It’s May and in Europe it’s time for another performance of a major annual event. No, not the Eurovision Song Contest, but negotiating another urgent loan for Greece.
As before this equates to a pay day loan to cover the interest on the previous loans. And, as before, it simply increases the total that the nation owes; while putting further austerity pressures on the Greek people. And so state pensions will be cut again; this time by an average of 9%. There will also be more competition in the energy market; so benefiting a few EU corporations and not the Greek people. With few state assets left the Greek government is hoping that the economy will grow enough to see taxes exceed spending by enough to pay the interest bill next year. But even that unlikely event will do nothing to reduce their outstanding debt mountain. The tragedy continues.
So why should the UK be overly concerned? This is an issue for Greece and the Eurozone nations alone … or is it? Well even the casual observer may be able to guess that Greece may simply default – possibly before Britain leaves the EU. A situation where our Eurocrat friends will need to find someone to pass their toxic debt parcel on to. And who may still have that prize mug, Britain, ideally placed to be their captive fool.
So don’t be surprised if that EU bill for Britain’s future commitments gets another massive increase as a result – or just in case it may be needed.
All the news reports about Greece this year have been about migrants. But that does not mean that the nation’s financial position has improved in any way. It has simply become old news.
But just how bad things still are can be judged by today’s news that the International Monetary Fund (IMF) has proposed that the Eurozone accepts major delays in the repayment of Greek bailout loans. Apparently asking that Greece be allowed to defer any loan or interest repayments until 2040 onwards. Considering that the current loans have an interest rate of just 1.5 percent and no one knows where bank interest rates will be in twenty four years time – or what governments will be in power by then – this is a big concession. Almost as bad as writing-off the entire debt.
Certainly the German Finance Minister (Wolfgang Schaeuble) was unimpressed with the plan being reported today as saying that he will not allow that as long as he is finance minister. And it is hard to imagine that any national treasurer would be happy having billions of euros taken out their economy for decades – especially when 2040 is just the start of a forty year repayment period. This, coupled with fading expectations of the approval of more funds for Greece at the meeting of Eurozone finance ministers next week, means that the Greek economy is still in intensive care …
On Sunday the Greek politicians will again be asking for a mandate from the people – for the third time this year. Last time it was a referendum on austerity plans and this time it is a second attempt at national elections.
Considering that the promises made before the January elections were not met, and that the views of the majority in the referendum were not followed, the population must have little faith in this latest round of voting.
Certainly there is little enthusiasm for more voting with the economy still in dire straits, a quarter of workers jobless and strict limits on cash withdrawals at banks. One interviewee said “What’s the point of going back to the voting booth all the time? Nobody trusts anyone anymore … They all lied to us and nothing has changed; it’s still terrible.” So while today’s media headlines concentrate on migrants going through Greece from Syria, Libya, Iraq, etc it is the migration of young Greek professionals – such as doctors and engineers – to Northern Europe that will impact the country even more in the long term.
With recent opinion polls being shown to be seriously flawed no one is prepared to forecast the outcome. Will the mood swing further against austerity or will voters accept that their country is going to be in hock to the EU for decades?
But at least the 86,000 million euro Greek bailout is still in place. However that leaves little room for winning parties to do anything other than follow the terms imposed by its lenders for the next three years. It was also hoped that the bailout agreement last month would mean that the UK could get back its ring-fenced 1,000 million euro emergency loan. But the absence of any announcement by the Chancellor / Treasury suggests that it has disappeared into the black hole. If so then that’s another cut to our public services coming up to pay for it …
Replacement Windows – All of the Windows 8 devices at Grandad Towers have survived enough daily use under Windows 10 to start clearing out the backups of the old versions. Even the tiny Linx tablet came through OK despite a short stage in the upgrade process where the video was totally scrambled.
Greeks Without Gifts – The last of the Eurozone countries agreed to the latest Greek bailout loan late yesterday. So it looks like the 3,400 million of loan repayments that are due by Greece today can go ahead on time. But any scheme that involves borrowing more to pay back earlier loans is bound to fail unless there is either some right-off of the debts or a dramatic increase in government revenue.
