Friday, February 3, 2012

Default better than death of democracy

By Bill Wilson

Reflecting Europe is nowhere near agreement on how to “rescue” Greece — let alone prop up Italy and Spain — German Chancellor Angela Merkel again delayed finalizing any deal on Jan. 30, telling reporters, “We won’t have a thorough discussion of Greece because the troika is in Greece and we don’t have a result of the talks with the banks.”

Greece cannot receive what remains of the original €110 billion bailout refinance loans, nor an additional €130 billion pledged in October, unless an agreement is reached with both Greece and private banks that lent the money to begin with. With €14.5 billion of debt coming due on Mar. 20, time is running out to resolve these issues.

At issue is Greek control over its fiscal sovereignty, and whether private investors will be forced to accept losses as much as 70 percent while governmental institutions such as the European Central Bank (ECB), the International Monetary Fund (IMF), and other sovereigns that purchased Greek debt bear no losses.
Germany has demanded quite explicitly a “transfer of national budgetary sovereignty” to a “budget coordinator” appointed by European authorities to administer Greece’s budget that will “veto decisions not in line with the budgetary targets set by the Troika,” referring to the tripartite organizations administering the bailouts: the European Commission, the ECB, and the IMF.

Greece has, to its credit, rejected these demands. A government source told AFP, “It is out of the question that we would accept it, these are matters of national sovereignty.”

Another told Athens News Agency, “We can never accept this. A similar proposal was made in the past by a Dutch minister. We do not even discuss about it.”
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