Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Greece’

Greece has a deadly new migration policy – and all of Europe is to blame

Posted by hkarner - 2. September 2020

Date: 01‑09‑2020

Source: The Guardian Daniel Trilling

Every time Athens pushes a refugee boat away, it’s the result of an entire continent acting in its perceived self‑interest

A vital part of international refugee law is the principle of non‑refoulement: the idea that states should not push people seeking asylum back to unsafe countries. In a country like the UK, which does not sit next to a war zone, advocates of “tougher” policies to deter asylum seekers will claim that the principle does not apply, since people who reach Britain’s shores will have passed through several peaceful countries before they get there.

But if every country looks only to its own interests, and behaves as if asylum seekers are someone else’s problem, then you very quickly end up with a system that traps people in situations where their lives are at risk. That is the system bequeathed by Europe’s panicked response to the 2015 refugee crisis, and in recent months, partly under cover of the emergency conditions imposed by the coronavirus pandemic, it has got worse. Den Rest des Beitrags lesen »

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A Very Greek Brexit?

Posted by hkarner - 18. Februar 2019

George Papaconstantinou

George Papaconstantinou, a former finance minister of Greece who negotiated the country’s first bailout, is the author of Game Over – The Inside Story of the Greek Crisis.

Unlike the United Kingdom, Greece is one of the European Union’s smaller economies, notorious for its weak institutions and economy, and a net recipient of EU funds. And yet the Grexit near-exit from the EU in 2015 offers important lessons for the final stage of Brexit negotiations.

ATHENS – As the Brexit train lurches forward with no clear direction, it is useful to look back at another dramatic episode in European Union politics for possible guidance: the Grexit that never happened. Although almost everyone during the euro crisis between 2010 and 2015 was convinced that Greece would have to leave the eurozone, if not the EU, the country remains a member of both. Den Rest des Beitrags lesen »

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The Evaporation Of The Greek Banking Sector

Posted by hkarner - 7. Dezember 2018

Tuesday, November 13, 2018, Observing Greece

The below statistics (source: Bank of Greece) show the development of the aggregate balance sheet figures of the Greek banking sector (all banks except the Bank of Greece) since the beginning of the financial crisis. Aggregate means that the figures are simply added up and not consolidated, i. e. there may be overstatements in some categories. For the years 2010 and 2015, the figures are as of June. For 2018, the figures are as of September (in BEUR).

2018 2018
vs vs
2010 2015 2018 2010 2015
Claims on domestic financial institutions 19,1 2,1 5,6 -13,5 3,5
Claims on foreign financial institutions 107,4 26,0 13,5 -93,9 -12,5
Domestic loans 273,9 217,1 181,2 -92,7 -35,9
Foreign loans 7,0 4,8 3,1 -3,9 -1,7
Domestic securities 42,9 13,6 11,6 -31,3 -2,0
Foreign securities 35,3 56,2 13,8 -21,5 -42,4
Domestic equities 7,0 4,8 3,6 -3,4 -1,2
Foreign equities 11,7 9,1 4,1 -7,6 -5,0
Remaining assets 40,4 52,8 54,8 14,4 2,0
Total assets 544,7 386,5 291,3 -253,4 -95,2
Debt to Bank of Greece 96,1 126,7 12,2 -83,9 -114,5
Debt to domestic banks 7,5 0,3 1,1 -6,4 0,8
Debt to foreign banks 63,8 7,6 23,2 -40,6 15,6
Domestic deposits 223,1 130,5 147,5 -75,6 17,0
Foreign deposits 25,5 9,8 6,9 -18,6 -2,9
Remaining liabilities 98,6 42,7 33,2 -65,4 -9,5
Total liabilities 514,6 317,6 224,1 -290,5 -93,5
Capital & Reserves 30,1 68,9 67,2 37,1 -1,7
Total liabilities & equity 544,7 386,5 291,3 -253,4 -95,2

In 2018, total assets (291 BEUR) were only a little over half the total assets of 2010 (545 BEUR), i. e. a decline of 47%. Put differently, almost half of a most important sector of the Greek economy evaporated. Den Rest des Beitrags lesen »

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Fresh Momentum for the Balkans

Posted by hkarner - 24. September 2018

Javier Solana was EU High Representative for Foreign and Security Policy, Secretary-General of NATO, and Foreign Minister of Spain. He is currently President of the ESADE Center for Global Economy and Geopolitics, Distinguished Fellow at the Brookings Institution, and a member of the World Economic Forum’s Global Agenda Council on Europe.

There can be little doubt that the last few decades have brought more frustration than progress to the Balkans. It would be ironic and deeply gratifying to see a region wracked by ethnic nationalism build bridges when so many others are building walls.

