Greece to Unveil Cuts to Get Approval for Bailout

[Elmore Furth]

Source: NY Times

By DAN BILEFSKY and LANDON THOMAS
Published: May 2, 2010

ATHENS — Prime Minister George Papandreou of Greece was to unveil Sunday a raft of tough austerity measures, clearing the way for long-delayed 120 billion euro rescue package aimed at helping the country avoid a debt default and preventing economic contagion from spreading throughout the region.

The unprecedented bailout of a member of the 16-nation euro zone, which was expected to be revealed later on Sunday, marks the culmination of months of often fraught negotiations. The crisis has tested the credibility of the single currency and created some of the deepest fissures in the European project since its inception, more than half a century ago.

Greek officials said Greece would slash public sector spending by 8 billion euros in the 14 months after the plan was adopted. They said Greece had also pledged to raise its value-added tax to 25 percent , to freeze civil servants’ wages and to eliminate public sector bonuses amounting to two months’ pay. The government would pass legislation increasing the monthly annual quota of workers companies can fire from two per cent to four per cent. It also intended to increase taxes on fuel, tobacco and alcohol.

Crucially, Greek officials said the plan included potentially politically explosive measures that would make it easier to lay off thousands of public sector workers, whose generous salaries and benefits have been a key cause of Greek’s debt problem. Until now, the government has not been able to lay off civil servants, whose employment rights are in effect constitutionally guaranteed.



Read more: http://www.nytimes.com/2010/05/03/business/global/03drachma.html?src=busln

[Unvanguard]

1. This was probably the least bad option.

As Krugman has emphasized so much recently, there is a lesson for all of us in this: do not straitjacket the government's capacity to respond to adverse economic conditions.

[David in Canada]

2. What about the rich?

Why do the poor and middle class have to bear the brunt of the crisis? Why not hike taxes on the rich until the situation stabilizes?

It is some kind of unwritten IMF and/or ECB rule that the poor have to be screwed over whilst the rich don't have so much as a hair on their pretty coiffed heads disturbed?

[fasttense]

3. Good question.

It seems the uber wealthy in Greece and Europe have finally got their way. Destroying the pensions and jobs of the middle class and poor is the only way the IMF operates.

They dare not tax the stock speculators, banksters, and CEOs at 95% as they should or ensure Corporations pay their fair share on their enormous profits, because they may down grade their bonds again, or not loan them anymore fake money or some other vaguely worded blackmail. The richest, most unscrupulous and dirties one percent of the world don't give a rat's a** if every last person on the face of this earth were to die, as long as it isn't them.

This is the Shock Doctrine destroying a path through the world. Coming soon to a neighborhood near you.

[Greyhound]

4. That's not how the IMF works. It works for huge corporations and the banks/insurance companies

that own them. This is what they do, force governments to slash and burn any and all funding of community support, squeeze the working class until until it is too weak to fight, and then free up their members to rape and pillage until there is nothing left but massive debt. This supplants civilian government and leaves the people with no means to fight back against the plundering.

[Better Believe It]

6. The rich decide the rules of the "bailout". Just like in the United States.

Why should the rich pay the taxes when they run the economy and government?

That wouldn't make any sense .... if you're filthy rich.

[ClarkUSA]

12. The rich are practicing tax evasion to the tune of $30B per annum. n/t

[Psephos]

14. Not just the rich. EVERYONE practices tax evasion in Greece. It's part of the culture. n/t

[ClarkUSA]

15. Really? Do you have details about that? n/t

[hack89]

16. For what's worth, I did find this article

Cherished aspects of Greek life, from widespread tax evasion to the bonuses which transform Easter holidays, are set to be swept away by the flood of financial aid, and the preconditions accompanying it.

"The extent of tax evasion is not exaggerated," said Irini Skouzou, who runs Company Set Up, a consultancy helping businesses with tax and legal affairs in Greece. "And the bureaucracy is so bad that even companies that want to pay tax have found it very difficult. They have been unable to register with local tax authorities."

Many take-home salaries will be effectively halved overnight by severely increased taxes, rising in some cases from less than 10 per cent to 38 per cent, and by the fact that those taxes will now have to be paid. Workers who had looked forward to a comfortable retirement in their mid-50s on up to 80 per cent of their final salaries now face the prospect of working on for more than another decade, for less at the end.

http://www.telegraph.co.uk/news/worldnews/europe/greece/7664764/Revolution-from-Greeces-ruins-as-crisis-deepens.html

[bemildred]

5. Government of Greece to be thrown out on its ass. nt

[Better Believe It]

7. Would anything short of a "revolution" in which the wealth of the filthy rich is confiscated work?

If so, what could it be?

[bemildred]

8. I assume that is a rhetorical question.

I'm not sure what the intention is, sarcasm or something else.

[Better Believe It]

13. I can't thing of anything short of the working class establishing what has been called

"duel power" could prevent the austerity measures and end the economic crisis in Greece.

So I wasn't being sarcastic and would like to hear other ideas DU'ers have on how this austerity plan could be defeated.

[bemildred]

17. The people in Argentina did it.

They got fed up, I think that is a good model. I think it is true that they will have to throw the government out, maybe even more than once.

[BolivarianHero]

9. Doing this in Greece is playing with fire...

The far-left is very powerful.

[bemildred]

10. I hope you are right. It will be interesting to see.

We all have an interest is seeing that this sort of exploitive crap does not succeed.

[Citizen Worker]

11. Shock doctrine for Greece

Naomi Klein calls it the Shock Doctrine. If the IMF follows its usual remedy for economic crises watch for the sell off of the Greek commons. I heard several days ago, although without attribution, that it was suggested to the Greek government to sell off some of the Greek islands. No doubt these islands would be purchased by the uber rich. Watch for a massive contraction in public sector employment and services with privatization to come next. Next up on the sacrificial altar to global capitalism is Portugal, then Ireland and Spain.

[DCBob]

18. Lets hope this works because we may all be screwed if Greece economy collapses..

because the "contagion" will likely spread.