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Would You Put Up With What is Being Asked of the Greek People?
By Tony Bonsignore
May 07, 2010 "City Wire" -- Want to know exactly why public anger in Greece is running at such explosive levels? Then take a look at the austerity measures currently being debated by the Greek parliament.
The BBC reports that as part of the IMF/ EU bailout Greek leaders are proposing the following measures:
* Public sector pay to be frozen till 2014;
* Public sector salary bonuses – equivalent to two months’ extra pay – to be scrapped or capped;
* Public sector allowances to be cut by 20%;
* State pensions to be frozen or cut, with the contribution period up from 37 to 40 years;
* The average retirement age raised from 61 to 63, and early retirement restricted;
* VAT to be increased from 19% to 23%;
* Taxes on fuel, alcohol and tobacco raised to 10%;
* A new one-off tax on profits to be introduced, plus new gambling, property and green taxes.
On their own any one of these measures would probably be enough to prompt significant political disquiet; taken together they represent a catastrophic setback to the financial aspirations of the average Greek.
It certainly wasn’t what the Greek population voted for when they entered the EU in 1981 and adopted the single currency two decades later.
The country’s government argues that it has no choice it if is to avoid an even greater catastrophe.
‘We are all responsible so that it does not take the step into the void,’ prime minister Karolos Papoulias argues, warning that the country is on the ‘brink of the abyss.’
Others, though, argue that Greece is being held to ransom by the EU and the IMF for ideological reasons, and that there are other more equitable options available.
Leave the single currency, for example, or nationalise Greece’s banks.
Or even default or restructure - and leave those German and French banks with massive holdings of Greek debt to deal with the consequences of their own investment folly.
More broadly, protestors argue that they are being made to pay for a crisis they did not cause, and which wealthy speculators are still profiting from.
That is inherently unfair, they say, and it must not be allowed to pass.
It all adds up to a huge dilemma for the Greek government.
Here in the UK on general election day, meanwhile, the main political parties are digesting yesterday's news from the European Commission that our economy now has the biggest budget deficit in the 27-nation EU.
The UK, of course, with its own currency, has many more policy options that Greece, and its economy is not nearly in the same mess as Greece's. Not yet, anyway.
'The first thing for the new government to do is to agree on a convincing, ambitious programme of fiscal consolidation in order to start to reduce the very high deficit and stabilise the high debt level of the UK,' said EU commissioner Ollie Rehn.
'That's by far the first and foremost challenge of the new government. I trust whatever the colour of the government, I hope it will take this measure.'
Today's Money Blog question, then, is one which goes to the heart of the political crisis which is gripping the Eurozone at the moment; it might even be a question asked of us by the next government, whatever hue they might be.
Put simply: would you put up with what is being asked of the Greek people?
Thoughts please.
By Tony Bonsignore
May 07, 2010 "City Wire" -- Want to know exactly why public anger in Greece is running at such explosive levels? Then take a look at the austerity measures currently being debated by the Greek parliament.
The BBC reports that as part of the IMF/ EU bailout Greek leaders are proposing the following measures:
* Public sector pay to be frozen till 2014;
* Public sector salary bonuses – equivalent to two months’ extra pay – to be scrapped or capped;
* Public sector allowances to be cut by 20%;
* State pensions to be frozen or cut, with the contribution period up from 37 to 40 years;
* The average retirement age raised from 61 to 63, and early retirement restricted;
* VAT to be increased from 19% to 23%;
* Taxes on fuel, alcohol and tobacco raised to 10%;
* A new one-off tax on profits to be introduced, plus new gambling, property and green taxes.
On their own any one of these measures would probably be enough to prompt significant political disquiet; taken together they represent a catastrophic setback to the financial aspirations of the average Greek.
It certainly wasn’t what the Greek population voted for when they entered the EU in 1981 and adopted the single currency two decades later.
The country’s government argues that it has no choice it if is to avoid an even greater catastrophe.
‘We are all responsible so that it does not take the step into the void,’ prime minister Karolos Papoulias argues, warning that the country is on the ‘brink of the abyss.’
Others, though, argue that Greece is being held to ransom by the EU and the IMF for ideological reasons, and that there are other more equitable options available.
Leave the single currency, for example, or nationalise Greece’s banks.
Or even default or restructure - and leave those German and French banks with massive holdings of Greek debt to deal with the consequences of their own investment folly.
More broadly, protestors argue that they are being made to pay for a crisis they did not cause, and which wealthy speculators are still profiting from.
That is inherently unfair, they say, and it must not be allowed to pass.
It all adds up to a huge dilemma for the Greek government.
Here in the UK on general election day, meanwhile, the main political parties are digesting yesterday's news from the European Commission that our economy now has the biggest budget deficit in the 27-nation EU.
The UK, of course, with its own currency, has many more policy options that Greece, and its economy is not nearly in the same mess as Greece's. Not yet, anyway.
'The first thing for the new government to do is to agree on a convincing, ambitious programme of fiscal consolidation in order to start to reduce the very high deficit and stabilise the high debt level of the UK,' said EU commissioner Ollie Rehn.
'That's by far the first and foremost challenge of the new government. I trust whatever the colour of the government, I hope it will take this measure.'
Today's Money Blog question, then, is one which goes to the heart of the political crisis which is gripping the Eurozone at the moment; it might even be a question asked of us by the next government, whatever hue they might be.
Put simply: would you put up with what is being asked of the Greek people?
Thoughts please.
