Will There Be Another Last Minute Reprieve For Greece?

[Gob]

To retire you have to be in work?

[Crackpot]

Not in terms of collecting retirement benefits. What's more at least in this country your retirement is based on your last few "working" years wages so waiting a few years to "retire" can be detrimental to your long term benefits

[Long Run]

For the universal Social Security, the retirement benefit is based on your highest 35 years of salary. If you scale back in your later years, your benefit does not decline. For the small percentage of workers who still have a private pension plan (an annuity at retirement age, rather than an account plan like a 401(k)), one type of benefit formula (among many) is based on either the final or the highest 3 or 5 year average of salary, times years of service, times a fraction (usually 1 to 2%). So again, if a worker reduces his hours/pay in the last few years, his private pension benefit still may go up based on the years of service factor, or it may stall out if the pay is reduced enough (but it would be a rare plan that actually reduces the benefit since the IRS would not approve such a plan design, considering it an unlawful cutback of benefits).

[MajGenl.Meade]

To retire you have to be in work?

Not in Australia if you're the standard

[Gob]

Not in terms of collecting retirement benefits. What's more at least in this country your retirement is based on your last few "working" years wages so waiting a few years to "retire" can be detrimental to your long term benefits

State pensions in Europe tend to be different.

[Lord Jim]

After throwing their counter-productive referendum tantrum, the Greek government accepts tougher terms then the ones they rejected:

BRUSSELS, July 13 (Reuters) - Euro zone leaders made Greece surrender much of its sovereignty to outside supervision on Monday in return for agreeing to talks on an 86 billion euros bailout to keep the near-bankrupt country in the single currency.

The terms imposed by international lenders led by Germany in all-night talks at an emergency summit obliged leftist Prime Minister Alexis Tsipras to abandon promises of ending austerity and could fracture his government and cause an outcry in Greece.

"Clearly the Europe of austerity has won," Greece's Reform Minister George Katrougalos said.

"Either we are going to accept these draconian measures or it is the sudden death of our economy through the continuation of the closure of the banks. So it is an agreement that is practically forced upon us," he told BBC radio.

If the summit had failed, Greece would have been staring into an economic abyss with its shuttered banks on the brink of collapse and the prospect of having to print a parallel currency and exit the European monetary union.

"The agreement was laborious, but it has been concluded. There is no Grexit," European Commission President Jean-Claude Juncker told a news conference after 17 hours of bargaining.

He dismissed suggestions that Tsipras had been humiliated even though the summit statement insisted repeatedly that Greece must now subject much of its public policy to prior agreement by bailout monitors.

"In this compromise, there are no winners and no losers," Juncker said. "I don't think the Greek people have been humiliated, nor that the other Europeans have lost face. It is a typical European arrangement."

Tsipras himself, elected five months ago to end five years of suffocating austerity, said he had "fought a tough battle" and "averted the plan for financial strangulation".

Greece won conditional agreement to receive a possible 86 billion euros ($95 billion) over three years, along with an assurance that euro zone finance ministers would start within hours discussing ways to bridge a funding gap until a bailout - subject to parliamentary approvals - is finally ready.

That will only happen if he can meet a tight timetable for enacting unpopular reforms of value added tax, pensions, budget cuts if Greece misses fiscal targets, new bankruptcy rules and an EU banking law that could be used to make big depositors take losses.

German Chancellor Angela Merkel said she could recommend "with full confidence" that the Bundestag authorise the opening of loan negotiations with Athens once the Greek parliament has approved the entire programme and passed the first laws.

The secretary-general of Merkel's conservatives said the Bundestag was likely to vote on Greece on Friday.

The deterioration of the Greek economy since Tsipras won office in January, and particularly in the last two weeks, had led to a much higher financing need, she said.

One senior EU official calculated the cost to the Greek state of the last two weeks of political and economic turmoil at 25 to 30 billion euros. A euro zone diplomat said the full damage might be closer to 50 billion euros.

