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No let-up on Greek austerity, says Germany

The Local · 19 Aug 2012, 12:53

Published: 19 Aug 2012 12:53 GMT+02:00

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“We can’t yet again devise a new rescue package," Schäuble told Der Spiegel on Saturday.

Hours later his warning was reiterated by the parliamentary head of Chancellor Angela Merkel's CDU party. "The Greeks have to stick to what they have promised,” Volker Kauder said on Sunday.

“There is no room for manoeuvre, either in terms of time or substance," he told Der Spiegel. "That would be yet another agreement broken. That's exactly what led us to this crisis."

Their comments come ahead of talks in Berlin this week between the German chancellor and Greek Prime Minister Antonis Samaras.

The Financial Times reported Wednesday that Samaras planned to discuss extending a deadline for Greece to make harsh budget cuts. They are a precondition demanded by Greece's international creditors in order for it to receive its next slice of financial aid.

The newspaper said he would ask for two more years to make the cuts in a plea that will just fall short of being a formal request.

Auditors from the European Commission, European Central Bank and

International Monetary Fund, known as the Troika, are to release a report next month on Greece's progress in achieving the required austerity.

According to the magazine, this report will call for Athens to slash €14 billion from its budget over the next two years. That is €2.5 billion more than originally demanded.

Story continues below…

Der Spiegel added the extra cuts were needed because planned privatizations were not turning out to be as lucrative as hoped and tax revenues were falling short of forecasts.

Greece faces bankruptcy as it endures its fifth year of recession.

The Local/AFP/ccp

The Local (news@thelocal.de)

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Your comments about this article

17:17 August 19, 2012 by smart2012
First scheuble made a pro euro speech, which here is not mentioned at all, but anyway, I did a quick calculation: 500 million European could pay off the 14 billion Greece debt paying each 28 euros. 1.5 years ago with 10 euros each the greek problem would have been addressed. Since 1.5 years we r killing Europe worth 28 euros pro person. How silly is this?
19:11 August 19, 2012 by Englishted
@ smart2012

Very silly if you work on the assumption that the powers that be will allow the bogie-man that is Greece not to be held up over and over again as what happens when the little people get greedy .

They want to grind the faces in the dirt as a example.

Extra cuts and a drop in tax revenue after 5 years of recession wow you don't say do you ?.(not you smart2012)
19:28 August 19, 2012 by truth is treason
It is not the peoples debt but the bankers debt.

Read the following link:


The important part:

On June 19, 2000, Greece joined the Euro-zone. This meant it adopted the Euro (€) as its national currency, and agreed to abide by the Maastricht rules on debt and deficit ratios. These stipulate that no Euro-zone member may have a debt greater than 60% of its GDP or a budget deficit greater than 3% of it GDP.[2]

However, it is now generally acknowledged that the Greek debt and deficits far exceeded these goals set by the Maastricht treaty. Greek debt was about $131 billion, or 103.7% of GDP in 2001, far above the required 60%. However, the more important deficit ratio was held under 3% through various accounting tricks throughout the early 2000s. Only in late 2009 and early 2010 did it become apparent that Greece¦#39;s true budget deficit was about 12% of its GDP.[3] Among these ¦quot;window dressings¦quot; were cross-currency swaps with Goldman Sachs. Although European governments commonly employ such derivates to hedge against changes in currency value, Goldman Sachs and the Greek government negotiated unusual terms that allowed the derivatives to function as a loan from Goldmans to the Greeks.
20:14 August 19, 2012 by Berlin fuer alles
Here we go again. The old reliable vote winner again. This is not news and the media should not keep quoting these stupid out of reality statements. I know it is the silly season but come on. Write about space exploration or something instead.
00:13 August 20, 2012 by smart2012
guys, i was not asking to implement my calculation, i just wanted to show how stupid it is that since 1,5 years we talk about a country which counts nothing for europe. Actually the only country/banks/company that have the most money there and invested in greece without caring about gdp/deficit etc etc were Germany /German banks/German companies (Siemes, Duetsche Telekom, Thyssenkrup/Deutsche bank/Commerzbank), which now are the ones with problems if greece goes bankrupt. That is why Greece is such a big deal in Germany, worth 28 Euros per European person. Wake up Germans, u are being fooled.
08:50 August 20, 2012 by lenny van
All of the countries in the Euro zone, except Germany and Austria, should be getting ready to voluntarily drop out of the E.U. and form a European Free-trade Zone.

Like the E.U., the EFZ would allow unrestricted freedom of movement of labour and capital, endorse common standards of production and education, promote the continued use of English as the world's second language and use it when necessary (not like some arrogant Germans who often refuse to speak English to a foreigner, even though they are fluent in Engllsh (e.g. our foreign minister), create a United Federal Bank of Europe (UFBE) that would finance things, that are better done collectively (e.g. a common defense force, federal benefits, health, old age and unemployment benefits, foreign aid, federal highways and other projects within the union. These projects would had to be passed by a democratically elected Economic Parliament of Europe (EPE). The UFBE would print and use only a common currency, that could be exchanged at any time for any of the national currencies at the prevailing rates of exchange.

In addition to the common currency, each nation state could print its own national currency for use within its borders. The national currencies would ¦quot;float¦quot; against the common currency, just as other E.U. countries, which are not now n the Euro Zone do (e.g. the U.K. Denmark, Sweden Poland etc.).They would automatically adjust to market forces, which also happens now with the non Euro Zone currencies. If the need arises, (as is happening in the present Eurozone with the ¦quot;PIIGS¦quot; countries), a nation states, itself, could devalue its currency (probably within certain limits). The National Bank of a particular nation state could also sell bonds, of course, but limitations and restrictions could be set by the UNB with an appeal process to the EEP in certain circumstances.

