Monday, October 3, 2011
Mortgage help for unemployed disappears
The federal government can't even give money away to help the unemployed pay their mortgage.
A $1 billion program to assist the jobless will likely end up spending only half the funds, at most, because so few people met the strict criteria.
The Housing Department, which had to approve the applications for the Emergency Homeowners' Loan Program by Friday, expects that only 10,000 to 15,000 people will qualify. That's only a small sliver of the roughly 100,000 who applied.
"No one could have anticipated how difficult the statutory requirements make it to reach homeowners," said Lemar Wooley, a HUD spokesman.
Those who make the cut are expected to receive between $35,000 and $45,000 in aid, he said.
Many had high hopes for the loan program because it was targeting a segment of delinquent homeowners not being helped by other federal initiatives, such as mortgage modifications.
Passed last year as part of the Dodd-Frank Wall Street reform bill, it was modeled after a very successful program in Pennsylvania that has helped tens of thousands of residents since 1983.
The federal effort offered interest-free, forgivable loans to homeowners who lost at least 15% of their income because of the economy or their own medical condition. Applicants had to be at least 90 days delinquent, facing foreclosure and show that they could resume payments if they found a new job.
If they qualified, they could receive up to $50,000 or 24 months of assistance, whichever came first.
10 dirt-cheap housing markets
The initiative quickly became a quagmire of delays and requirements, however. The rollout was postponed for months, finally launching in late June. HUD originally gave people less than six weeks to apply, but then pushed back the deadline to mid-September.
But it was the income and delinquency guidelines that prevented many seemingly eligible people from getting assistance, housing counselors say. HUD used a complicated formula that took into account monthly payments, income and arrears.
Only 34 of the 174 homeowners who came to Tierra del Sol Housing Corp. in Las Cruces, N.M., met the criteria, said Rose Garcia, the agency's executive director. Some people were turned away because they were already too far behind in their payments or because their income fell because of a family member's illness.
"This program could have made a difference to save people from being homeless," she said. "But it doesn't meet people's needs."
In Philadelphia, Michelle Lewis is waiting to see how many of the 400 applications her Northwest Counseling Service received will be approved. She fears it will be few.
One problem she ran into was that many applicants lost their jobs more than a year ago. Under HUD's rules, the circumstance that caused the delinquency had to have occurred within the past 12 months.
The Pennsylvania loan program, which ended in June because of state budget cuts, allowed for many more hardship conditions so it was able to reach more people than the federal effort, she said.
"The [HUD] guidelines were so restrictive that it knocked out a lot of otherwise eligible and worthy consumers," said Lewis, the agency's chief executive.
CNN
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Vatican’s pact with Islam
It has been five years since gave his controversial lectio about Islam at the German University of Regensburg. On September 12th, 2006, Joseph Ratzinger claimed that the god of the Muslims is both transcendental and unreasonable and he severely condemned jihad and the use of violence in the name of Koran. It was the only public event in which a Pope told the truth about some aspects of Islamic religion.
Benedict XVI made himself a central player in the post-9/11 era: His speech against the link between religion and violence, typical of Islam today, was not a mistake or a false step, as some observers wrote at that time. It was, rather, a vigorous attack against certain aspects of Islamic fanaticism.
The reaction to the Pope’s speech was a familiar spectacle: Threats, riots, and violence. From the religious leaders in Muslim majority countries to the New York Times, all demanded the Pope’s apologies. In the Palestinian areas, churches were attacked and Christians targeted. In the Somali capital, Mogadishu, an Italian nun was executed. In Iraq, Amer Iskander, a Syrian Orthodox priest, was beheaded and his arms mutilated.
In Islamic forums, Ratzinger was depicted like Dracula. He received many death threats: “Slaughter him”, “pig servant of the cross”, “odious evil”, “Allah curse him”, “vampire who sucks blood” and so on. The highest Islamic representative in Turkey, Ali Bardakoglu, declared that Ratzinger’s speech was “full of enmity and hatred.” The Egyptian Muslim Brotherhood pledged “reactions worst of those against the Danish cartoons”.