Tsipras accepted a compromise on German-led demands for the sequestration of Greek state assets worth 50 billion euros - including recapitalised banks - in a trust fund beyond government reach, to be sold off primarily to pay down debt. In a gesture to Greece, some 12.5 billion euros of the proceeds would go to investment in Greece, Merkel said.

The Greek leader had to drop his opposition to a full role for the International Monetary Fund in the next bailout, which Merkel had insisted on to win parliamentary backing in Berlin.

In a sign of how hard it may be for Tsipras to convince his own Syriza party to accept the deal, Labour Minister Panos Skourletis said the terms were unviable and would lead to new elections this year.

Six sweeping measures including spending cuts, tax hikes and pension reforms must be enacted by Wednesday night and the entire package endorsed by parliament before talks can start, the leaders decided.

In almost the only concession after imposing its tough terms on Tsipras, Germany dropped a proposal to make Greece take a "time-out" from the euro zone that many said resembled a forced ejection if it failed to meet the conditions.

Tsipras was subjected to a 17-hour browbeating by leaders furious that he had spurned their previous bailout offer on more favourable terms in June and held a referendum last week to reject it. Only France and Italy worked to try to soften the terms being imposed on Greece.

HARD BARGAIN

Some diplomats questioned whether it was feasible to rush the package through the Greek parliament in three days. Tsipras is set to sack ministers who did not support him and make dissident Syriza lawmakers resign their seats, people close to the government said.

Even if this week's rescue succeeds, many EU diplomats question whether an unstable Greece will stay the course on a three-year programme.

Merkel, whose country is the biggest contributor to euro zone bailouts, said from the start that she would drive a hard bargain against a backdrop of mounting opposition at home to more aid for Greece.

The final sticking point was Germany's insistence on an independent external trust fund to control state assets for privatisation. Berlin initially wanted to use a structure in Luxembourg managed by its own national development bank, KfW, but eventually relented.

One diplomat said that was tantamount to turning Greece into a "German protectorate". But Merkel declared the matter a "red line" for Germany.

Euro zone finance ministers were tasked with finding sources of immediate bridge funding for Greece if it passed the laws, to prevent it defaulting on a key payment to the ECB next Monday.

Finance ministers said Greece needed 7 billion euros of funding by July 20, when it must make a crucial bond redemption to the ECB, and a total of 12 billion euros by mid-August when another ECB payment falls due.

http://www.reuters.com/article/2015/07/ ... L120150713

This is still not a done deal; while the idiot Prime Minister has apparently finally accepted reality, there's no guarantee that the other members of his idiot party in the Greek Parliament are ready to get off of Fantasy Island...

[Guinevere]

Nor any way to guarantee you can get blood from an olive.

I just see Greece spiraling further and further downward. This "austerity" isn't going to help anyone, including the Euros or the euro (which slid again against the dollar - I should buy that Paris pied-à-terre now).

"Privatization" = forcing Greece to sell the Parthenon and more of its cultural heritage to wealthy Euros. What a crock, trying to take now what couldn't be stolen in decades of war and "archeology." This is Europa raping Zeus.

[Lord Jim]

The ones who have been getting "raped" are the citizens of the responsible, tax paying European countries that are on the hook for 300 (soon to be 400) billion dollars owed by the irresponsible non-taxpaying Greeks...

Tax debts in Greece equal about 90% of annual tax revenue, the highest shortfall among industrialized nations, according to the Organization for Economic Cooperation and Development.

http://www.greekcrisis.net/2015/02/gree ... o-pay.html

The citizens of most of the other Euro Zone countries are completely fed up with the Greeks, who flip them the bird with one hand, while having an outstretched palm asking for more money with the other. It would have been political suicide for any of the governments of the lending nations to bestow undeserved gifts on Greece. Particularly in light of the vote in that idiotic referendum, which absolutely could not be rewarded.

