Another satirical clip from Clarke and Dawe of ABC in Australia, this time on the crisis in Greece and understanding Grexit. Interesting use of the word ‘Grexitentialism’.
Another report from Paul Mason in Greece where he explains the third bailout package. He also meets a doctor whose hospital has had its budget slashed from €19 million to €7 million and who says the deal is ‘a crime against humanity’.
A HT to colleague David Parr for this piece from The Sydney Morning Herald. Apple are currently worth $US194 billion in cash and securities which equates to €178 billion. This means that Apple have enough to cover the €86 billion Greek bailout deal struck earlier in the week twice over — with a cool €6 billion still left over to maybe buy an island or a port. If Apple were a country, it’d be the 55th richest country in the world.
According to the World Bank’s most recent data on national wealth, Apple is now worth more than the following countries:
Belarus – worth $467 billion
El Salvadore – worth $364 billion
Guatemala – worth $548 billion
Iceland – worth – $268 billlion
Jamaica – worth $211 billion
Kenya – worth $366 billion
Luxembourg – worth $419 billion
Mongolia – worth $34 billion
Nepal – worth $151 billion
Nicaragua – worth $101 billion
Sri Lanka – worth $424 billion
Tunisia – worth $475 billion
The IMF has stated that Greece needs far more debt relief than European governments have been willing to contemplate so far, as fractious parties in Athens prepared to vote on a sweeping austerity package demanded by their lenders. Paul Mason from Channel 4 in the UK explains the options very well in the video below.
When Greece went through euro-zone entry exam in 2000 it is said that it cheated on its deficit figures. Greece was able to enter the currency bloc after claiming its deficit was less than 1% of GDP, well within the bloc’s 3% threshold. EU reports have since revealed Greece’s budget hasn’t been within the 3% limit a single year since its accession. Below is a video from RealNews which explains the background to the present crisis. Worth a look
The Greeks vote on Sunday whether to accept a June 25 offer from the International Monetary Fund, European Union and the European Central Bank (collectively known as “the Troika”) to provide Greece with desperately needed bailout money. In exchange, the Troika demanded that Greece implement a list of tax increases, spending cuts, and economic reforms. If there is a no vote then there could be the following scenario.
* Overnight the Greek authorities would have to circulate a new currency (most likely the Drachma)
* The Drachma would depreciate against the Euro – according to some analysts this would increase Greek debt from the current level of 175% to 230% of GDP.
* Interest rates would increase causing businesses to go bankrupt – some have indicated that this would be around 50% of businesses
* The risk of a run on the banks would mean that the monetary authorities would have to introduce controls on money flows – especially abroad.
* Social unrest would no doubt escalate in the short-term and many Greeks will leave the country (if they can afford it).
* The Greek government would find it difficult to raise funds from overseas as investors become more prudent and see Greek bonds as an even bigger risk than before.
* A devaluation will would do nothing to change Greece’s structural problems.
* The euro will lose credibility in the long run and its weaker members will be exposed to bank runs which will ultimately extinguish any chance of a recovery.
* A weaker currency would make Greek exports a lot cheaper and may resurrect the textile industry that collapsed a few years ago.
* However the biggest benefit would be the tourism industry where holidays would become very cheap relative to similar destinations in Europe.
* The Greek government could keep printing money to finance the promises made Alexis Tsipras’ government – maybe an inflationary threat.
* Interest rates would no longer be determined by the ECB and a more expansionary monetary policy could be implemented by Greek authorities to tackle the downturn.
We’ve been here before as Jeff Sachs mentioned in his piece from Project Syndicate.
Almost a century ago, at World War I’s end, John Maynard Keynes offered a warning that holds great relevance today. Then, as now, creditor countries (mainly the US) were demanding that deeply indebted countries make good on their debts. Keynes knew that a tragedy was in the making.
“Will the discontented peoples of Europe be willing for a generation to come so to order their lives that an appreciable part of their daily produce may be available to meet a foreign payment?” he asked in The Economic Consequences of the Peace. “In short, I do not believe that any of these tributes will continue to be paid, at the best, for more than a few years.”
The Greek government is right to have drawn the line. It has a responsibility to its citizens. The real choice, after all, lies not with Greece, but with Europe.