Pope Benedict XVI (Photo: AP)
Iran’s Supreme Ayatollah, Ali Khamenei, accused the Pope of being part of “the conspiracy of the Crusaders.” Under pressure, and aiming to stop any further violence, the Pope apologized.
Benedict XVI recently visited again his native Germany, but this time with a different agenda. Five years later, the Vatican adopted a pro-Islam course and has capitulated to fundamentalists. In a recent book written by German journalist Peter Sewald, Pope Ratzinger expressed “regrets” about the Regensburg lecture. The Vatican’s Secretary of State, Tarcisio Bertone, buried the Pope's lesson about Islam as “an archaeological relic.”
“The default positions vis-à-vis militant Islam are now unhappily reminiscent of Vatican diplomacy’s default positions vis-à-vis communism during the last 25 years of the Cold War,” writes George Weigel, a leading US writer about the Vatican. The Vatican’s new agenda seeks “to reach political accommodations with Islamic states and foreswear forceful public condemnation of Islamist and jihadist ideology.”
Appeasement agenda
After Regensburg, the Vatican adopted an appeasement agenda. Cardinal Jean-Louis Tauran, who is known for having a pro-Islam position, was appointed by the Pope as the head of the Pontifical Council for Interreligious Dialogue.
Indeed, Dialogue with Iran’s mullahs is pivotal in the new Vatican agenda. Recently, a delegation of clergy members of Iran’s Islamic Consultative Assembly visited the Vatican, meeting with top Catholic officials.
In June, the Vatican sent Archbishop Edmond Farhat, who is the official representative of Vatican politics, to Tehran to attend an “international conference on the global campaign against terrorism.” Last autumn, Vatican representatives met with Muslim leaders from around the world in Tehran for “a three-day interreligious dialogue.” In Tehran Cardinal Tauran praised Iran’s “spirit of cordiality” and “the friendly Ahmadinejad.”
Last month, the Vatican published a letter written by Tauran, addressing his “Dear Muslim friends.” In the letter, Tauran asked for Islamic help to form an alliance against atheism.
In 2008, the Vatican promoted “Love of God, Love of Neighbor,” the first three-day forum with Islamic leaders. The Pope agreed to meet one the most dangerous Islamist in the Western world, the grandson of Muslim Brotherhood founder Hassan al-Banna, Tariq Ramadan - the Swiss scholar who denies Israel’s right to life and who has been banned from entering the US because of his alleged association with extremists.
Pope meets Saudi King Abdullah (Photo: AP)
Last May, Bishop Mariano Crociata, secretary general of the Italian Episcopal Conference, announced that the Vatican is in favor of building new mosques in Europe. A month later the European Bishops met with European Muslims in Turin (Cardinal Tauran was also present) to proclaim the need for the “progressive enculturation of Islam in Europe.”
In Rimini, a seaside resort on the Adriatic coast, the Comunione e Liberazione movement, one of the most powerful in the Catholic Church, holds its massive annual “meeting” that usually draws some 700,000 people. The Catholic movement last month hosted the president of Al Azhar, the most important Islamic university in Cairo, and a senior leader of the Muslim Brotherhood, despite the fact that for the first time the US Commission on Religious Freedom recommended that Egypt be placed on a list of the “worst of the worst” countries for persecution of Christians.
Targeting Israel
The State of Israel is easily expendable in the new pro-Islam policy. In January 2009, thousands of Muslims marched in front of Milan’s Duomo to protest against Operation Cast Lead in Gaza. They burned Israeli flags and chanted anti-Jewish slogans. Joaquin Navarro-Valls, John Paul II’s spokesman for 22 years, defended the “freedom of expression” of the Muslims who burned the Star of David.
Months later, Pope Benedict visited Bethlehem, where the Christian population has dropped from a majority to less than 20%. Benedict delivered a message of solidarity to the 1.4 million Palestinians isolated in the Hamas-ruled Gaza Strip. He said nothing of the suffering of Gaza’s 3,000 Christians since Hamas took over that territory in 2007.
