A little more than a week the German government proposed “Budget Commissioner” of the euro area to exercise direct control over the budget of Greece. With this proposal, Berlin, Athens asked to give up its sovereignty in the name of financial assistance, to prevent the bankruptcy of our southern neighbor. Although the European Commission (EC) rejected the proposal, it is not sunk into oblivion. Greece can not settle with its creditors, which leads to two outcomes for the country: either declare bankruptcy or to continue negotiations with the private sector, the European Union (EU) and International Monetary Fund (IMF), says the CEO of American company Stratfor Strategic Analysis and reputed political scientist George Friedman. In his agreement with its creditors Greece will consist of three parts: the forgiveness of the debt, additional financial assistance from the EU and IMF agreement to limit government spending and raise taxes so as to avoid future sovereign crises or at least to be paid to the Greek debt. The Germans certainly do not believe the Greeks, as the latter have not met already made commitments to creditors. That lack of confidence led to the proposal for budget control, but it would be okay, if it is a corporation or a private person, says Friedman. Such a request from a nation state, however, is unacceptable according to the analyst. State is based on two premises. The first is that the nation state is unique legitimate community whose members share a common range of values ​​and interests. The second condition is related to the occurrence of the state. Friedman points out that this happens in people’s will and only has the right to determine state action.
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Greece collected 1.3 billion EUR from markets once managed to sell 26-week treasury bills at a slightly lower rate than achieved in the previous auction. The National Agency of Greece debt management said the securities were sold at yields of 4.80 percent. For comparison, on August 9th investors yield reached 4.85 percent. Athens relies heavily on funds from both international relief programs to avoid bankruptcy. Because higher-than-expected budget deficit, however, is likely to ask the Greek authorities to the second rescue package to be reduced by one year.
“Athens is expected to offer the program to continue to act not by 2014 but by 2013, so that 109 billion to cover the financial needs of the country”, says the publication.

Every evening until night falls over Athens, dozens of armored buses of gendarmerie in the dangerous streets in the city center. Some of the police playing with their mobile phones, others just smoke, staring into the darkness. What are they waiting, no one is quite sure, but all in the Greek capital agree that something can happen any time. An year after agreeing to conduct economic reforms against the bailout plan of 110 billion euros from European Union (EU) and International Monetary Fund (IMF), Greece does not seem far out of shape. The country is in deep recession – last year its economy shrank by 4.5 percent, a decline in 2011 is estimated to be 3%. Closed shops and trash heaps evaded, is collected on the streets of Athens are a testament to the scale of the economic shock. The EU is growing concern that the socialist government of Prime Minister George Papandreou will not be able to modernize the country’s sclerotic economy.
If Papandreou fails, the other European capitals and Washington will face the dilemma whether to give Greece another chance, or leave the country fell into the abyss of failure – a perspective with potentially devastating consequences for the financial system and economic confidence in euro zone. In recent days, the risk premium on the Greek debt increased again to record levels. At the same time, Greek banks are trying to rescue its finances.
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The Athens Airport will be the first site proposed for sale by Papandreou’s office for the plan from which the expected revenue of 50 billion EUR to cover the debt of Greece. The Privatization Commission announced that it had decided to sell 20 percent stake in the international airport “Eleftherios Venizelos” and to extend the term by 20 years of the concession agreement with the German Hohtiyf. The Greek State holds 55 per cent of the airport, and Hohtiyf – 40 per cent. Among the other items, announced the privatization are former airport Elinikon near Athens, and other public property. The observers in Athens as “timid” first decisions of the privatization commission with the comment that they were taken in the absence of consensus, as many ministers have voiced disagreement. Eight of them even accused the banks that in the current crisis they have domognali to aid granted by the State to promote the market. The Kathimerini newspaper writes that their criticisms were addressed to the Prime Minister and Finance Minister for their actions and in particular that the banks received from the state about 100 billion.
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The British economists have suggested the Greek government to rescue its economy abandon the euro and declared bankruptcy on its debt of 300 billion euros, says the Times. London-based Centre for Economics and Business Research (CEBR) warned the Greek ministers that will be able to escape the debt trap of the country, unless it devalued its currency to encourage exports. The only way this can happen is to return to Greece its own currency – the coin. Greek politicians rejected the idea of leaving the euro area would lead to disintegration of the single currency. “Leaving the euro would mean that the new currency will be cheaper at least by 15% and as the national debt is measured in euros, it would automatically increase the level of debt of 120% of GDP to 140% of GDP,” said Doug Makuilyams, executive director of the CEBR, during talks in Athens yesterday. “So part of the idea of leaving the euro is Greece unilaterally convert debt into the new local currency. Separation of Greece to the euro would be a disaster for Germany and French banks, which Greece owes billions of euros. However Makuilyams sets this development as “practically inevitable” and added that other eurozone countries could follow suit in Greece.
