Greece gets wake-up call: coming week could seal its fate

[webfact]

Greece gets wake-up call: coming week could seal its fate
RAF CASERT, Associated Press
LORNE COOK, Associated Press

BRUSSELS (AP) — International creditors sent Greek Prime Minister Alexis Tsipras home from a summit Thursday with a clear message: swiftly tone down your demands in the bailout talks over the next week or face financial ruin.

The International Monetary Fund took the toughest stance, saying it was bringing its negotiators back to Washington as there had been no sign of compromise.

"There has been no progress in narrowing these differences," IMF spokesman Gerry Rice said Thursday. "There are major differences between us in most key areas."

The creditors — the IMF and Greece's fellow eurozone states — want the country to commit to new economic reforms before they pay out another 7.2 billion euros ($8.2 billion). Athens needs the money to repay debts worth 1.6 billion euros at the end of the month and later this summer.

European Union President Donald Tusk earlier warned "there is no more time for gambling" and that next week's meeting of the 19 eurozone finance ministers in Luxembourg should be the make-or-break session in sealing Athens' fate.

Cutting through days of dense diplomatic talk about the state of negotiations, Tusk said it was time for Tsipras to stop biding for time with unworkable demands.

"The Greek government has to be, I think, a little bit more realistic," Tusk said.

The comments dented optimism created earlier in the day. Stock markets across Europe that had earlier rallied lost much of their gains. The Greek market closed up by a hefty 8.1 percent before the IMF's tough statement.

Despite the bluster, the financial and economic stakes are such that cutting Greece loose from the eurozone or the global financial network seems improbable. Failing a deal, there have been fears that Greece could drop out of the euro, a move that would create huge uncertainty for Europe and global markets.

"We remain engaged," Rice said. "The IMF doesn't leave the table."

For months, Greece has wrangled with its creditors over the release of the bailout loans.

The eurozone's finance ministers, commonly known as the eurogroup, meet in Luxembourg June 18-19, in a meeting that Tusk says "should be decisive."

European Commission President Jean-Claude Juncker said a two-hour meeting with Tsipras on Thursday had been "important, interesting and friendly" but he reported no breakthrough.

The creditors have made clear that Greece must improve its offer of reforms. Sticking points appear to center on pensions and changes to labor market rules.

The IMF's Rice noted that pensions and wages account for 80 percent of Greece's primary spending. "It's not possible for Greece to achieve targets without reforms" especially in pensions, he said. Greece spends an amount equal to 10 percent of its economic output on pensions, compared to an average 2.5 percent across the eurozone.

Greece also needs to overhaul its tax system. "The policy of increasing already-high rates on a low tax base again is not sustainable. It is critical to significantly broaden the tax base," Rice said. He noted Greece has Europe's biggest gap in value-added taxes owed and VAT collected, largely because the system is so complex. Simplifying the VAT tax could increase tax collections by 1 percent of gross domestic product.

Over the past few weeks there has been increasing gloom surrounding the talks.

The head of Germany's central bank, Jens Weidmann, said time is running out for a deal and the risk of insolvency is increasing by the day.

"The contagion effects of such a scenario are certainly better contained than they were in the past, though they should not be underestimated," he said in a speech in London. "But the main losers in that scenario would be Greece and the Greek people."

Amid the uncertainty, Greece's economy has slipped back into recession, while figures released Thursday showed that unemployment increased in the first quarter, reaching 26.6 percent — compared to 26.1 percent at the end of last year.

And deputy health minister, Andreas Xanthos, warned that Greece's under-staffed, under-funded public health system faces "very serious problems" at the end of the year unless a bailout deal can be struck soon.
___

Paul Wiseman in Washington, Nicholas Paphitis in Athens and Geir Moulson in Berlin contributed to this report.


-- (c) Associated Press 2015-06-12

[deecee10]

Public servants retiring on pensions at forty years of age in a country where tax avoidance is a national way of life, is crazy.

[IamNoone88]

I don't understand the issue. Why lend Billions more to them, so they can effectively pay you back what they already owe and still retain the same debt levels - which they will not be able to pay back anytime soon. The Greek attitude is unbelievable. The sooner they exit and stop being a burden to other states the better. They need to sort out their own issues - which are many and not make their own poorly managed problems other nations problems.

[BuaBS]

""Coming week could seal its fate""

We've been hearing that nearly every month of the last 3 years.....

[ggold]

Good on Greece, all the EU countries cooked the books to Join the Euro, Greece rightly so is asking for more time, But the Fuhrer (Germany) doesn't like this idea. So they threaten Greece with expulsion from the Euro.