Benedict could have decried the bombings, shootings and other Islamist attacks against Gaza Christian establishments, the brutal murder of the only Bible-store owner of Gaza, or the regular intimidation and persecution of Christians there. Instead, the Pope stood beside Mahmoud Abbas as the Palestinian leader deceptively pointed to a concrete separation barrier in Bethlehem and blamed that barrier, as well as Israeli “occupation,” for the plight of Christians.
A few weeks later, the United Nations ran “Durban II” and on the first day of the conference, Mahmoud Ahmadinejad, the only head of state to attend, made a speech condemning Israel as “totally racist” and referred to the Holocaust as an "ambiguous and dubious question.” When Ahmadinejad began to speak against the Jews, all European Union delegates left the conference room. The Vatican delegation didn’t say a word.
To understand the new Vatican’s approach toward Islam, one should also read what happened in the historical synod on the Middle East hosted by the Pope last autumn. Nothing was said about Islamist persecution of Christians; indeed, every effort was made to show the Catholic Church’s sympathy to Muslim grievances, especially against “Zionism” – a word evoked as a symbol of evil.
Aside from Iraq, the only country singled out for criticism in the Middle East was Israel. Patriarch Antonios Naguib of the Egyptian Coptic church, who was the “relator,” or secretary, of the synod, expressed “solidarity with the Palestinian people, whose situation today is particularly conducive to the rise of fundamentalism.” The lesson was simple: Islamism is the consequence of Israeli policies. The synod was carefully prepared for a year, and it produced a rash of radical anti-Jewish statements on both political and theological issues.
Ethnic cleansing silenced
The rightful concern of the Vatican for co-religionists has also been silenced. Intimidation, thuggery and violence have succeeded in turning away criticism not only of Islam, but of violence committed in the name of Islam against Christians.
Over the past several years, Christians have endured bombings, murders, assassinations, torture, imprisonment and expulsions. The very roots of the Christian heritage in the Middle East are being extirpated. When last winter Christians were killed in Egypt, Cardinal Tauran and the Vatican foreign office requested to “avoid anger” and downplayed the Islamist role in the butchering.
In the summer of 2010, Bishop Luigi Padovese, Vatican vicar for Anatolia and president of the Catholic Episcopal conference of Turkey, was slaughtered by Islamic fanatics in Iskenderun on the eve of the Pope’s trip to Cyprus. Vatican diplomacy did its part to convince the Pope to immediately and preemptively rule out the idea that this was a “political or religious” murder.
Elsewhere, the number of Christians in Turkey declined from two million to 85,000; in Syria, from half the population they have been reduced to 4%; in Jordan, from 18% to 2%; nearly two-thirds of the 500,000 Christians in Baghdad have fled or been killed; in Lebanon, Christians have dwindled to a sectarian rump, menaced by surging Shiite and Sunni populations, and in Saudi Arabia Christians have been beaten or tortured by religious police.
Ynet
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Benedict XVI made himself a central player in the post-9/11 era: His speech against the link between religion and violence, typical of Islam today, was not a mistake or a false step, as some observers wrote at that time. It was, rather, a vigorous attack against certain aspects of Islamic fanaticism.
The reaction to the Pope’s speech was a familiar spectacle: Threats, riots, and violence. From the religious leaders in Muslim majority countries to the New York Times, all demanded the Pope’s apologies. In the Palestinian areas, churches were attacked and Christians targeted. In the Somali capital, Mogadishu, an Italian nun was executed. In Iraq, Amer Iskander, a Syrian Orthodox priest, was beheaded and his arms mutilated.
In Islamic forums, Ratzinger was depicted like Dracula. He received many death threats: “Slaughter him”, “pig servant of the cross”, “odious evil”, “Allah curse him”, “vampire who sucks blood” and so on. The highest Islamic representative in Turkey, Ali Bardakoglu, declared that Ratzinger’s speech was “full of enmity and hatred.” The Egyptian Muslim Brotherhood pledged “reactions worst of those against the Danish cartoons”.