MADRID – As autumn comes to Europe, it is time to reap the fruits of months of hard diplomatic work across the Balkan Peninsula. On September 30, the former Yugoslav Republic of Macedonia (FYROM) will hold a consultative referendum that could lead the country to change its name to “Republic of North Macedonia.”

This is no mere linguistic exercise. If the referendum passes, it could put an end to 27 years of bickering between the Macedonian and Greek governments. Greece vehemently opposes its northern neighbor’s use of “Macedonia” without a qualifier, because a region in Greece bears the same name. Moreover, the ancient kingdom of Macedonia has great cultural and historical significance for modern-day Greeks. Den Rest des Beitrags lesen »

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As Euro Crisis Ends, Italy Stokes Fear of a Revival

Posted by hkarner - 21. August 2018

Date: 19-08-2018
Source: The Wall Street Journal

Concern comes amid market jitters over Italian debt, attacks by politicians in Rome on Europe’s establishment

ROME—The end of Greece’s marathon bailout on Monday would mark the closure of the eurozone crisis—if only it weren’t for Italy, and nagging fears that the euro isn’t fixed after all.

European Union authorities will hail as a victory the completion of Greece’s financial-rescue program, an eight-year drama that triggered a wider European sovereign-debt panic. Greece’s economy has begun to grow again, although recovery has far to go. Defying many predictions, Greece has stayed in the euro, thanks to the strength of public support for keeping the currency, even amid one of the deepest economic depressions of modern times.

Meanwhile French President Emmanuel Macron, German Chancellor Angela Merkel and other EU leaders are discussing the next moves to bolster the currency union, building on various overhauls since the crisis.

Italy shows it might not be enough. Den Rest des Beitrags lesen »

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Greece’s eight-year odyssey shows the flaws of the EU

Posted by hkarner - 18. August 2018

Date: 16-08-2018
Source: The Economist: Charlemagne

The island where the euro crisis started has yet to recover from Europe’s help

KASTELLORIZO is “the end of Europe—or perhaps its beginning”. So says Yannis Doulgaroglou, co-owner of the Hotel Kastellorizo, a sunny inn on Greece’s easternmost inhabited island. A tiny rocky outpost just off the Anatolian coast, on maps of Greece Kastellorizo is often relegated to an inset. Yet it was from the island’s picturesque harbour, on April 23rd 2010, that George Papandreou, the prime minister, stared blankly into a camera and acknowledged that his troubled country had lost access to capital markets and needed a financial rescue package from its euro-zone peers. The day is etched in the memory of most Greeks. Chuckling, Mr Doulgaroglou recalls the journalists who scarpered from his hotel once they realised the prime minister was saying something momentous, leaving behind their unpaid bills.

Eight years and three bail-outs later, as Greece prepares to leave its final programme on August 20th, Mr Papandreou’s remarks seem laden with pathos. He directed his ire at the “speculators” who had sent Greek bond yields soaring, more than at the successive governments that had overspent, under-reformed and fiddled the national accounts. Yet, he vowed, with a “common effort” Greece would “reach the port safely, more confident, more righteous and more proud.” He called this the “new Odyssey”. Den Rest des Beitrags lesen »

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Greece: Long-Run GDP Growth Prospects Are Poor

Posted by hkarner - 17. August 2018

Friday, August 17, 2018, Observing Greece

Last month, the IMF pubslished its 2018 Article IV Report on Greece and it was widely commented in the media. I have now read the full 80+ pages and can only recommend others to read the full report. It can be found under this link (under the caption Electronic Access, click on Free Full Text).

I focus here on Annex VI about Greece’s Long-Term Growth Potential and I reproduce it below. A summery statement would be: „Ceteris paribus, aging would imply an average yearly decline of 1.1 percentage points in Greece’s labor force during the next four decades. Labor productivity (output per worker) would grow only at about 0.4 percent in the steady state (the rate of TFP growth adjusted for the labor share in output). Long-run GDP growth prospects are thus poor, absent a major change in policies. Structural reforms to raise TFP growth and employment are therefore the only option to achieve higher long-term output growth.“

Below is the Annex VI about Greece’s Long-Term Growth Potential.

1. Greece is set to experience dramatic population aging over the next several decades. In its 2018 Aging Report, the EC projects Greece’s working age population to fall by about 35 percent between 2020 and 2060 due to a shrinking and rapidly aging population. This is among the largest such declines in the Euro Area, and three times the average fall for the Euro Area. Ceteris paribus, aging would imply an average yearly decline of 1.1 percentage points in Greece’s labor force during the next four decades.

