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Greece plunges euro into crisis, France insists on debt deal

01 November 2011, 23:57 CET
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(ATHENS) - Greece plunged the eurozone back into crisis and markets into panic on Tuesday with a shock call for a referendum on a debt rescue package reached just days ago with huge difficulties.

Prime Minister George Papandreou's decision to hold a confidence vote on Friday and then a referendum on the debt deal stunned investors, angered EU leaders and left the eurozone back at square one, with Italy now under pressure just ahead of a high-profile Group of 20 summit in France.

The turmoil saw some European markets slump by 5.0 percent or more and pushed borrowing rates uncomfortably near record levels for Italy, which can ill afford to pay extra to raise funding given its strained finances.

French President Nicolas Sarkozy called Greece to order, insisting, in concert with Germany, that last week's accord was the only way to solve its debt problems.

Noting that the referendum call "surprised all of Europe," Sarkozy said "France reminds everyone that the accord adopted ... unanimously by the 17 member states ... is the sole possible way to resolve Greece's debt problems.

"Giving people a voice is always legitimate but the solidarity of all the eurozone countries is not possible unless each one agrees to measures deemed necessary," Sarkozy said.

France and Germany, he added, took the initiative to hold a meeting Thursday before the opening of the G20 summit in Cannes, of all European institutions, the International Monetary Fund and the Greek prime minister to discuss "the conditions under which the engagements undertaken will be kept."

The White House meanwhile said the uncertainty caused by Greek's move showed the need for rapid implementation of the eurozone deal.

The announcement "just reinforces the notion that ... the Europeans ... need to elaborate further and implement rapidly the decisions they made last week," US President Barack Obama's spokesman Jay Carney said.

"It remains the case that the Europeans have the capacity to deal with this crisis and they need to implement the very important decisions they made last week to provide a conclusive resolution to it," Carney added.

The latest turn in the eurozone debt saga put Italy right back in the firing line, raising fears that it could follow Greece, Ireland and Portugal in needing a bailout and that the contagion could spread even further, to Spain.

Italian stocks closed down 6.80 percent with bank shares in free fall, in the worst session since the start of the global financial crisis in 2008.

Borrowing rates also shot up to well above 6.0 percent, coming close to levels that most believe cannot be sustained for the long term.

In an effort to get ahead of the debt curve, Italian Prime Minister Silvio Berlusconi promised to take "rapid" action on economic reforms, long sought by his European partners, ahead of the G20 summit.

He told German Chancellor Angela Merkel that "the Italian government is determined to introduce the measures rapidly," his press office said.

Berlusconi had sought to ease market concern and pressure from Italy's eurozone partners last week with promises to increase the pension age, launch a privatisation programme and reform labour laws to make firing easier.

In a brief phone call to Merkel, Papandreou told the chancellor that the referendum would "strengthen the country in the eurozone and globally" but other leaders voiced frustration and annoyance that they had not been informed of his plan at last week's negotiations.

Analysts said that the referendum call effectively left last week's accord dead in the water, with Greece facing default and even an exit from the eurozone.

If the vote is 'No,' it would scupper a deal to cut Greece's debt of more than 350 billion euros ($495 billion) by about 100 billion euros while recapitalising the banks who will take a 50-percent loss on their holdings of Greek government debt.

In a joint statement, EU president Herman Van Rompuy and European Commission president Jose Manuel Barroso said they had full trust in Greece to "honour the commitments undertaken."

Greece however was teetering on the edge of chaos, with military chiefs replaced ahead of a confidence vote on Friday that could bring down Papandreou's government.


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Greece plunges Euro into crisis...

Posted by Demir Arabaci at 02 November 2011, 02:12 CET

Mr Papendreau is no fool. He is fully aware of the consequences of mortgaging his nation to the hilt to control freaks like germany's booby angela, france's yid sarky or even a double hook from the chinese communist government or their triads.
None of those options are for the benefit of the greek people but mostly for the benefit of the loan sharks hiding behind the banks of wall street in jewyork or bay street in toronto or any other street that sucks the blood of ordinary people only to channel those exorbitant profits to fund more arm shipments to the nation of murdering pirates in eastern mediterranian.
At least the somali pirates just demand money and release their hostages but these thugs murder and try to get away with it.
It is not just the Greek people waking up and saying enough of this blood sucking but even the ordinary people of other countries traditionally friendly with these bastards are taking over parks and streets to protest against them all over the world.
Enough of crooks behind bank boardrooms and their multi billion dollar or euro bonuses, enough of crooks hiding behind the protection of anti semitism crap.
It is time to wake up not just the Greeks but the rest of the world and push back. It is time to ignore all the crap that comes out of the newspapers and movies and TV news that they control and try to brain wash the innocent and the uninitiated with their venomous attacks on those who don't share their extremely vindictive cult.
It is time to bring law and order and peace to the world.
Terrorrism does not take place only with bombs or guns, it takes place with brain washing media controlled by bloody minded and vindictive assholes like them.
Reduce or better still, eliminate their exhorbitant loan sharking, refuse to channell any more billions to the pirates of eastern mediterranean country, then you will ensure restoration of law and order in the world.
There is no alternative.
Germans found that out to their dismay a century ago.
    

Greece and referendum

Posted by Argyrios Tambaropoulos at 15 November 2011, 08:26 CET
Mr Papandreou had to do that (much) much earlier when he agreed to mortgaging his country with the IMF and the EU combined Memorandum agreement in May 2010. Its too late for tears now. Its time for hard work and review of all our international relations.

Greece Joining the EU was a Mistake

Posted by xa vexo at 14 December 2011, 09:57 CET
Those who know the Greek economy and political history are acquainted with the reality and possible prospects of the Greek future and know that Greece joined in for the convenience of some countries but that they are in for the free ride, the sooner they get our the EU the better off we are.

Greece Joining the EU was a Mistake

Posted by Stoyan Antonov at 20 December 2011, 21:53 CET
Sorry, it was not a mistake- rather, it was a ploto boost the aling Greek economy and give fresh start to the whole state. Greece before some 40 years - had plunged into civil unrests - both leftists and rightists groups violating the peace - remember "black colonels" etc,... so Greece was a weak member of NATO's Soudern Flang, and Greeks were in need of much funding, which came with EU membership, and the internal tensions smoothed.
Just recently i saw on BG TV how a Greek Lady shouted against a reporter that "...France and Germany want to Balkanize Greece....to make Greece become as Bulgaria and Romania..."
I am Bulgarian, and i have to recognize that Bulgarian average incomes are still times lower compared to those in Greece; however Bulgaria is one of the two EU memberstates that have not yeat raised its taxes - currently the lowest in EU, and BG budget deficit is at the level of 1.1-1.2 percent of GDP, which is the best in EU, and just recently Moody's grading agency announced once again BG credit ratings will be increased.
And Mr. Juncler who visisted BG approved our fiscal discipline "Exelent state of finances".
So why then is this obvous expression of hubrice expressed by that Greek lady, and unfortunately by some other Greeks - against Bulgarians?
In what way we are worse?