Pope Benedict XVI (Photo: AP)
Iran’s Supreme Ayatollah, Ali Khamenei, accused the Pope of being part of “the conspiracy of the Crusaders.” Under pressure, and aiming to stop any further violence, the Pope apologized.
Benedict XVI recently visited again his native Germany, but this time with a different agenda. Five years later, the Vatican adopted a pro-Islam course and has capitulated to fundamentalists. In a recent book written by German journalist Peter Sewald, Pope Ratzinger expressed “regrets” about the Regensburg lecture. The Vatican’s Secretary of State, Tarcisio Bertone, buried the Pope's lesson about Islam as “an archaeological relic.”
“The default positions vis-à-vis militant Islam are now unhappily reminiscent of Vatican diplomacy’s default positions vis-à-vis communism during the last 25 years of the Cold War,” writes George Weigel, a leading US writer about the Vatican. The Vatican’s new agenda seeks “to reach political accommodations with Islamic states and foreswear forceful public condemnation of Islamist and jihadist ideology.”
Appeasement agenda
After Regensburg, the Vatican adopted an appeasement agenda. Cardinal Jean-Louis Tauran, who is known for having a pro-Islam position, was appointed by the Pope as the head of the Pontifical Council for Interreligious Dialogue.
Indeed, Dialogue with Iran’s mullahs is pivotal in the new Vatican agenda. Recently, a delegation of clergy members of Iran’s Islamic Consultative Assembly visited the Vatican, meeting with top Catholic officials.
In June, the Vatican sent Archbishop Edmond Farhat, who is the official representative of Vatican politics, to Tehran to attend an “international conference on the global campaign against terrorism.” Last autumn, Vatican representatives met with Muslim leaders from around the world in Tehran for “a three-day interreligious dialogue.” In Tehran Cardinal Tauran praised Iran’s “spirit of cordiality” and “the friendly Ahmadinejad.”
Last month, the Vatican published a letter written by Tauran, addressing his “Dear Muslim friends.” In the letter, Tauran asked for Islamic help to form an alliance against atheism.
In 2008, the Vatican promoted “Love of God, Love of Neighbor,” the first three-day forum with Islamic leaders. The Pope agreed to meet one the most dangerous Islamist in the Western world, the grandson of Muslim Brotherhood founder Hassan al-Banna, Tariq Ramadan - the Swiss scholar who denies Israel’s right to life and who has been banned from entering the US because of his alleged association with extremists.
Pope meets Saudi King Abdullah (Photo: AP)
Last May, Bishop Mariano Crociata, secretary general of the Italian Episcopal Conference, announced that the Vatican is in favor of building new mosques in Europe. A month later the European Bishops met with European Muslims in Turin (Cardinal Tauran was also present) to proclaim the need for the “progressive enculturation of Islam in Europe.”
In Rimini, a seaside resort on the Adriatic coast, the Comunione e Liberazione movement, one of the most powerful in the Catholic Church, holds its massive annual “meeting” that usually draws some 700,000 people. The Catholic movement last month hosted the president of Al Azhar, the most important Islamic university in Cairo, and a senior leader of the Muslim Brotherhood, despite the fact that for the first time the US Commission on Religious Freedom recommended that Egypt be placed on a list of the “worst of the worst” countries for persecution of Christians.
Targeting Israel
The State of Israel is easily expendable in the new pro-Islam policy. In January 2009, thousands of Muslims marched in front of Milan’s Duomo to protest against Operation Cast Lead in Gaza. They burned Israeli flags and chanted anti-Jewish slogans. Joaquin Navarro-Valls, John Paul II’s spokesman for 22 years, defended the “freedom of expression” of the Muslims who burned the Star of David.
Months later, Pope Benedict visited Bethlehem, where the Christian population has dropped from a majority to less than 20%. Benedict delivered a message of solidarity to the 1.4 million Palestinians isolated in the Hamas-ruled Gaza Strip. He said nothing of the suffering of Gaza’s 3,000 Christians since Hamas took over that territory in 2007.