I think the truth is Greece can't pay back this debt even if they had the leeway to move. So does it really matter to Greece if they are in or out of the Euro. IMO the rest of the EU, need to wake up, or the Euro will collapse. And if Greece leaves, who else will leave, Spain, Portugal, Italy are next in line debt wise.

I really hope we are seeing the beginning of the end of the Euro. Time for national governments to take control of the EU and not have the EU control national governments.

[Srikcir]

"The Greek government has to be, I think, a little bit more realistic,"

That's not how Tsipras came to power and that's not how he will stay in power.

[BuaBS]

Good on Greece, all the EU countries cooked the books to Join the Euro, Greece rightly so is asking for more time, But the Fuhrer (Germany) doesn't like this idea. So they threaten Greece with expulsion from the Euro.

I think the truth is Greece can't pay back this debt even if they had the leeway to move. So does it really matter to Greece if they are in or out of the Euro. IMO the rest of the EU, need to wake up, or the Euro will collapse. And if Greece leaves, who else will leave, Spain, Portugal, Italy are next in line debt wise.

I really hope we are seeing the beginning of the end of the Euro. Time for national governments to take control of the EU and not have the EU control national governments.

I really hope we are seeing the beginning of the end of the Euro. Time for national governments to take control of the THEIR OWN COUNTRY and not have the EU control national governments.

There , I fixed it for you.

[GoodThaiGirl]

greeks leaving will not happen merkel and her corrupt friends will do anything to keep the idea going for a bit longer..goldman sachs..ring any bells people..it would be a blessing in disguise to leave they will be fine in the end..hope its the uk next to leave..if greece goes..but the parasite cameron wants in at all costs..

[ggold]

"The Greek government has to be, I think, a little bit more realistic,"

That's not how Tsipras came to power and that's not how he will stay in power.

He is doing what he was elected to do, He won on an anti austerity policy. The IMF and EU want him to reverse his policies, or did you miss that? They shoud all have been more realistic when they created the Euro. Now we have the big boy telling the little boy to pay up or else, So much for unity between EU nations?

It would not surprise me if Tsipras has a deal with the Russians on exiting the Euro. After Greece, Spain Portugal and maybe Italy! Maybe Merkel wants the Euro to collapse, Hope Germany has deep pockets!!!

[ggold]

greeks leaving will not happen merkel and her corrupt friends will do anything to keep the idea going for a bit longer..goldman sachs..ring any bells people..it would be a blessing in disguise to leave they will be fine in the end..hope its the uk next to leave..if greece goes..but the parasite cameron wants in at all costs..

There is a lot of brinkmanship going on, The IMF and Germany are waiting for Greece to blink, Greece is waiting for the IMF and Germany to blink, He who blinks first loses the game!

But it does look as if a perfect storm is brewing, If Greece do leave, it will certainly have an impact not just on the currency but on the other weaker EU countries, They may decide if Greece gets favours why don't we? Because Germany is going to have to do Greece a BIG favour!

Now with the UK threatening to leave the EU, as long as Cameron doesn't fudge it, hopefully his own anti EU backbenchers will not allow that to happen, A storm is developing on the horizon.

I don't see Germany or France letting go of the reigns, But I don't see Germany willing to put its hands in its pockets, Not for Greece, Spain or Portugal.

It is their own Arrogance that will be their downfall, Both Germany and France treat others as if they own them.

Two World Wars and a world cup! lol, the UK should get out out out NOW.

Edited June 12, 2015 by ggold

[hawker9000]

Public servants retiring on pensions at forty years of age in a country where tax avoidance is a national way of life, is crazy.

Greeks categorically reject austerity after decades of foolish indulgence and populist madness. Fine. Let 'em suffer. Everyone else, watch and learn.

[ourmanflint]

Europe will be fine, but Greece has to go. They lied to get in so they could get their greedy hands on large amounts of euro dosh to fritter away drinking wine and smashing plates. Let them cosy up to Russia if they want to. Putin will be a good friend to Greece I'm sure!

[hawker9000]

Europe will be fine, but Greece has to go. They lied to get in so they could get their greedy hands on large amounts of euro dosh to fritter away drinking wine and smashing plates. Let them cosy up to Russia if they want to. Putin will be a good friend to Greece I'm sure!

Lol. What a pair. Greece & Russia. Two economic prodigies.

[Basil B]

Problem with Greece is it is a idle free loader, not Greeks as individuals but Greece as a nation.

The EU and IMF have told Greece to sort out its problems of public sector spending and getting tax from those who pay little or nothing but are in a position to pay.

Basically Greece has far too many civil servants who retire far too early on very generous pensions, and a lot of tax avoiders at a great cost to the state.

I agree with Merkle on this one, Greece has to do something to reduce its payments deficit, the problem is persuading Greece the EU is not the Bank of Mum&Papa, or it and the IMF will foreclose on it.