DAB Radio Drags On and On – It is over two years since it became obvious that the push to switch to DAB radio would never reach its target market share in time and so trigger the switch-off of FM radio transmissions.
But the UK Government (where Ed Vaizey is still the Minister responsible) continues to be encouraged by the BBC / commercial operators to invest more on our obsolete DAB radio. A process that has been on going for five years or more in the form of the Digital Radio Action Plan. But more importantly was started with BBC trials in 1990 and launched publicly twenty years ago. Clearly technology has moved on – a lot – since then. Today the standard is DAB+ for radio transmissions with wi-fi / bluetooth / 4G being preferred for tablets and smartphones.
Despite these years of DAB radio promotion the latest survey from RAJAR shows that the slow decline in AM/FM listening mirrors a similarly slow growth in DAB listening. Current trends indicate that DAB will not reach the 50% of listening mark until 2026. And Ed Vaizey has even resorted to asking UK manufacturers to stop producing FM radios to try to force the issue. A strategy that fails to address the fact that Mark 1 DAB radio, as implemented in the UK, is so technically inferior to the alternatives. And each year that goes by makes the UK’s official position that much more untenable and out-dated. Despite this the second national DAB channel (the D2 multiplex / ensemble) licence was awarded in March with the objective of being on-air in 2016.
It is now eight weeks on from our first posting and still the Greek tragedy stumbles from deadline to deadline.
Last week the EU stumped up another 7,160 million euro as an emergency loan. And, as predicted, the UK was indeed hit with a large contribution (1,000 million euro) by our friends in Europe – despite not even being part of the eurozone. In return we have been given a ring-fenced promise that it will be repaid. But with the eurozone itself having eighteen countries (plus Greece) that could have paid a bit more it does feel like the UK is paying someone else’s bill.
So what did the Greek people get from this extra 700 euro per person of additional debt? Nothing. It was spent on the payments already due to the European Central Bank (ECB) and the International Monetary Fund (IMF). But there are more funds on the way .. probably.
First the ECB has shipped cash to Greek banks so that they can stay solvent. Next there are discussions aimed at agreeing a 86,000 million euro bailout. This third bailout loan is intended to re-capitalise Greek banks, pay interest on earlier loans and repay some previous debts [source BBC]. So again no direct benefit to the Greek people. It is simply a loan to help service earlier loans – which will next require a 3,400 million euro repayment by 20th August. But there are also proposals to sell off state assets. And if this goes to plan – and achieves their true value – the revenue produced should improve the situation – a little. However even after a fire sale of assets the total Greek debt will still increase; worsening the austerity situation in the country for years, possibly decades, to come. A situation that must be hard to swallow given the two recent democratic votes – first to elect anti-austerity politicians and then against any stricter EU constraints.
But at least the politicians at the top of the EU have a cause to celebrate. They have kept Greece within the euro block and maintained their onward march towards the goal of a mighty European Empire. One as great as that of Charlemagne …
|Today’s Phrase for Future Eurocitizens
|Woher kommen Sie? (vo-hair koh-men zee)
= Where are you from?
|Sponsored by: Lederhosen of Leipzig
We are persisting with these basic German phrases – as a service to those Grandads who stay in the UK after a Yes vote in the 2016/17 European Union Referendum and in response to this warning. Achtung! Anyone not reaching the required standard by the required date vill have their name reported to their local EU Commandant ..
Four weeks on from Grandad’s last posting and the Greek government is still floating more speculative plans aimed at convincing other EU countries (plus the European Central Bank and International Monetary Fund) to lend them more money.
But even if the Greek leaders, against all odds, succeed in getting more new money it will only be used to meet delayed loan repayments and a month or so’s operating costs. The same problem of too little government income will come round again within a matter of weeks. Last month it was the end of May that was the deadline, this month it is the end of June and the EU politicians may soon produce a fudge that moves the deadline to the end of July. But the numbers will never get any better – so something is going to have to give soon.
And Greece has previous form. Since regaining independence in 1830 Greece has been declared bankrupt no less than five times. For most of the past 185 years the country has been in default and unable to raise foreign loans. And many Grandads will remember the handfuls of drachma you could once get for a pound on a Greek holiday – as the books were made to balance by currency devaluation. But despite its non-existent credit rating Greece was voted into the EEC and then allowed to switch its drachmas for euros. A move surely set to become one of the EU’s most expensive membership decisions.
