Update 4: Greece - Default wil cause chaos, warns PM
Video: AFP
Greece's future in the euro grew increasingly precarious tonight as violence erupted on the streets of Athens and dissent grew among its lawmakers after European leaders demanded deeper spending cuts.
The country's beleaguered coalition government promised to push through the tough new austerity measures and rescue a crucial 130 billion euro bailout deal, as six members of the Cabinet resigned.
Prime Minister Lucas Papademos promised to "do everything necessary" to ensure parliament passes the new austerity measures that would slap Greeks with a minimum wage cut during a fifth year of recession.
"It is absolutely necessary to complete the effort that began almost two years ago to consolidate public finances, restore competitiveness and economic recovery," Papademos told an emergency Cabinet meeting.
Debt-stricken Greece needs the bailout money before a 14.5 billion euro bond deadline on March 20 and strike a vital debt-relief deal with bond investors.
He said the bailout and a related debt-reduction deal with private creditors would return Greece to growth next year, and deliver 4.5% primary surplus in 2012 - better than an earlier official prediction of 1.1% of gross domestic product.
"A disorderly default would cast our country into a catastrophic adventure. It would create conditions of uncontrollable economic chaos and social explosion," he warned.
"Greeks' standard of living in the event of a disorderly default would collapse, and the country would be swept into a deep vortex of recession, instability, unemployment and penury. These developments would lead, sooner or later, to exit from the euro."
Earlier today, a small right-wing party in Papademos' coalition said it would not back the new measures and four of its officials in the cabinet resigned, including the country's transport minister.
Two Socialists cabinet members have also quit.
Greece has promised to approve the new austerity measures by late Sunday, despite deep public resentment.
Violent clashes broke out in front of parliament earlier today, amid mass protests organised by unions, which launched a 48-hour general strike.
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Alex Caffari
Feb 11th, 09:08
"He said the bailout and a related debt-reduction deal with private creditors would return Greece to growth next year, and deliver 4.5% primary surplus in 2012 "
It might interest the editor and readers of this news release that the above quote is wrong as misleading. Being someone who follows the political and financial news very closely, I can assure you that the above quoted "4.5% primary surplus" was projected for fiscal year 2015 and not 2012.
Even so, 4.5% primary surplus in 2015??? Here, pull the other leg. With the current proposals of further austerity without a component to stimulate growth, those targets will never be met as the GDP will shrink exponentially thereby increasing the debt to GDP ratio no matter how much they cut spending and even without borrowing a single cent..
There are only two solutions for Greece.
1. Leave the EMU and return to the Drachma
2. A 50% debt haircut which includes the bonds held by official sources (ECB, IMF, EU), and not just private bond holders.
Both solutions have many drawbacks for both Greece and the other EU nations, but not as bad as a disorderly default.
Wenzu Vella
Feb 11th, 07:31
The Greek situation is far from over. The possibility of defaulting is still a reality and if this happens the Maltese people would have to repay all those hundreds of millions of euro that the present PN government borrowed in their name to lend to Greece.
The lend becomes a gift because, defaulting means, that the Greek government forgoes all responsibility to repay all loaned money.
Joe Vella
Feb 10th, 23:13
To many on the Government payroll and to few working for the private sector. Productivity is a strange word for Socialist around the word. Socialist think that we could go on and live on manna falling from the skies for ever.
Joseph Ellul
Feb 10th, 22:37
Greece's situation started when US banks and financiers helped in covering up the national debt while supplying loans and insurances. It is a complicated matter and this came to be found out only when Lehman and others went to the wall.
The Greek population voted for a government with high promises, but not to be sold out to bankers. Now is the time for Greece to take stock and move out of the EU. It would also be wise for the armed forces to take control and put all politicians under house detention for protection. Greece should take to court the US financiers etc and demand reparations for the harm done to its people.
Joe Vella
Feb 10th, 23:08
Joseph Ellul, Greece problems started with by living beyond their means. Malta could have very well ended like Greece if the Economic situation of the 1980's persisted.. Socialists around the world have to learn that there is a limit a far as how much one can milk a Cow. To distriburte wealth, one have to know how to create it.
mark borg
Feb 10th, 22:04
A far cry from the picture drawn and shown to some gullible people to vote for the EU ! Just a few years back!
Now they are telling us, thank god our country is not in the state of three fourths ot the rest of EU !! THEY WHY THE HELL HAVE YOU TIED US WITH THESE BUST COUNTRIES!!!!!