Edited June 12, 2015 by Basil B

[Aforek]

When Greece is out ( the best solution for Europe and Euro ( long live for Euro ! ), I hope that Goldman Sachs will pay billions of Euros

[h90]

Public servants retiring on pensions at forty years of age in a country where tax avoidance is a national way of life, is crazy.

And there are extreme many of them.

But on the other hand all the money >90% they got from the European Union had to be used to pay back bank credits.

So we Europeans didn't lend Greece the money. We took over the debt from the banks. And it was expected that we never get back the money. Just it should need a few years till other politicians get the troubles. It was totally corrupt.

[waxon]

"The Greek government has to be, I think, a little bit more realistic,"

That's not how Tsipras came to power and that's not how he will stay in power.

He is doing what he was elected to do, He won on an anti austerity policy. The IMF and EU want him to reverse his policies, or did you miss that? They shoud all have been more realistic when they created the Euro. Now we have the big boy telling the little boy to pay up or else, So much for unity between EU nations?

It would not surprise me if Tsipras has a deal with the Russians on exiting the Euro. After Greece, Spain Portugal and maybe Italy! Maybe Merkel wants the Euro to collapse, Hope Germany has deep pockets!!!

Russia likely but they are struggling with their own financial issues. But what if it is China? The idea of China financially bankrolling a former EU country is scary. But they could easily do so and the benefits for them are quite high.

[waxon]

Europe will be fine, but Greece has to go. They lied to get in so they could get their greedy hands on large amounts of euro dosh to fritter away drinking wine and smashing plates. Let them cosy up to Russia if they want to. Putin will be a good friend to Greece I'm sure!

Greece is the "used car dealer" of Europe. They made their rundown, worn out, non-functioning country "acceptable" to be included in the EU. The EU, greedy as they are, want to buy knowing that they were buying a lemon. Sort of serves both right for the current situation.

But it will not be Russia to come to the Greeks aid. It will be the Chinese. They are much better positioned to provide financial aid. Russia is bankrupt. They are fighting a war in the Ukraine. Oil prices are still at historic lows so there is no income. China, while not doing as well previously, still has deep foreign currency reserves. They can easily prop up a country like Greece.

Imagine, if you will, a European country as the puppet of China.

[saakura]

Problem with Greece is it is a idle free loader, not Greeks as individuals but Greece as a nation.

But surely Greeks as individuals make up Greece as a nation?

[Ghostnigel]

I don't understand the issue. Why lend Billions more to them, so they can effectively pay you back what they already owe and still retain the same debt levels - which they will not be able to pay back anytime soon. The Greek attitude is unbelievable. The sooner they exit and stop being a burden to other states the better. They need to sort out their own issues - which are many and not make their own poorly managed problems other nations problems.

So it looks like they will all be 'jumping ship' to other EU countries before the shit hits the fan....and then put a burden on all the other countries they go to.

[Ghostnigel]

Good on Greece, all the EU countries cooked the books to Join the Euro, Greece rightly so is asking for more time, But the Fuhrer (Germany) doesn't like this idea. So they threaten Greece with expulsion from the Euro.

I think the truth is Greece can't pay back this debt even if they had the leeway to move. So does it really matter to Greece if they are in or out of the Euro. IMO the rest of the EU, need to wake up, or the Euro will collapse. And if Greece leaves, who else will leave, Spain, Portugal, Italy are next in line debt wise.

I really hope we are seeing the beginning of the end of the Euro. Time for national governments to take control of the EU and not have the EU control national governments.

Has anyone else noticed how Angela Merkel struts around like she owns europe? When there's a photo shoot, she is always the one that gets herself in the middle of the gang, with her little plebs around her....so annoying. Why for once can't she be the the one at the back, craning her neck over someone's shoulder to get her mug in the shot...lol

[hawker9000]

Problem with Greece is it is a idle free loader, not Greeks as individuals but Greece as a nation.

The EU and IMF have told Greece to sort out its problems of public sector spending and getting tax from those who pay little or nothing but are in a position to pay.

Basically Greece has far too many civil servants who retire far too early on very generous pensions, and a lot of tax avoiders at a great cost to the state.

I agree with Merkle on this one, Greece has to do something to reduce its payments deficit, the problem is persuading Greece the EU is not the Bank of Mum&Papa, or it and the IMF will foreclose on it.

No, Greeks as individuals. Individuals have been electing these governments. Individuals have been the recipients and beneficiaries of these absurdly, unsustainably generous benefits. And individuals are now the ones screaming bloody murder at mere mention of austerity.

[Scott]

A post with an aberrant spelling of a politician's name has been removed. Such comments are off-topic and inflammatory.