[Long Run]

"Austerity" in this case means having a reasonable plan for aligning government revenues and expenses. While most nations are able to soften low economic times with borrowing,it is because they have room to borrow (not at their limit to service debt), and this works because such countries generally tax themselves enough to pay expenses. The Greeks have not done this, and borrowed too much during good times, then when 2008-09 hit, they quickly hit their limit. At this point, there is no more room to borrow and soften the blow. The only choice is to take the tough medicine of raising taxes (in Greece's case this means actually collecting taxes) and cutting expenses -- it will definitely hurt, but if they see it through, they will come out a much stronger and more stable country.

If you have a soft spot for Greece and its predicament, go on vacation there and spend your euros/dollars freely -- that kind of real economic help is what they need more than anything.

[Big RR]

The citizens of most of the other Euro Zone countries are completely fed up with the Greeks, who flip them the bird with one hand, while having an outstretched palm asking for more money with the other.

If that's the case one would wonder why the governments are offering to restructure the debt once again; unless it's that they are reaping what they sowed and are just dancing to the dictates of the bankers who cannot afford to write off the debts. I love the hand wringing and rhetoric about how itrrespomnsible Greece is, followed by an offer to just extend the debt (and the ultimate again reconciliation) yet another time. I told you they wouldn't pull the plug on Greece--the bankers won't let them.

[wesw]

yeah, I have not weighed in on this, as financial responsibility is not one of my strengths....

but....

the greeks have been no more foolish than their creditors, they should both suffer the results of their folly. sometimes failure must be allowed and the consequences suffered.

[Lord Jim]

the bankers won't let them.

That's funny because it was the Germans, (among others) who have the largest financial exposure both public and private, that were perfectly prepared in the last discussions to let Greece go, while it was France and Italy, (with less exposure) who were most committed to making a deal...

I'm sorry, but I'm just not buying the evil banker conspiracy narrative...

[Crackpot]

It doesn't take a conspiracy Jim. Many are afraid of the long term cost of a country exiting the euro.

[Lord Jim]

Many are afraid of the long term cost of a country exiting the euro.

I'm sure that's true; among government officials, and members of the public...

But a policy motivated by a general unease and fear of the consequences of the unknown by many segments of society is not at all the same thing as "the bankers won't let them. "...

[Long Run]

I love the hand wringing and rhetoric about how itrrespomnsible Greece is, followed by an offer to just extend the debt (and the ultimate again reconciliation) yet another time. I told you they wouldn't pull the plug on Greece--the bankers won't let them.

Except, the countries were willing to provide a debt rewrite/deferrment a month or so ago if the Greeks would finally implement real reform to get to a reasonable budget. The Greeks rebuffed this in their referendum snit. Now they are getting a tougher deal, which includes, one presumes, verifiable and actionable promises of reform (lower expenditures plus more collected taxes). Thus, the promise is that if the Greeks take action that proves they will be more responsible, they get more credit. That may be foolish given Greece's history, but the rhetoric and intent all along has been to push Greece away from irresponsibility and toward a viable long term future so that it can stay in the EU.

[Big RR]

Exactly; tied in with the economic problems the collapse and write off would bring. Sure, Germany said it didn't want to do anything, but when push came to shove it acquiesced (and will tell its citizens "we tried" when I doubt it did anything of the sort). And even though Italy and France might have each had less total exposure, they may well have been in a much poorer position than the Germans to weather the default.

And FWIW, I don't see any evil in the bankers; they just don't want to write off the debt and are exerting whatever leverage they have on the nations to assure they don't have to. Nothing inherently evil in that, although it makes poor policy in the long run.

LR, you might see the effort as earnest to help push Greece toward prosperity, but that's the rhetoric every time the refinancing of the debt comes up. And it hasn't worked yet; a few moths/years from now we'll be having the same exchange.

[Crackpot]

It's hard to argue a push toward sustainability when the past actions have only further depressed the economy.

[Lord Jim]

It's hard to argue a push toward sustainability when 90% of taxes continue to go unpaid...

[Big RR]

But it's real easy to delay the day of reckoning by restructuring debt that will never be repaid again and again. Eventually the bubble will burst, but that's down the road so let's not worry about it. And guess what, the banks will be bailed out by the national governments yet again.

[Crackpot]

Is everything an either or proposition?