Benedict could have decried the bombings, shootings and other Islamist attacks against Gaza Christian establishments, the brutal murder of the only Bible-store owner of Gaza, or the regular intimidation and persecution of Christians there. Instead, the Pope stood beside Mahmoud Abbas as the Palestinian leader deceptively pointed to a concrete separation barrier in Bethlehem and blamed that barrier, as well as Israeli “occupation,” for the plight of Christians.
A few weeks later, the United Nations ran “Durban II” and on the first day of the conference, Mahmoud Ahmadinejad, the only head of state to attend, made a speech condemning Israel as “totally racist” and referred to the Holocaust as an "ambiguous and dubious question.” When Ahmadinejad began to speak against the Jews, all European Union delegates left the conference room. The Vatican delegation didn’t say a word.
To understand the new Vatican’s approach toward Islam, one should also read what happened in the historical synod on the Middle East hosted by the Pope last autumn. Nothing was said about Islamist persecution of Christians; indeed, every effort was made to show the Catholic Church’s sympathy to Muslim grievances, especially against “Zionism” – a word evoked as a symbol of evil.
Aside from Iraq, the only country singled out for criticism in the Middle East was Israel. Patriarch Antonios Naguib of the Egyptian Coptic church, who was the “relator,” or secretary, of the synod, expressed “solidarity with the Palestinian people, whose situation today is particularly conducive to the rise of fundamentalism.” The lesson was simple: Islamism is the consequence of Israeli policies. The synod was carefully prepared for a year, and it produced a rash of radical anti-Jewish statements on both political and theological issues.
Ethnic cleansing silenced
The rightful concern of the Vatican for co-religionists has also been silenced. Intimidation, thuggery and violence have succeeded in turning away criticism not only of Islam, but of violence committed in the name of Islam against Christians.
Over the past several years, Christians have endured bombings, murders, assassinations, torture, imprisonment and expulsions. The very roots of the Christian heritage in the Middle East are being extirpated. When last winter Christians were killed in Egypt, Cardinal Tauran and the Vatican foreign office requested to “avoid anger” and downplayed the Islamist role in the butchering.
In the summer of 2010, Bishop Luigi Padovese, Vatican vicar for Anatolia and president of the Catholic Episcopal conference of Turkey, was slaughtered by Islamic fanatics in Iskenderun on the eve of the Pope’s trip to Cyprus. Vatican diplomacy did its part to convince the Pope to immediately and preemptively rule out the idea that this was a “political or religious” murder.
Elsewhere, the number of Christians in Turkey declined from two million to 85,000; in Syria, from half the population they have been reduced to 4%; in Jordan, from 18% to 2%; nearly two-thirds of the 500,000 Christians in Baghdad have fled or been killed; in Lebanon, Christians have dwindled to a sectarian rump, menaced by surging Shiite and Sunni populations, and in Saudi Arabia Christians have been beaten or tortured by religious police.
Ynet
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Architect of Euro says Greece must go
Former European Central Bank chief economist Otmar Issing, one of the architects of the euro, said Greece’s exit from the 17-nation monetary union is inevitable.
“There is no other way,” Issing told Germany’s Stern in an interview, according to a transcript supplied by the magazine. With Greece’s debt forecast to reach 160% of gross domestic product next year, the country needs to renege on at least 50% of its obligations and “that can’t happen within the monetary union,” Issing is quoted as saying.
ECB President Jean-Claude Trichet has said the suggestion that a country could leave the euro is “absurd” and insisted that Greece can solve its problems through fiscal reforms. Issing said it’s “too late for that” now and that “the country won’t get back on its feet without a drastic debt restructuring.”
That can’t happen within the euro area because it would be “a license for Greece and other highly-indebted nations to dispose of their problems through a reduction of their debt levels” and result in “the end of the monetary union,” Issing said.
European leaders have struggled to allay investor concerns that a potential debt restructuring in Greece will plunge the region’s economy into a recession. Greek bonds have tumbled and insurance against default has soared as markets put the probability of insolvency at more than 90%. Such an event may require the recapitalization of banks across Europe as they incur losses on their Greek assets.
