The world now waits to see what the Troika has to say about Greece, at this stage it is anyone’s guess:
Greece said in a conference call tonight between Minister of Finance Evangelos Venizelos and high representatives of the European Central Bank, European Commission and International Monetary Fund “a productive and substantive discussion took place.”
Tomorrow morning, the teams of technical experts already in Athens “will further elaborate on some data and the conference call will be repeated tomorrow at the same time,” the Greek Finance Ministry said.
I must admit I am impressed how powerful these European phones are. Every time it is reported that someone has used one the DOW jumps 100 points.
Seriously though…. We know Greece will officially run out of money in October so there is little time for compromises. The Greek government seems to be coming increasingly desperate in its attempts to stave off the inevitable:
Greece’s government held an emergency cabinet meeting Sunday to plan new measures to bring its unruly budget deficit into line, after heated warnings from the other euro-zone nations over the weekend that its efforts were insufficient and might threaten the delivery of future aid.
During a late-evening break in the meeting, Finance Minister Evangelos Venizelos pledged that Greece would adopt a raft of new budget-cutting measures endorsed by the “troika” of European Commission, International Monetary Fund and European Central Bank inspectors overseeing the country’s bailout.
But there were signs of swelling exasperation, and with it a larger risk that Greece could descend into a messy debt default. Mr. Venizelos said Greece was being “threatened and humiliated” by the troika’s continued demands for cuts, which include mass firings of public workers.
In a fiery statement released after the meeting, Mr. Venizelos lashed out at his political opponents—but also, unusually, at the euro-zone countries that are funding Greece and administering its bailout. “We should not be the scapegoat or the easy excuse that will be used by European and international institutions in order to hide their own lack of competence to manage the crisis,” he said.
If it is any comfort to the Greeks they aren’t alone. Last night Portugal took the next step, straight out of the IMF handbook:
Portugal will begin selling state- owned electricity, gas and oil companies by mid-November, Prime Minister Pedro Passos Coelho said in an interview published in Le Figaro newspaper.
The privatization drive that is part of the country’s plan to wean itself off aid from the European Union and International Monetary Fund, should be completed by the end of next year and raise 7 billion euros, Coelho said, according to the newspaper.
Coelho also said that Portugal will meet its targets of reducing the budget deficit to 5.9 percent of gross domestic product this year, and achieving a surplus before interest charges in 2012, according to Le Figaro.
You’d probably believe it if you hadn’t heard the same thing so many times before.
I also noted last night that a member of the Executive Board of the ECB, José Manuel González-Páramo, gave a “lessons learned” speech for Europe. I thought the following paragraph was a good round up of how Europe got itself into this position and also what to expect from the ECB in response over the next few years:
Indeed, the current dire situation is the result of the lack of effective and enforceable rules, i.e. of the lack of a credible fiscal commitment. Before the crisis, after initial efforts to consolidate public finances, some governments have enjoyed increasingly feeble external pressures to put their own house in order, thanks mainly to favourable global economic conditions, and have reverted to unsustainable fiscal stances. Others have turned a blind eye on the domestic economic imbalances that were building up, mainly as a consequence of abundant credit, and enjoyed the delusion of sustainable growth. As the crisis unfolded, all those vulnerabilities materialised calling for supranational interventions. As I have mentioned earlier, some of these interventions involved the ECB, as in the case of (sterilized) purchases of sovereign bonds in the secondary market. These type of unconventional interventions can only be seen as exceptional measures which would not have been necessary in the presence of appropriate institutional arrangements and credible rules for fiscal authorities. In designing these rules and institutions, European legislators will find vast insights in the existing economic literature.
I recommend you read the full speech if you have the time.
In other news Italy downgraded its growth forecasts, Merkel lost yet another election and UBS announced that its rogue trading loss was actually 15% bigger. But none of that matters because today the world only cares what happens to Greece.