Meanwhile the Greek banks are only avoiding collapse through daily transfers of cash from the ECB. A move that seems in direct contravention of EU rules – considering that the Greek banks are clearly insolvent and should have already gone belly-up; like Lehman Brothers did in the USA in 2008.
But why does this matter to the UK? Firstly because we will all need to decide how to vote on our continued EU membership soon. Secondly any Greek collapse will cost the UK money – even if only indirectly. Thirdly the UK has big debts of its own and needs to take steps to avoid following Greece along a road to default. Finally it provides many here with a touch of Schadenfreude in the daily news.
Today’s basic German phrase (sponsored by Vorsprung durch Technik) – Ich habe Langeweile (ikh hah-buh lahn-guh-vy-luh) = I’m bored.
National debts have moved from the realm of economic theory to being the cause of practical problems in many peoples daily lives. Before the financial markets became so greedy that they passed off junk mortgages as low risk investments, or manipulated interest and exchange rates to maximise bonuses, national debts were not an issue for the general public. When the junk mortgages scam unwound the bailout of the failing banks added huge debts to national accounts, killed off speculative financial schemes and all but stopped further lending.
So now a range of countries are teetering on the edge of debt repayment defaults – with Greece being the one making the current headlines. Yet it remains difficult to grasp how the billions or trillions involved actually compare to our own family finances. So Grandad is trying out one of the simplest, and least adjusted, methods – simply dividing a country’s total debt by its estimated population.
So for Greece if we divide the government’s total debt to its official lenders by the estimated population of Greece we get how much everyone in that country owes to international lenders. And today’s best estimates of the key numbers gives us 242,800,000,000 euros divided by 10,816,286 population which equals debts of 22,448 euros per person. If you think that is a manageable amount then you truly are a born optimist.
But Greece is just the country that is currently in the spotlight. There are others with problems. And it is fortunate that the UK is not one of them. Everything here is fine – or is it? Well yes – it is according to the various national and international official statistics. However if we do the same debt per person calculation based on one of the lower estimates of UK national debt we get – 1,278,200,000,000 pounds divided by 62,000,000 population which equates to 20,616 pounds per person; or 28,713 euros! Hardly a favourable comparison.
So let us all hope that Greece does not decide to default – since someone will loose a huge amount of money. And despite not being in the eurozone the UK will no doubt be hit with a big bill by our friends in Europe.
Today’s basic German phrase (sponsored by EU Über Alles) – Jetzt muss ich gehen (yetz mooss ikh geh-en) = I must go now.
The wooden horse left outside the besieged city of Troy by the ancient Greeks was a trick to gain entry. It resulted in the proverb Beware of Greeks bearing gifts.
But modern day Greece has little left to offer to either its Eurozone creditors or its own population. Despite years of bailouts and national upheaval the country is heading ever closer to economic meltdown.
The Greek population wants to keep the euro – because it is a stable international currency. Unlike the previous drachma that kept falling in value as the government spent too much and printed more money. Powerful politicians in Europe want to keep Greece in the eurozone to become part of a federal Euroreich. But both groups could be disappointed unless things turnaround soon.
Greece’s economic survival is in question again through its short-term financial commitments. These include euro debt repayments of 6,740 million in June; 5,950 million in July and 4,380 million in August (source: BBC). Considering that the Greek government is already struggling – unsuccessfully – to pay its suppliers, civil servants and pensioners the chance of meeting these massive debts is close to zero.
One Greek expert (Prof Kousenidis) is quoted as saying If there is no deal by the end of May Grexit (Greece’s exit from the eurozone) is inevitable. There has to be a deal.
But there are very few days left before this latest crunch deadline. And if no solution is found then the Greek government may decide to go out with a bang – tearing up contracts, nationalising banks and grabbing any remain assets. That would leave Germany with a gift of 56,000 million euros of bad debt and the rest of the world wondering which part of Euroland would be next.
And if things go really badly then the UK’s proposed referendum on EU membership could become academic and overtaken by events well before 2017.