Joseph Borg
Feb 10th, 20:15
The Federation of Greek Police have accused EU/IMF officials, in a formal letter, of “…blackmail, covertly abolishing or eroding democracy and national sovereignty”.
http://www.prisonplanet.com/greek-police-threaten-imf-arrests-due-to-austerity-demands.html
Joe Xuereb
Feb 10th, 18:16
I am out of this one as I do not understand money as long as I don't have to ask for a loan. Oh Greece, Greece! where are the days of my youth, backpacking to your furthest corners, struggling with your complex language but finally getting my tongue round it something wicked, mastering it even if in the most shameful places - ah! Monastiraki, mon amour! - and scratching my head over your now defunct drachma. Such sweet, sweet memories now turned sour, my lovely!
Whatever the cause of all this, I can vouch for the Greek people. A more soulful lot is difficult to come across.
Joseph Borg
Feb 10th, 17:43
Nahseb xi hadd hu responsabli ta dan il falliment fil Gregja.
Lanqas mhu sew li l-poplu jkollu jhallas qares ghal min kien responsabli tal falliment.
Ghandi feelings li din is sena mhix ser tintemm b'wicc il gid.
Id dollaru qied jikkolassa , l-ewro qied agunija, arab uprising, Iran nuke programme,
relations between US and Russia is detoriating, Israel want to attack Iran etc etc.
Who are causing these to happen are always on the winning side . We are the victims.
Joseph Camilleri
Feb 10th, 21:54
Sur Borg, nahseb ma tafx kollox dwar il Grecja... Kemm nighd din biss... Dawk in nies li qed jipprotestaw QATT ma hallsu income tax bhal ma nhallsu ahna meta nircievu l'paga taghna... Barra minn hekk kumpanijji qatt ma hallsu centezmu taxxa lil gvern...
Issa ara x'gara... Zewg kellmiet ghandi ghalijhom... hallijhom ha jiehdu. Ghal dawn it tip ta nies m'ghandix percentagg ta dispjacir ghax issa la darba dahhlu il mizuri ta awsterita qed jiddejqu... Mela allura ahna hawn Malta ilna nighxu fl'awsterita mill 1998 meta Malta regget fethet in negozzjati mal EU... U meta nighd awsterita nfisser li ghax ghalina normali li nhallsu it-taxxi maghmula mill gvernijiet sabiex in nies tieghu igawdu u jighxu hajja ahjar ghax fl'ahhar mill ahhar xi hin jew iehor it taxxa li nhallsu nehduwa lura, dawn in nies, jridu jgawdu xorta bla ma jhallsu taxxi.
Hekk sew?
Joseph Borg
Feb 10th, 23:13
@Joseph Camilleri
Jekk jien ma nafx kollox dwar il Gregja nahseb int iktar minni ma taf xejn.
Ahna inhallsu it taxxa ghax ghadna il ligi tat taxxa u l-gvern jara lit taxxi qedin jingabru.
Issa nahseb li anke il Gregja ghandhom il ligi tax taxxa imma min kien responsabli li jigborom
baqa jhares biss u allura int taghti tort lill haddiema biss li ma kienux ihalsu taxxa. Ma nahsibx li il punt tieghek hu validu li wassal il pajjiz kif jinsab. Perswaz li kien hemm intricci barranin li ghal skopijiet malizjuzi ittradew lill pajjiz biex gabuh fl-istat li hu illum
stephen koludrovic
Feb 10th, 17:41
It would help if they sold one of their islands to some of our property developers. It could be a win win situation,both for them and for us.
david debattista
Feb 10th, 18:17
Now that's what I call............ a man of vision !
Philip Pryce
Feb 10th, 19:20
Yes, they could turn it into a Greek Sliema. Lots of lovely high rise, empty apartments!!
M Borg
Feb 10th, 20:17
Why do you always have to put Sliema into the picture ?
It would serve us Sliema residents well if all those who dislike Sliema and its residents keep away.
That way our parking slots will be free of all the cars that do not belong to the locals
Joseph Borg
Feb 10th, 17:37
Nahseb xi hadd hu responsabli ta dan il falliment fil Gregja.
Lanqas mhu sew li l-poplu jkollu jhallas qares ghal min kien responsabli tal falliment.
Ghandi feelings li din is sena mhix ser tintemm b'wicc il gid.
Id dollaru qied jikkolassa , l-ewro qied agunija, arab uprising, Iran nuke programme,
relations between US and Russia is detoriating, Israel want to attack Iran etc etc.
Who are causing these to happen are always on the winning side . We are the victims.
