JANE BURGERMEISTER REPORT: ‘Eurozone increases pressure on Greek parliament in make or break week for eurozone’

Eurozone increases pressure on Greek parliament in make or break week for eurozone

Ahead of a key confidence vote on Greek Prime Minister Giorgos Papandreou in the parliament on Tuesday, eurozone officials have increased the pressure on Greece to agree to sweeping privatisations and additional fiscal austerity measures, arguing there is no option for Greek lawmakers except to agree to the eurozone measures or face bankruptcy.

Of course, there is an option. It is called a managed insolvency and should have been implemented a year ago given the evidence that Greece is insolvent. The German government buried a recommendation for a managed insolvency mechanism by its experts in autumn 2010.

Also, a US senate investigation, in the meantime, has concluded that the  financial crisis and Lehman debacle were avoidable. Equally avoidable are any bank crashes in Europe as a result of a Greek default, especially given the fact the tax payers and ECB are already by the far the biggest creditors of Greek, Irish and Portuguese government and bank debt.

Econmists say Greece should default, nationalise its banks and reintroduce the Drachma and reform their public sector at their own pace. A disorderly default now is far better than more fiscal austerity and hasty privatisations, which will only sink Greece deeper into ruinous debt.

More from the BBC on the make or break week for the euro with the eurozone officials openly pressuring Greece to continue down a path of economic ruin for the profit of American, German and French banks.

BBC, 20 June 2011

Eurozone finance ministers have postponed their decision on a 12bn euro ($17bn; £10bn) loan to Greece until it introduces further austerity measures.

The ministers said they expected to pay the latest tranche of a 110bn euro EU and IMF aid package by mid-July.

But its release depends on the Greek government surviving a vote of confidence on Tuesday.

Parliament then must also pass 28bn euros worth of new spending cuts and economic reforms.

Greeks have already seen wages and pensions cut and there have been regular, mass demonstrations – even riots – in protest.

The latest public opposition to the cutbacks involves Greek workers at the state-owned electricity company, who are on the first day of a 48-hour strike.

At a press conference on Monday, Jean-Claude Juncker, Luxembourg’s prime minister who chairs the meetings of the 17 eurozone finance ministers, said he felt for the Greeks: “This is something that affects me greatly. You look at the reaction of the people on the streets. You see they are rebelling. I understand that and I’m touched by that.”

Letting Greece default in a disorderly, uncontrolled way would probably be a good deal worse for the global economy than Lehman’s collapse.”

http://www.bbc.co.uk/news/world-europe-13830466