18-year-old engineering student Diego Cubero said he had voted for the first time and chosen the Popular Party.

This is the end of a huge mistake made by the Spanish people in 2004 when they elected the socialists. Never, ever, ever elect socialists unless you want your economy to end up like Greece. That’s what socialists do to economies.

Socialist European countries seizing individual retirement accounts

ECM sent me this terrifying story.

Excerpt:

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

The Bulgarian government has come up with a similar idea. $300m of private early retirement savings was supposed to be transferred to the state pension scheme. The government gave way after trade unions protested and finally only about 20% of the original plans were implemented.

The article describes 3 other countries that are grabbing more individual retirement contributions.

This is exactly where the Democrats would take us.