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The turbulence in the euro area is not over, as Greece remained only “the tip of the iceberg,” warned the professor of economics at New York University Nuriel Rubini. “This front is currently facing the euro area is the second stage of a typical financial crisis,” said Rubies to radio BBC. Approved a rescue package amounting to 750 billion, intended to stop the spread of the crisis in Greece to other EU countries do not calm the markets, as questions remain whether governments are strong enough to make the necessary rigor, stated Rubini. Earlier today it became clear that it is paid the first tranche of EUR 20 billion of aid to Greece. Tomorrow ends the maturity of the Greek bonds 8.5 billion. Markets remain worried about the solvency of some European countries in the euro area as there are significant economic and financial problems, stresses Rubini. Protests in Greece against budget cuts fueling suspicions that European governments can solve such problems, he said.
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Leaders of euro area Member States approved a final plan for the financial support of Greece, that the next three years the country will receive 110 billion loans with interest lower than the market, writes Dnes.bg, citing BTA. 80 billion euros will be allocated by the 16 member states of the Eurogroup, about a third of them must be provided this year. The remaining 30 billion will be allocated by the IMF. Athens is expected to receive the first tranche of aid more in the coming weeks. Disbursement has already been approved by governments. The plan was adopted by the Greek Parliament, despite mass protests in the country against him. “The current situation is exceptional and requires exceptional measures. Approved the final declaration, which includes two parts – for Greece and the current crisis situation,” said a news conference after the meeting of permanent European Union president Herman van Rompoy at whose initiative was convened forum. After the meeting, leaders said the euro area as a priority the maintenance of sound public finances. To this end, the greater surveillance of financial markets, whose transparency must be strengthened. Moreover, much wider will be used criminal procedure in case of excessive government deficits. “We are ready to strengthen rules and procedures for surveillance of member countries of the euro area, including through the strengthening of the Pact for Growth and Stability through the most effective sanctions, stated in the Declaration which was adopted at a meeting in Brussels tonight. Furthermore, the EC will propose specific European common mechanism to maintain stable finances.
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Greek stock market regulator has decided to ban short sales of securities which it may be speculating on falling prices for Greek shares. Decision takes effect today and will be valid until 28th June. The reason for this was the wave of sales that hit Athens Stock Exchange yesterday because of speculation that Greece will not be able to meet payments on its debt. The decision of the international rating agency Standard & Poor’s to lower the rating by three points in Greece quake caused the financial markets yesterday and fell 6 percent main stock index in Athens ASE. Investors had expected such a move because of uncertainties about the rescue plan by the International Monetary Fund for Greece and the euro area and the growing interest on government securities of the party would further hamper the Greek government in its attempts to be financed by issuing government bonds. However, news that the Greek government bond rates have already “junk” led to massive sales of Greek shares Tuesday, which suffered the most financial companies. Shares of Greece’s largest bank National Bank of Greece dropped by 10% and already 45% below their price levels by the end of last year. The ban on short selling is not surprising, given that they contribute to the sharp drop in share prices. They allow market participants who expect the price per share to decline to speculate with it, sell it without first be purchase.
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Greece began with sales of ten-year bonds yesterday after the country has announced plans to significantly cut costs in order to reduce the budget deficit. This government is seeking to win back investor confidence, which drew aside from the financial markets in the country. It is expected that the price of bonds to be such as to bring a serious return to investors, as it is projected to amount to approximately 6,5 per cent, Bloomberg reported before familiar with the situation requested anonymity. For comparison, the yield of the current issue, which is due in July 2019 proposes return of 6,1 per cent. Because of the planned auction price of the instruments, allowing investors to protect the bankruptcy of Greece have risen for the first time in a week. Swaps for bankruptcy protection today to deal with 11 basis points more expensive. Among the measures to combat the deficit were increases in excise duties on tobacco and alcohol restriction on wages in the public sector and others. The plan is the budget deficit, which currently amount to 12,7 percent, to be shrunk to about 4 per cent at the end of the year.
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The Greek government spokesman George Petalotis categorically denied the information that the government is negotiating with the International Monetary Fund (IMF) loan of 35 billion euros, police agency ANA-MPA. “No such initiative and such an agreement,” stresses a spokesman, asked to comment on Replication in the media in this sense. The Government is determined and has the national debt difficult to win the battle to revive the economy, improve the image of Greece abroad and restore confidence in the country, said Petalotis. “In this titanic battle, the government is not seeking services and loans, but need political support from its partners and the necessary time to implement its program to stabilize the economy,” the spokesman further stated. Asked to comment on the pressure of EU countries for the implementation of new restrictive measures, the spokesman said that by 15 March will be assessed a situation which is not yet complete “and that” until an assessment of what has happened so far can not comment more. Petalotis said that the proposal for the establishment of a committee of inquiry to investigate the fraudulent statistics about the state of public finances and over-indebtedness of the country will be tabled for debate in parliament next week probably.
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