How the world sees Greece
Greeks give back during fall break UT Daily Beacon UT Greek organizations have had a tough year so far, with two fraternities kicked off campus and several more under social probation. This past fall break, however, a mission trip with over 100 Greek-affiliated students showed the town of Pineville, Ky ... |
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Three years ago this week Greece's finance minister revealed a black hole in the country's budget – the first sign of a debt crisis that has shaken markets and sparked unprecedented austerity and protests
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 Bloomberg | Credit Agricole Agrees to Sell Emporiki in Greece to Alpha Bank Bloomberg Emporiki's loans exceed deposits, requiring Credit Agricole to provide funding to the unit and making the French bank the foreign lender with the most to lose should Greece leave the euro. Credit Agricole's net funding to Emporiki was 2.1 billion euros ... Alpha close to sealing deal for Emporiki |
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By subsidising cheaper loans to low-income countries, the IMF will keep them trapped by debt repayments for years
The countries that run the International Monetary Fund (IMF) have decided to spend a $2.7bn (£1.7bn) windfall on subsidising cheaper loans to low-income countries. This will represent a small financial benefit for countries taking such loans, but leaves unchallenged what such loans and debt exist to do.
In the mid-2000s, the IMF faced a financial crisis as middle-income countries such as Argentina and Brazil paid off their debts to the institution. The fund's $1bn costs are paid for by the interest it charges on loans, and its income dried up as countries got off lending programmes, scarred by two decades of austerity and liberalisation.
The IMF decided to sell off some gold, invest the money earned, and use the proceeds to run the institution. Then the financial crisis hit; a crisis the IMF had not only systematically failed to warn of but had helped to precipitate through its praise of light-touch regulation. Lending by the IMF has ballooned along with its income: this year a profit of $2.2bn has been made on loans to countries including Pakistan, Jamaica, Ireland and Greece. And with gold prices rising, far more money than predicted came in from the sell-off, leaving a $2.7bn windfall.
The IMF charges little or no interest on its loans to low-income countries; those with an income per person of less than £650 a year. Historically, it has been subsidised to do so by "aid" donations from wealthier countries. The IMF board's decision to use the gold windfall to pay for these low interest rates for the foreseeable future means low-income countries will continue to pay 1% less in interest than they otherwise would, a saving of £40m a year across them all. It also leaves IMF loans funded and in place for years to come.
The IMF was created at the end of the second world war to provide temporary loans to countries that were facing a "liquidity crisis" – a short-term inability to pay debts and buy imports.This month, Germany's Bundesbank complained that the IMF in Europe is straying from this liquidity role to one of ongoing lending. But this has been happening for three decades.
In 1982, Mexico defaulted on its huge debts from reckless lending by banks awash with money in the 1970s because of high oil prices. Faced with the prospect of US, Japanese and British banks going bust, the IMF stepped in with bailout loans, enabling the continued payment of the debts in return for austerity and liberalisation. The pattern was repeated across Latin America and Africa for two decades, a time when economies stagnated and poverty rapidly increased. In Africa, the number of those living in extreme poverty rose from 205 million in 1981 to 330 million in 1993.
While IMF lending maintained a debt crisis, the reckless lenders benefited from getting money back. The same pattern is being repeated in Europe today as German, French and British banks are repaid reckless loans, while Greece, Ireland and Portugal are stuck in economic collapse, depression and rising poverty.
Bailing out reckless lenders contributes to the pattern of debt crises we have seen for the past 30 years; bank risk is reduced by the knowledge that the IMF is ready to step in to honour repayments. It continues in low-income countries. The IMF is due to lend Bangladesh $1bn over the next three years, money that will be used to help meet debt payments of $2bn a year; a huge 15% of government revenue.
At the same time, IMF loans continue to impose particular economic policies on countries that borrow. Bangladesh is having to increase VAT, including on essentials such as rice, lentils and cooking oil, while cutting trade taxes, which could undermine small businesses and worsen the country's balance of payments, leading to more debts.
In other low-income countries, IMF loans no longer look like debt bailouts. Many countries have seen their debt payments fall significantly in recent years, partly due to $130bn of debt cancellation by the IMF, World Bank and governments in response to the jubilee campaign for debt repudiation or cancellation. Yet many of these countries continue to borrow from the IMF, and for the long term. Burkina Faso, Malawi and Sierra Leone are among those that have been borrowing for more than a decade.
In some countries, the IMF is effectively acting as a general development lender. IMF staff justify this by saying the loans can be used for productive investments, increasing exports, and making a country less vulnerable to crises. That may be true, but loans might also be used, for example, to pay for consumption of luxury imports by elites – leaving the entire country with a debt to be paid.
The IMF accounts for 15% of all lending to low-income countries, and the World Bank is responsible for a further 30%. Debts in many countries are increasing again, with repayments by impoverished countries predicted to rise by one-third between 2010 and 2014.
One indicator of how rapidly debts are being created is the current account deficit. If imports are higher than exports, this has to be paid for by borrowing or other investments that create financial obligations. For the 15 low-income countries with which the IMF says it has had "long-term engagement" over the past decade, current account deficits have been increasing every year, from 6% of GDP in 2002 to 15% in 2011. This could be sowing the seeds of future debt and financial crises.
Saving low-income countries £40m a year is a positive result. But it will be a drop in the ocean if continued IMF lending contributes to more devastating debt crises in the future.
