Greeks Agree But Euro-zone Wants More

Greece is like a drowning man who is negotiating with his potential saviors. Once they agree to a price, the price goes up.  So it is with the Eurozone and the Greek people.  In the following AP posting, we read the following:

"Investors breathed a sigh of relief that the agreement would allow Greece to get a euro130 billion ($173 billion) bailout package and avoid a bankruptcy next month that could send shockwaves around the financial markets.

But finance ministers from the other 16 eurozone states threw a spanner in the works late Thursday and insisted that Greece had to save an extra euro325 million ($430 million), pass the cuts through a restive parliament and guarantee in writing that they will be implemented even after planned elections in April."

So if Greece agrees to this additional $430 million and other guarantees, will the issue be over? One would hardly think so. It appears they are playing with Greece as a cat plays with a mouse. Is the game-plan a takeover of Greece as we had earlier pontificated? Or are the finance ministers serious.  We hope for the latter but still think the prior may be the plan. All Europeans love to go on "holiday" and wouldn't owning Greece be wonderful!

As far as the cuts go, they are serious.  From the same article:

"Greek Prime Minister Lucas Papademos and heads of the three parties backing his government agreed to deep private sector wage cuts, civil service layoffs, and significant reductions in health, social security and military spending."


Our response is -- wow!  This is serious! We find it interesting they are cutting private sector wages, how does that factor into government spending and debt?  Would not those wages pay the taxes that are needed to pay off the debt, or am I missing something here?

We would have no problem with civil service layoffs or reductions in health spending but social security and military is another issue. How is Greece to defend itself if their military is significantly cut.  Will the Turks  or Italians invade?  Hasn't the Greek people been paying into Social Security for years? How does one justify a cut here?

But rest your mind, it is only Greece and their debt problem is so much worse than ours, right?  Wrong. Their debt to GDP ratio is approximately 160% and  the United States looks like a piker with only 100% .  However, given the spending trajectory we are on, we can reach Greece's lofty level in a year or two.  Then what happens?

We suspect the world will not be as generous to us as they have been to Greece. There are multiple outcomes, none of which will be good for the US.  Definitely salary cuts, layoffs of public sector, major cuts in social programs, social security and medicare would be expected. Strict limitations on health care expenditures under ObamaCare including dollar limits and definite age limits on both sides of the age continuum. Lastly, major increases in all taxes should be expected. Gas taxes would triple or more and income taxes and sales taxes will at least double.

Military spending would be cut by 3/4 effectively removing our ability to be a stabilizing force in the world. Most worldwide commitments would be jettisoned. Spending on new  military hardware would be curtailed and replacement parts would be limited to 1/2 prior levels.

The one area that would have little change would be foreign aid. The one exception would be that all money going to Israel would be eliminated.

No, it will not be a pretty picture. Who is to blame? George W, for sure!

Are we crazy? You tell us.

Conservative (Crazy) Tom

Greek deal limbo weighs on markets

Greek deal limbo weighs on markets, a day after apparent breakthrough

By Pan Pylas, AP Business Writer | Associated Press – 3 hours ago

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  A man looks at an electronic stock board of a securities firm in central Tokyo, Japan, Friday, Feb. 10, 2012. Asian stock markets dropped Friday after Europe's finance ministers demanded more spending cuts from Greece before clearing a €130 billion ($170 billion) bailout to stave off the country's bankruptcy. (AP Photo/Itsuo Inouye)

LONDON (AP) -- Stock markets fell Friday after Greece's crucial international bailout was put on hold by its partners in the 17-nation eurozone, a day after it seemed that the country's tortuous journey to pacifying its creditors had reached a conclusion.

Greek Prime Minister Lucas Papademos and heads of the three parties backing his government agreed to deep private sector wage cuts, civil service layoffs, and significant reductions in health, social security and military spending.

Investors breathed a sigh of relief that the agreement would allow Greece to get a euro130 billion ($173 billion) bailout package and avoid a bankruptcy next month that could send shockwaves around the financial markets.

But finance ministers from the other 16 eurozone states threw a spanner in the works late Thursday and insisted that Greece had to save an extra euro325 million ($430 million), pass the cuts through a restive parliament and guarantee in writing that they will be implemented even after planned elections in April.

The renewed hurdles in the way to the avoidance of a Greek default, which could send shockwaves around the global economy, dented sentiment in the markets Friday. Stocks were down through the Asian session into Europe's, with the benchmark index in Athens 1.6 percent lower by midday local time.

In Europe, the FTSE 100 index of leading British shares was down 0.3 percent at 5,876 while Germany's DAX fell 0.9 percent to 6,728. The CAC-40 in France was 0.6 percent lower at 3,403.

The euro was also subdued, trading 0.1 percent lower at $1.3262.

Wall Street was poised for a lower opening too — Dow futures were down 0.4 percent at 12,785 while the broader Standard & Poor's 500 futures fell 0.6 percent to 1,341.

The prevailing view remains that a deal will be cobbled together but the uncertainty is weighing on stocks. Once all the demands have been fulfilled, the eurozone will give Greece the green light to start implementing a separate bond swap deal with banks and other private investors designed to slice some euro100 billion ($132 billion) off Greece's debt load.

"For all the rhetoric it is probable that a deal will still be reached because the consequences of not doing so would be so damaging for the EU as a whole," said Gary Jenkins, managing director at Swordfish Research.

However, it is possible that the Greek politicians "suffer from negotiating fatigue and decide that putting their people through the austerity measures are not worth it."

Earlier in Asia, Japan's Nikkei 225 index fell 0.6 percent to close at 8,947.17. Hong Kong's Hang Seng lost 1.1 percent to 20,783.86 and South Korea's Kospi dropped 1 percent to 1,993.71.

However, mainland Chinese shares edged higher with the benchmark Shanghai Composite Index gaining 0.1 percent to 2,351.98. The Shenzhen Composite Index also gained 0.5 percent to 903.64.

Oil prices tracked the bulk of equities around the world lower — benchmark oil was down $1.08 to $99.27 per barrel in electronic trading on the New York Mercantile Exchange.