Hardline IMF forced Germany to guarantee Greek bailout

Source: The Guardian

Germany was forced to agree to bail out Greece for the second time in a year under strong pressure from the International Monetary Fund following the resignation last month of its head, Dominique Strauss-Kahn, the Guardian has learned.

Under its acting chief, the American John Lipsky, the IMF has taken a more hardline stance. The fund warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece's rescue.

Senior officials and diplomats in Brussels confirmed that the IMF threat to pull the plug on its funding, in stark contrast to the more emollient line of Strauss-Kahn, had been defused because of a German climbdown.

As political turmoil continued in Greece on Thursday, with the prime minister, George Papandreou, scrambling to form a fresh government, the stage was being set for a political struggle between Europe's powerbrokers over the fine print of the proposed new €100bn-plus rescue of Greece.

Read more: http://www.guardian.co.uk/business/2011/jun/16/imf-forced-germany-to-guarantee-greek-bailout

They have no reason to pay for Greece's financial problems. This will be argued over the kitchen tables.

And one of their complaints is why should they bail out Greece so that Zorba can retire at 45.

The people who are paying don't make distinctions about the way-points in a transfer.

Tell them they are propagating racist stereotypes. Also, they are the lazy ones, intellectually speaking. They have no clue whatsoever about the financial crisis and obviously aren't interested in going beyond rudimentary cliches. The EU-French-German "bailout" isn't going to Greece! Greeks will see NOTHING of it. The "bailout" is going to pass through Greece for a minute before going back out to cover interest payments to German (and French and Dutch) banks.

This is another reason why Greece needs to liberate itself by defaulting on the odious debt now. That way, when German taxpayers are forced to bail out the German banks directly your ignorant German nationals will at least know who is really picking their pockets. It's not "Zorba," it's Frankfurt.

A year ago, during the first Greek crisis, see this thread for the real story:

Essay: Let us reject the anti-Greek mythology...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=8416528&mesg_id=8416528

Greeks work longer hours than Germans, have terrible wages and pensions by comparison, and the average Greek household carries LESS debt than German households.

Greece is caught up in a world economic crisis that it did not cause.

Ireland ran budget surpluses, liberalized markets, cut wages and was the poster child for neoliberalism. When the banks crashed Ireland was screwed just like the other countries and overnight ended up in enormous debt (because of the idiotic decision to bail out the Irish banks, who had participated in the Wall Street frauds). Ireland is now in an even worse financial pickle than Greece. Maybe your prejudiced German acquaintances can blame it on leprechauns.

Would you agree with some Tea Partiers claiming they don't want to pay taxes to subsidize the lazy Cheesehead union protesters in Wisconsin? Because that is the level of discourse on which your German acquaintances are engaging.

The fiscal crises around the world have nothing to do with national cliches and everything with the crashes caused by the deregulated global banking system in a few financial centers. The IMF and the ECB now move in to plunder whatever can be squeezed on behalf of the banksters.

.

That's exactly what the IMF / EU / financial elite have in store for ordinary people in Greece and all of Europe. The feeble, colluding and corrupt Greek ruling class is in no position to offer any resistance.

And yes, these are defaults, otherwise they wouldn't need to be bailed out with over a hundred billion dollars each time.

They are going to go under at some point and those hundreds of billions of dollars are going to be sucked down as well, pulling all the banks in the EU with them.

Second plunder to the banksters who put Greece and the rest of the southern tier in this mess in the first place.

Default is exactly what Greece needs to do: liberate as-yet unborn generations of Greeks from the obligation to pay off the odious debt imposed by the bond gangsters.

They need to be able devalue their own currency.

It'll cause more cuts than the current austerity measures but would be better in the long term.

However, any debts to be repaid shall be denominated in drachmas. Tough for creditors, but there's no obligation for debtors to die (or enslave their children) if they can't pay.

The whole point would be building a different economic model.

The first question would be, how can Greece feed itself?

How can Greece move to a mix of energy solutions, using its solar wealth?

> Germany was forced to agree to bail out Greece for the second time in
> a year under strong pressure from the International Monetary Fund
> following the resignation last month of its head, Dominique Strauss-Kahn ...
>
> Under its acting chief, the American John Lipsky, the IMF has taken a more
> hardline stance. ...
>
> Senior officials and diplomats in Brussels confirmed that the IMF threat
> to pull the plug on its funding, in stark contrast to the more emollient
> line of Strauss-Kahn, had been defused because of a German climbdown.

:think:
:yoiks:

Eventually Greece will default and then the protestors will really have something to protest about - no public sector salaries or pensions paid at all for a while.

..but I'd still default if I were them. Drop the Euro, bring their old currency back, and go for a fresh start.

It will be a total nightmare, and as you correctly point out the protesters probably don't grasp the gravity of the situation - but endless years of "austerity" is a path to violent instability and essentially being dictated to by the IMF/EU/Big Banks.

Personally, I'd rather take a couple years massive pain and at least see a light at the end of the tunnel. The path Greece is currently on is hopeless.

They just stop paying their creditors.

Defaulting means no more loans and then no means to pay.

It'll really suck in the short term, but probably the best long term solution.

Last I checked, even if Greece entirely defaulted they'd still run a significant deficit without massive, crushing cuts (much worse than what are being proposed currently). Since a default would mean they couldn't borrow money, they literally wouldn't have the flexibility to run a deficit at all which would mean, at least in the short run, even more brutal austerity than they have now.

I still think default and dumping the Euro is the best options, but it is going to be extremely painful for the Greek people either way.

Greece is just the beginning.

The weak Euro and struggling periphery EU countries have been a massive boon for German industry and the German economy in general.

If German voters realize this, they will be content to give Greece just enough to painfully struggle along forever. It just may be in Germany's interest to keep things just as they are.