Greek ‘Precedent’
“Markets see Greece not as a special case but as a precedent,” said Christian Schulz, an economist at Joh. Berenberg Gossler & Co. “A Greek exit would increase the cost for the euro-zone rescue significantly.”
Greece, which is locked out of financial markets, is struggling to the meet the terms of its European Union-led bailout. It has pledged to reduce its general government deficit to about 7.5% of GDP this year from 10.5% in 2010.
“The bitter truth, unfortunately, is that the Greeks have lived beyond their means for years and will now be set back many years by their artificially inflated living standards,” Issing said.
Issing, 75, designed the ECB’s monetary policy strategy. He retired from the bank in 2006 and is currently president of the Center for Financial Studies in Frankfurt. He was unable to be reached for comment.
Financial Post
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Qatari wealth fund plans $10bn gold buying spree
The fund is seeking to invest in a range of natural resources, but gaining access to physical gold is its top strategic priority.
On Sunday, Qatar Holdings, which controls the wealth of the Middle East state's royal family, confirmed it would invest about $1bn in European Goldfields, a London-listed miner currently developing the largest gold-mining project in Greece.
"Qatar Holdings have done a systematic and detailed study of the gold sector," said Ken Costa, who put the deal together. "They chose European Goldfields because [chairman] Martyn Konig is very experienced – a 30-year veteran in the gold market."
While Mr Costa would not comment on future likely targets, the Qataris are known to have been focusing in particular on opportunities in Africa and Russia. The valuation of North American gold miners was said to be too high.
The gold price has increased every year for the past 10 years as investor concern about the devaluation of global currencies, particularly the dollar, mounts.
The price is up by 14pc this year, despite a recent correction, and currently sits at $1,623.97 an ounce after it hit a record high of $1,923.70 on September 5.
However, shares in listed gold miners have underperformed this year, with European Goldfields shares down 41pc in the year to date. This is despite the company receiving the long-awaited approval for its mines from Greek authorities in July.
The Qatari fund has acquired a 9.9pc stake in European Goldfields from Greek construction group Ellaktor and one of its directors, Dimitrios Koutras. Qatar Holdings will also provide a $600m loan facility at an interest rate of 7pc.
Athens will be celebrating the bold investment move, as the Southern European country teeters on the edge of default, because the deal represents a vote of long-term confidence in the troubled Greek economy.
After securing the investment, about 1,500 jobs will be created in Greece. The deal was agreed by George Papandreou, Greek prime minister, and Sheikh Hamad Bin Khalifa Al-Thani, the ruling Emir of Qatar, on Saturday.
Qatar Holding was advised by Credit Suisse, with Lazard and Liberum Capital advising European Goldfields.
The Telegraph
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Germany 'won't give more to EU bail-out fund'
AFP - German Finance Minister Wolfgang Schaeuble ruled out Germany contributing any more money to the beefed-up EU bail-out fund than the 211 billion euros approved by parliament, in an interview published Saturday.
"The European Financial Stability Facility has a ceiling of 440 billion euros ($590 billion), 211 billion of which is down to Germany. And that is it. Finished," he told the magazine Super-Illu.
He also suggested the European Stability Mechanism, which is due to replace the EFSF by 2013 at the latest, would be smaller.
"Then it will be only a matter of 190 billion in total, for which we will be guarantors, including interest," he explained.
Germany's lower house of parliament, the Bundestag, on Thursday approved the beefing up of the eurozone bailout fund, which cleared its final hurdle on Friday when it was rubber-stamped by the Bundesrat (upper house).
The vote had been seen as a crucial test of Chancellor Angela Merkel's authority amid fears of a backbench rebellion. However she secured an overwhelming majority of her own deputies to back the move.
A majority of Germans (58%) consider it was a mistake to boost the EFSF, according to a poll to be published Sunday in the weekly Bild am Sonntag.
German Foreign Minister Guido Westerwelle said he wanted the debt-ridden countries put under tighter surveillance in an interview given to Saturday's Sueddeutsche Zeitung.