People in the EFZ could use the common currency whenever they choose. It would be especially convenient when traveling outside of their native countries or when paying federal taxes, for example.

The Euro, used in future only by the Germans and Austrians, would immediately double in value and instantly make the people in the German speaking countries very rich and so deliriously happy to have so much money, that they as well as other money worshipping countries like the United States, wouldn't notice or even care what else is going on. Then, full employment could almost immediately be brought about in every nation state in the new European Free-Trade Zone and their national deficits would be dramatically reduced to meet the former debt to GDP requirements required in the former Eurozone.

It would take too many words to explain how this can be done, so I have to wait until after someone else comments.
09:43 August 20, 2012 by Username2
someone else............
09:49 August 20, 2012 by lenny van
The answer to the high rates of unemployment and the debt problem in Europe (and elsewhere) is NOT more austerity and hard work. Workers must work less, not more. The answer to European integration is not getting rid of he single currency. It is to add another currency.

Technology should have made life easier for everyone but, unfortunately, only the capitalist is benefitting from the increasing productivity that it provides to mankind. The capitalist doesn¦#39;t have to pay the robot and the human beings in the working class, that are lucky enough to still have jobs, are made to work ever harder and longer and earn less money in order to keep keep their jobs. The working class must understand that the problem is that the fewer and fewer jobs that are becoming available to the full work force, are not being shared out. The plan to achieve full employment and resolve the debt problem in Europe is relatively simple. A four day, 32 hour work week will immediately be established in a new European FreeTrade Area (EFTA 2). Initially, everyone¦#39;s wages will be reduced by 10 %. This must happen, so that the initial sacrifice can be shared equally between capital and labour. (The capitalist looses 20% production from his work force and only saves 10% in wage payments, so he in effect makes the same 10 % sacrifice.) However, in a short time (less than a year) as full employment returns, which it obviously must do, wages will rise for the worker and the extra demand for goods and services will cause prices to rise for the capitalist to pay for the wage rises. The 10% ¦quot;sacrifices¦quot; will be absorbed and forgotten as market equilibrium brings everything back into balance. Everything is back to where it was, but the unemployment problem is solved. This simple idea can also solve the debt problem Governments will obviously save a great deal of money because they no longer have the burden of having to pay record high unemployment and welfare benefits. In addition, goverment tax revenues will rise dramatically with full employment and this combination immediately reduce national budget deficits. Remember how quickly the United States budget deficit turned into a surplus in the Clinton administration with the ¦quot;peace bonus¦quot;.

Businesses will argue that they will have to pay extra benefits because the number of individual workers they have to pay benefits to will increase. Not true, because in EFTA 2, they will no longer be involved in contributing to or deducting money to pay employee benefits. These will be paid by every individual through the progressive tax system.

This could never happen, of course, in the present Euro Zone because the Germans and the American capitalists (indirectly from Jackson Hole or Davos) are calling the shots. If the German and American capitalist policiy makers force Greece out of the Euro Zone, the non-German peoples of Europe should immediately voluntarily give up the Euro, withdraw from the E.U. and join EFTA 2.
09:54 August 20, 2012 by raandy
No let up on the austerity, no hope of solving the problem.

The Greek people are between a rock and a hard place. If they meet the approval of the Germans and receive the loan, the money will only go to restructuring their existing debt, this cycle will continue until the inevitable Greek collapse.

I believe many in the Greek gov. think Germany is bluffing. I would not want to bet on that.
16:46 August 20, 2012 by Englishted
@ lenny van

With comments of that size I'm glad that life expectancy is rising it gives us time to read it. Not to agree or understand but just to read bit like Das Kapital .
13:23 August 21, 2012 by lenny van
The most important function of the E.U. in my opinion is to diminish the prospect of war which was so dominant in the 20th century. Also, in my opinion, there is no way to resolve the the logical contradictions in the way that the single currency economic system was devised and I am disturbed with the way that Germany has taken control is making all of the decisions in the E.U.

No one seems to be thinking outside of the box. Maybe sharing the availale jobs by working less, instead of working more and reducing the economy through austerity will stimulate the economy much more effectively than all the QEs that have only increased debt, because the government has to pay to keep people without jobs alive.

Instead of a choice of either keeping the single currency or dumping it, which are the only choices that are being considered, why not consider keeping the Euro, as well as the national currencies, so that a nation can devalue if it needs to.

Sorry, but to adequately present these ideas requires a relatively long explanation on the only platform that I have to reach other people. I am hoping that perhaps someone with more influence and resources than I have can take these ideas further and explore them.

I'm certain that others must also be fearful that 1) the Germans, the most aggressive people in the last century, are now making the decisions for all of Europe and 2) Germany must fall in line with the the mandates of the United States, the powerful representative of the capitalist class which seeks to control and amass as much of the world's wealth as possible before capitalism collapses because of its own contradictions.
15:26 August 21, 2012 by schneebeck
@lenny van #11

"the United States, the powerful representative of the capitalist class which seeks to control and amass as much of the world's wealth as possible before capitalism collapses because of its own contradictions"

Could you give an example of an economic system being used in the world today that you think has the least amount of "contradictions"?

Which country is using this system?
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