Shaun Anthony Camilleri
Feb 10th, 15:49
They joined the Euro with false accounting and they borrowwd more money than they could ever pay. Now they want the rest of us to pay their debt. Please leave the Euro the Drachma was good for you as it reflected your concept of yourselves in this world.
john gittos
Feb 11th, 00:31
You are not just describing Greece but you are describing everything that is wrong with the EU , a third of the countries within the EU would never have been accepted if the original criteria for entry had have been observed and that I am afraid would have included Malta , you cannot align the economies of the likes of Cyprus , Malta and so on , with that of Germany and France and that is what they have tried to do , it cannot be an even playing field and that is why the Euro is in such a mess , its not if the Euro is scrapped but it is when . Now we have a situation where the budget of Greece is being determined by the German chancellor , he who pays the piper decides the tune . Mr Camilleri do not wish ill on our Greek colleagues because that fate could happen to about eight other countries within the EU if things get any worse .
Rocco Camilleri
Feb 10th, 15:34
It's useless that the EU impose heavy austerity measures on the Greece people if they are not able to shoulder them. The unemployment is so high that this continues to make the work difficult because less income to the government taxes is made, but even has to deploy large sums of money in unemployment benefits. Probably this is going to drug us and other EU countries in a large pit hole which will be difficult for most to emerge from. Pray God that this does not happens.
stephen koludrovic
Feb 10th, 14:45
I wonder, Have the Greeks ever considered doing a day's work for all the money that they have been given by the EU?
Leonard Brincat
Feb 10th, 17:45
Nassigurak li qed ippattu qares ta l-izbalji li ghamlu il politikanti. Ohti tghix il grecja u ghada kif irceviet kont ta 2000 euro biex thallsu bhala parti mil mizuri li qed jiehu il pajjiz. Ara kif gabu lil poplu dawn mhux ta b'xejn qed jipprotestaw.
Joseph N. Attard
Feb 10th, 14:08
There's a lesson for us Maltese somewhere there. But as ever, it will be viewed from an angle depending on one's politics. Only, at the end of the day, the whole population of any Nation is in it alltogether. Ask the Greeks.
Peter Murray
Feb 10th, 09:14
This is death by a million cuts and how will more and more cuts solve the problem as opposed to exacerbate them?The NEDS( NON ELECTED DICTATORS) in the EU Ivory Tower can demand all they may but the Greek people cannot pay.This si heading for all-out anarchy and possibly revolution in Greece and remember the Greeks are not immune to a coup d'etat by the armed forces-as had happened there in the recent past.The only viable cut is to cut Greece loose as what,good in the long-run ,will yet another loan achieve?
N Zahra
Feb 10th, 12:54
What Ivory Tower? That money is yours and mine so the 'NEDS' are perfectly right to be very careful not to let good money chase bad. Cutting Greece loose is the right way to go though... All this hype about the markets etc... The markets have given up on Greece a long time ago...
Mark Seychell
Feb 10th, 14:45
Non elected dictators? The European Council is made up of nationally elected representatives sitting on Cabinets, in this case Prime Ministers and Finance Ministers.
It is only the Commission which is not elected by the people (still has to be approved by Parliament, which is elected by the people), and the Commission have very much taken a back seat in this crisis, in favour of the Council. I love it how most eurosceptics talk through lack of knowledge.
But, I agree, the only way forward is to kick Greece out of the Eurozone. We cannot keep them in the Eurozone and not help them, otherwise they will drag the rest of the zone down with them. Help them or kick them out
Trevor Lorenzo Mizzi
Feb 10th, 15:56
The only NEDS the Greeks need are a couple of Ned Kelly type characters to take them out of the EU and restore the drachma as their national currency.
Franco Farrugia
Feb 10th, 19:52
@ Trevor Lorenzo Mizzi: 'restore the drachma as their national currency.'
Yeah - that's right. And make it worth a pittance? Eh? Give it an extremely low value? Is that your answer? Is that how you would solve matters? Putting everything under the carpet, as if it never was?
N Zahra
Feb 10th, 21:37
@ Franco Farrugia - if you'd like to help directly, you can buy some Greek bonds. There are many for sale paying handsome yields...
Trevor Lorenzo Mizzi
Feb 10th, 21:39
@ Franco Farrugia,
It is their only way out Franco.
That means their drachma actually reflects their GDP and it will be worth a pittance because their net worth is worth a pittance. Improve their GDP and the drachma will go up in value and also the Greek government can be able to float government bonds internationally because as it is now no one will touch their Government bonds.
The Greeks are between a rock and a hard place and something has got to give because they cannot be kept in a perpetual stalemate.
Trevor Lorenzo Mizzi
Feb 10th, 21:58
@ Franco Farrugia,
It is their only way out Franco.
That means their drachma actually reflects their GDP and it will be worth a pittance because their net worth is worth a pittance. Improve their GDP and the drachma will go up in value and also the Greek government can be able to float government bonds internationally because as it is now no one will touch their Government bonds.
The Greeks are between a rock and a hard place and something has got to give because they cannot be kept in a perpetual stalemate.