"A right to scrutiny and make recommendations isn't enough. The states, which in the future will benefit from the solidarity of the rescue fund, should give the European authorities the right to intervene in their budgetary decisions," the minister said.
France 24
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Greece will miss 2011 and 2012 budget deficit targets
Greece will miss 2011 and 2012 budget deficit targets set by the EU and the IMF, according to figures published by the finance ministry on Sunday after the cabinet adopted the draft 2012 budget.
The budget deficit will reach 8.5% of GDP this year, missing a 7.6% target. It will be brought down to 6.8% of GDP next year but will still miss the bailout target of 6.5% of GDP.
“Three critical months remain to finish 2011, and the final estimate of 8.5% of GDP deficit can be achieved if the state mechanism and citizens respond accordingly,” the Greek Finance Ministry said in a statement.
Since the deficit targets were set just months ago in a massive bailout package, missing the targets is a setback in Europe’s efforts to stave off the country’s bankruptcy.
The dire forecasts come while inspectors from the International Monetary Fund, EU and European Central Bank, known as the troika, are in Athens scouring the country’s books to decide whether to approve a loan tranche, without which Greece could run out of cash this month.
European Union officials say the troika’s assessment of Greece’s future prospects could determine whether it needs to demand more debt relief from private creditors, a measure that could effectively amount to default.
European officials are scrambling to avert an abrupt Greek bankruptcy, which would wreck the balance sheets of European banks, jeopardise the future of the single currency and potentially plunge the world into a new global financial crisis.
GDP is predicted to fall by 5.5% this year and 2.0-2.5% next year. Those numbers are in line with recent forecasts by the IMF, but much worse than predictions used to calculate a 109-billion euro (US$146-billion) bailout in July, which anticipated Greece posting a 0.6% growth next year.
The shortfall in the 2011 deficit target means Greece would need almost 2 billion extra euros just to finance its expenses for this year. It also means emergency tax hikes and wage cuts announced in the past two months to hit the target have not been enough to put Greece’s finances back on track.
To persuade the troika to release the loans, Greece has promised to raise taxes, cut state wages and speed up plans to reduce the number of public sector workers by a fifth by 2015.
The Greek cabinet also approved a measure on Sunday to begin reducing the number of state workers. The plan creates a “labour reserve” allowing state workers to be placed on partial pay and be dismissed after a year. The government has said it would put 30,000 workers in the reserve by the end of this year.
“The labour reserve measure was approved unanimously,” a deputy minister who participated in a cabinet meeting told Reuters on condition of anonymity while the cabinet meeting was still under way.
Euro zone finance ministers are expected to discuss Greece at a meeting in Brussels on Monday, but will be waiting for the troika inspectors’ report before taking any new decisions.
The inspectors are widely expected to give a green light to the release of the next 8-billion euro tranche of aid to avoid plunging the euro zone deeper into turmoil. But all eyes will be on their forecasts for 2012-2014.
If the inspectors conclude that Greece’s recession will continue to be worse than predicted, EU officials have suggested that banks that agreed to write off 21% of the value of their Greek debt holdings in July may be forced to take deeper losses.
The austerity measures are deeply unpopular, and public sector unions hope that strikes and demonstrations can wreck the Socialist government’s resolve to enact them. Striking civil servants have disrupted the talks with the troika over the past days by blockading ministries.
The government has a majority of just four seats in parliament and could be forced into elections if a handful of lawmakers balk. But disgruntled legislators have toed the party line over the past weeks and analysts expect them to continue to do so and pass the new austerity package.
No part of the package is more contentious than the plan to lay off state workers — who make up a fifth of the Greek workforce and are guaranteed jobs for life under a constitution that bans firing them under nearly all circumstances.
The government has yet to announce how the “labour reserve” plan would work. If most workers placed in the reserve are near pension age and planning to retire soon anyway, the savings would be negligible and the inspectors are likely to be unimpressed.
The inspection visit, which is expected to go well into next week, also focuses on budget plans for 2012-2014 and commitments to raise 50-billion euros from privatizations by 2015 and open up the country’s heavily-regulated economy.
Financial Post
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