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Non-Greek organizations alter initiations The Dartmouth In an effort to combat hazing among non-Greek organizations and athletic teams, the Collis Center for Student Involvement and the Athletics Department implemented new policies at the beginning of Fall term requiring student organizations and athletic ... |
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 CBS Local | Romney: Obama Re-Election Would 'Put Us On A Road To Greece' CBS Local HEMPSTEAD, N.Y. (CBSDC/AP) — Republican presidential candidate Mitt Romney warns that the United States will go the same way as Greece if President Barack Obama is re-elected president. Speaking about the deficit during the town hall-style debate, ... Obama-Romney debate recap Obama leading US down 'road to Greece': Romney |
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 Livemint | FOREX-Euro hits 1-mth peak after Moody's affirms Spain rating Reuters Euro posts one-month highs versus dollar and yen. * Moody's keeps Spain credit rating in investment grade. * Spanish bond sale next in focus. By Masayuki Kitano and Ian Chua. SINGAPORE/SYDNEY, Oct 17 (Reuters) - The euro hit a one-month high ... New Zealand Dollar Higher Late After Moody's Reaffirms Spain Rating Opposition wanes to Spanish aid request Rupee extends gains on second day; euro rise hurts |
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OPINION: Greek leaders must provide leadership to address hazing The University of Alabama Crimson White Over the past two weeks, this newspaper has reported extensively on the atmosphere of our University's greek system – the largest in the nation – uncovering and exposing troubling aspects of such an integral element of our student life. With a simple ... |
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BLOG: Greek guy breaks down relationships and when girls should just walk away USD Volante Online (blog) I believe every person on this campus who isn't a complete introvert and has at least one female friend has heard the following at least once during each semester: “My boyfriend is such a jerk, like I don't even know why I date him sometimes.” This ... |
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 Sky News Australia | Asian shares, euro gain on US earnings, Spain hopes Reuters TOKYO (Reuters) - Asian shares rose to their highest in over five months on Wednesday as strong U.S. earnings reports lifted investor mood, while the euro hit a one-month high against the dollar as Spain retained an investment-grade debt rating. Growing ... Opposition wanes to Spanish aid request Spain Nears a Decision on Asking the European Union for a Bailout or Loan Euro Touches Month-High on Spain Optimism Before Summit |
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 The Economist | Greece and Germany The Economist AS a stiff Aegean breeze fluttered the hair and lapels of Angela Merkel's pale-green jacket, one Greek reporter thought the outfit looked familiar. The German chancellor, making a one-day working visit to Athens, seemed to have picked the same jacket ... Bond Prices Climb as Fears on Greece Ease Softening stance on Greece, Merkel rules out default Merkel stresses Greece should stay in eurozone |
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Sky News Australia | Spain Nears a Decision on Asking the European Union for a Bailout or Loan New York Times But if the call for help comes, it might stop well short of seeking an outright loan from Europe's bailout fund. Instead, Spain might simply seek a precautionary line of credit, to be used only in emergencies. Spanish government officials said on Tuesday that they ... Eurozone crisis as it happened:: Markets rise on 'bailout lite' plan for Spain Euro Touches Month-High on Spain Optimism Before Summit Here's Why Europe Must Do More to Save Its Currency Union |
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 New Straits Times | EU risks future as loveless marriage New Straits Times German Chancellor Angela Merkel meeting Greek Prime Minister Antonis Samaras in Athens on Oct 9. The visit indicates that Germany, EU's most powerful economy, wants Greece to stay in the euro area. Reuters pic. 1 / 1. THE European Union's Nobel ... Germany makes demands for Greek approval: report Merkel Sees “Change of Thinking” in Greece Germany shocks EU with fiscal overlord demand |
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 Bloomberg | Here's Why Europe Must Do More to Save Its Currency Union Bloomberg The battle to save the euro turns on one question: Can large governments, notably Italy and Spain, get their debts under control? Because they are in a monetary union, they can't take the easy way out by devaluing their currencies to make their obligations ... Eurozone crisis as it happened:: Markets rise on 'bailout lite' plan for Spain Euro Tops $1.30 on Spain Bailout Hopes Spain prepares to make rescue request |
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Greek coalition member Koivelis: Troika demands unacceptable to me ForexLive (blog) Greek coalition member Koivelis: Troika demands unacceptable to me. By Jamie Coleman || October 16, 2012 at 17:08 GMT. || 0 comments || Add comment. Kouvelis leads the Democratic left, the second largest faction in the coalition. The Troika wants more ... |
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 Washington Times | PATTERSON AND BROWN: Greece's grim future portends Western decline Washington Times Today, 2,500 years later, an angry horde is succeeding where the Persian army failed: Greece's public-sector unions are rioting in the streets and sacking the capital in protest of the government's desperate attempts to save the nation from fiscal ... |
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Should We Follow the Lead of Ancient Greece When It Comes to Punishing ... Huffington Post (blog) Having just returned from Greece and a tour of the incredible ruins of Olympia, the site in western Greece that hosted the Olympic Games from 776 BC and continued until AD 393 -- (1,169 years during which 293 Olympiads were held), one of the many ... |
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 Fifa.com | Greece wins at Slovakia 1-0 in World cup qualifier SI.com BRATISLAVA, Slovakia (AP) -Dimitrios Salpingidis struck in the second half to lead Greece to a 1-0 victory over Slovakia in a 2014 World Cup qualifier on Tuesday. Salpingidis capitalized on a defensive blunder by the hosts to score the winner from ... Salpingidis the hero as Greece win in Slovakia Salpingidis downs Slovakia Salpigidis bags three points for Greece in Slovakia |
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