Greek Parliament Approves Austerity Measures to Release Funds

Greek lawmakers passed a bill that puts thousands of state workers on notice for possible dismissal, a victory for Prime Minister Antonis Samaras that clears the way for the country’s next installment of bailout loans.

A total of 153 lawmakers voted for most of the articles in a roll call with 140 against, Deputy Parliament Speaker Christos Markogiannakis said in remarks carried live on state-run Vouli TV after voting ended shortly after midnight local time. The vote came hours before German Finance Minister Wolfgang Schaeuble arrives in Athens for a one-day visit.

With his coalition reduced and Greece stuck in its sixth year of recession, Samaras pushed the job cuts over public protests amid record unemployment of 27 percent. Passage was needed for euro-area officials and the International Monetary Fund to sign off on the next disbursements from a 240 billion-euro ($314 billion) bailout.

“An unprecedented effort is now under way to reconstitute our country’s economy and state,” Finance Minister Yannis Stournaras told lawmakers before the vote. “I’m totally confident that the road we’re following is the right one. The effort is yielding results.”

The bill includes provisions to push through a plan to put 25,000 public employees on notice for possible dismissal. About 3,000 people protested peacefully in front of parliament during the debate, according to police estimates.

Euro-area finance ministers, whose deputies will discuss unlocking the payment in a July 24 teleconference, committed to pay 2.5 billion euros this month and 500 million euros in October. In addition, Greece can count on recouping 2 billion euros of central bank profits on domestic bonds, plus 1.8 billion euros from the IMF.

Samaras’s coalition was shaken last month after the departure of the Democratic Left party following the closure of state broadcaster ERT. His New Democracy party must now rely on its historic rival, the socialist Pasok party. The two control 155 of the Greek parliament’s 300 seats.
http://www.bloomberg.com/news/2013-...oves-austerity-measures-to-release-funds.html

 

The crazy thing is is that none of that money will end up in Greece but Greece will have to pay it back to the IMF and EU central bank. It will go to pay holders of Greek national debt, which are mostly hedge funds that bought it at a huge discount and German and French banks that cannot write it off because that would make them insolvent. The really crazy thing is that most of that debt is private debt that Greece was forced to nationalize in earlier bailout agreements.

Greece, Spain, Portugal and Ireland have destroyed economies because the private sector refused its responsibility for losses when the economy went south and instead used its power over the EU and IMF to force private losses onto the public purse. Only tiny Iceland did not. When Icelandic banks failed Iceland said too bad for you but we are not responsible and will not bail you out because we followed all the rules to the letter, stupid as they were. The courts have agreed that Iceland has zero liability for its bank failures and it has a good case against Ireland and the UK for using threats and intimidation to force Iceland to take on the private liabilities they took on from the failures of these banks, the UK going so far as to use anti-terrorism statutes to seize Iceland government assets.

At this point Greece would be better of to just default and force bondholders into a decades long court battle to get their money. All new debt issues should be issued with a compliance requirement, whereby any agreement for repayment by two thirds of bondholders would automatically apply to all bonds of that issue. Greece would be able to sell new bonds to the IMF and EU, and be able to put the IMF and EU central bank, and the Fed into a position where they would be obliged to put pressure on private debt holders to make accommodations. The hedge funds that hold so much Greek debt may seem immune to pressure but they get their money from the largest banks in the world and the Fed and EU central bank can easily make their lives more difficult.