2. Greece’s productivity growth has historically been poor. Greece’s underperformance relative to peers is often associated with relatively low openness of the economy and a high share of labor allocated to non-tradable sectors. Total factor productivity (TFP) growth over the last 47 years averaged just ¼ percent annually, by far the lowest in the Euro Area. Assuming this historical average TFP growth rate going forward, labor productivity (output per worker) would grow only at about 0.4 percent in the steady state (the rate of TFP growth adjusted for the labor share in output).

3. A pickup in investment could provide a short-run boost to growth, but productivity and demographics will dominate in the longer run. Investment is bound to recover from its highly depressed level once Greece emerges from the crisis, but the growth effect of this will wane once the capital stock returns to its long-run level. Staff’s medium-term projections already assume a temporary boost to GDP growth from higher investment (with real GDP growth rates averaging close to 2 percent during the investment recovery). Once the transition to the new, higher capital ratio is completed, however, the impact of increased investment will fade and growth dynamics will be determined by the evolution of output per worker and of the number of workers. Den Rest des Beitrags lesen »

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Andreas Georgiou – Griechischer Chefstatistiker verurteilt – wegen Ehrlichkeit

Posted by hkarner - 12. Juni 2018

Andreas Georgiou korrigierte das griechische Staatsdefizit für 2009 auf 15,4 Prozent – nachdem Athen 3,9 Prozent gemeldet hatte.

  • Der Grieche Andreas Georgiou hatte als Chef der nationalen Statistikbehörde das Staatsdefizit seines Landes korrigiert und an Brüssel gemeldet.
  • Nun wurde er verurteilt, weil er die Berechnung nicht politisch abstimmen ließ – das aber ist in keinem Gesetz auch nur vorgesehen.
  • Seine vermeintliche „Pflichtverletzung“ bringt ihm nun zwei Jahre Haft auf Bewährung ein.
Von Christiane Schlötzer

Für die Kunst, Staatsdefizite klein zu rechnen, gab es einst den Begriff „Greek Statistics“, bis ein Statistiker kam, der in Athen mit den geschönten Haushaltszahlen aufräumte. Damit erwarb sich der Grieche Andreas Georgiou höchstes Lob der EU. In seiner Heimat aber soll Georgiou dafür büßen. Der oberste griechische Gerichtshof verurteilte den einstigen Chef der nationalen Statistikbehörde Elstat jetzt zu zwei Jahren Haft auf Bewährung, wegen „Pflichtverletzung“. Nach seinem Amtsantritt im August 2010 hatte Georgiou das Etatdefizit für 2009 auf 15,4 Prozent korrigiert, Athen hatte zuvor nur 3,9 Prozent nach Brüssel gemeldet.

Das Gericht verurteilte Georgiou, weil er die von ihm ermittelte Defizithöhe nicht in dem damals existierenden politisch besetzten Aufsichtsgremium von Elstat abstimmen ließ, bevor er Eurostat informierte. Eine solche politische Abstimmung ist aber weder im griechischen Statistikgesetz noch nach EU-Regeln vorgesehen, sie betonen die Unabhängigkeit des Statistikamtes und seines Chefs.

Die schriftliche Begründung des Urteils liegt noch nicht vor, sie dürfte längere Zeit auf sich warten lassen. Die Entscheidung erlaubt aber keinen Einspruch mehr, sie ist endgültig. Georgiou hat davon durch seinen Anwalt erfahren, er hat Griechenland schon vor drei Jahren verlassen, nachdem er im August 2015 sein Amt nach fünf Jahren entnervt niedergelegt hatte. Den Rest des Beitrags lesen »

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Aftereffects of Eurozone Crisis Plague Europe’s South

Posted by hkarner - 3. Juni 2018

Date: 02-06-2018
Source: The Wall Street Journal

Spain, Italy and Greece face political, social and economic fallout from bailouts, austerity budgets

ROME—This week’s high-profile political crises in Spain and Italy are making plain the social and economic scars Southern Europe bears almost a decade after the eurozone crisis, destabilizing traditional alliances and feeding political discontent.

In Italy—now home to Western Europe’s largest antiestablishment movement—two large outsider parties are coming to power, bolstered by the votes of millions of Italians stuck in a cycle of stubbornly high unemployment and poverty.

In Spain, a sitting premier was toppled in a no-confidence vote for the first time since the country emerged from the dictatorship of Francisco Franco. Prime Minister Mariano Rajoy, Europe’s longest serving leader, was ousted Friday in the wake of a corruption scandal that proved the final blow for a leader whose support has gradually eroded since he imposed unpopular measures to avert economic disaster in Spain during the eurozone’s debt crisis. Den Rest des Beitrags lesen »

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Italy’s Long, Hot Summer

Posted by hkarner - 1. Juni 2018

Severe political uncertainty, chronic slow growth, and a sovereign-debt level currently hovering around 160% of GDP already is enough for Italy to trigger a debt crisis. And there is no plausible resolution that would not generate additional risks and complications.

STOCKHOLM – The political upheaval and social unrest fueling the current crisis in Italy should surprise no one. On the contrary, the only uncertainty was when exactly matters would come to a head. Now they have.

Italy’s per capita GDP in 2018 is about 8% below its level in 2007, the year before the global financial crisis triggered the Great Recession. And the International Monetary Fund’s projections for 2023 suggest that Italy will still not have fully recovered from the cumulative output losses of the past decade.

Among the 11 advanced economies that were hit by severe financial crises in 2007-2009, only Greece has suffered a deeper and more protracted economic depression. Greece and Italy were the two economies carrying the highest debt burdens at the outset of the crisis (109% and 102% of GDP, respectively), leaving them poorly positioned to cope with major adverse shocks. Since the crisis erupted a decade ago, economic stagnation and costly banking weaknesses have propelled debt burdens higher still, despite a decade of exceptionally low interest rates.

Greece has already faced more than one “credit event” and, while Italy has also had a couple of close calls, the spring of 2018 is turning out to be its most tumultuous episode yet. The summer will probably be worse, bringing Italy closer to a sovereign debt crisis.

On the surface, general government debt appears to have stabilized since 2013, at around 130% of GDP. However, as I have stressed here and elsewhere, this “stability” is misleading. General government debt is not the whole story for Italy, even setting aside the private debt loads and the recent renewed upturn in nonperforming bank loans (a daunting legacy of the financial crisis).

When evaluating Italy’s sovereign risk, the central bank’s debts (Target2 balances) must be added to those of the general government. As the most recent available data (through March) show, these balances increase the ratio of public-sector debt to GDP by 26%. With many investors pulling out of Italian assets, capital flight in the more recent data is bound to show up as an even bigger Target2 hole. This debt, unlike pre-1999, pre-euro Italian debt, cannot be inflated away. In this regard, it is much like emerging markets’ dollar-denominated debts: it is either repaid or restructured.

Severe political uncertainty against a backdrop of chronic slow growth and a sovereign-debt level currently hovering around 160% of GDP already is enough to trigger a debt crisis. Adding to these fundamentals, populist rhetoric about introducing a quasi-currency or small-denomination IOUs (presumably to finance ambitious spending plans and larger budget deficits), and about not honoring the Bank of Italy’s debt, adds fuel to the financial fire.

Italy’s instability is already having international repercussions, and the current bout of global uncertainty is far from over. Close to home, as Italian bond yields climb and oscillate with the rumor mill, yields for Spanish, Portuguese, and Greek bonds have been driven higher. Moreover, the Italian story is unfolding as Greece closes in on an agreement in June about its exit late this summer from dependence on Europe’s bailout framework. One can only hope that political contagion from Italy does not further complicate these negotiations.

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Farther afield, the weakness in the euro has translated into dollar strength, which means a sustained beating for emerging markets, particularly those with US dollar debt. The flight to quality that accompanies outbreaks of financial turbulence is reinforcing a shift away from some of the riskier asset classes of which emerging markets are a part. International equity markets have not been exempt from contagion.

How do such episodes typically end? The most desirable outcome – rapid resolution that places the source of contagion on a sustainable growth path – appears improbable in Italy’s case. Meaningful debt renegotiations are seldom swift: creditors want repayment, and debtors want a write-down. As Christoph Trebesch and I have documented, negotiations seldom get it right on the first – or even the third – try. Initial restructuring agreements tend to fall short of the magnitude needed to achieve debt sustainability.

Still, it is difficult to see how restructuring of Italy’s debt can be avoided altogether. The alternative – exclusive reliance on a bailout – is tempting, as it may temporarily calm markets. But a bailout would only kick the can down the road. The fact that Greece’s debt problems still have not been resolved should serve as a warning.

In the mildest of scenarios, only Italy’s official debt – held by other governments or international organizations – would be restructured, somewhat limiting the disruptions to financial markets. Yet restructuring official debt may not prove sufficient. Unlike Greece (post-2010), where official creditors held the lion’s share of the debt stock, domestic residents hold most of Italy’s public debt. This places a premium on a strategy that minimizes capital flight (which probably cannot be avoided altogether). At this stage, policymakers should aim for a resolution of Italy’s woes that does not generate additional risks and complications. But there is little reason to expect them to hit the target.

Den Rest des Beitrags lesen »

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