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| Europe | |||||
| Greece will run out of money soon | |||||
| 2012-05-14 | |||||
| Greece's deputy prime minister has said the country will run out of money in six weeks unless it honours its bitterly-disputed EU bailout deal. The deputy prime minister also warned that chaos could boost the neo-fascist Golden Dawn party, which won an unprecedented seven per cent of the vote, and 21 seats, in Sunday's election. Speaking exclusively to The Sunday Telegraph, Theodoros Pangalos said he was "very much afraid of what is going to happen" after Greek voters rejected the deal in elections last Sunday. "The majority of the people voted for a very strange mental construction," he said. "We want to be in the EU and the euro, but we don't want to pay anything for the past."
Mr Pangalos warned: "There is a school of thought that says the Germans are bluffing. They need Greece and will never throw us out of the eurozone. But what will happen, which is almost certain, is they will not give us the money to pay our debts. "We will be in wild bankruptcy, out-of-control bankruptcy. The state will not be able to pay salaries and pensions. This is not recognised by the citizens. We have got until June before we run out of money.
"I'm sure the Germans don't want Greece to leave the euro. What I don't know is how much they're willing to pay. It depends on the German man on the street. Is he willing to pay his taxes to save Greece? I doubt it."
Mr Pangalos compared Syriza's charismatic leader, Alexis Tsipras, to Venezuela's Hugo Chavez. "Are the Germans going to pay for a guy that wants to imitate Chavez?" he said. "Except that Chavez has oil, and an army." The deputy prime minister also warned that chaos could boost the neo-fascist Golden Dawn party, which won an unprecedented seven per cent of the vote, and 21 seats, in Sunday's election. "In the places where the police voted, the fascists got 25 per cent," he said. "They are a serious threat. They have used violence already -- you don't know where it will stop. "You know how it happened in Germany -- it started with the Jews, then the Communists, then everybody -- it could happen here. This is the country, after the Soviet Union and Germany itself, with the biggest percentage of [Second World War] casualties in its population."
The economy has shrunk by 8.5 per cent in the last year. More than a fifth of the population is out of work and youth unemployment is almost 54 per cent. Pasok, together with the main conservative party, New Democracy, previously won up to four-fifths of the vote. Last week, the two established pro-bailout parties were reduced to 32 per cent between them. The streets are calmer since the election. Though Greeks are fearful, there's also satisfaction at the blow they've dealt to their former rulers. But the casualties of the bailout are everywhere. On the pavements, junkies openly inject in the middle of the day. And what is striking about Athens beggars is how clean and well-groomed so many are: not stereotypical street-dwellers, but working and professional people deep down on their luck. Yiannis Bournos, Syriza's European policy spokesman, told The Sunday Telegraph that Greece could afford to reject the bailout deal because European policymakers dared not risk Greece triggering a domino effect -- and a potential depression - across Europe. "Mr Schaeuble [Germany's finance minister] is pretending to be the fearless cowboy on the radio, saying the euro is secure [against a Greek exit]. But there's no way they will kick us out," he said. "If we left the euro, the financial markets would attack Italy. If you owe 3000 euros to the bank and don't pay, they will kill you. If you owe 10 billion euros, they will do everything for you." He criticised the deputy prime minister's remarks, saying: "Mr Pangalos is in his own sphere. When reality does not agree with him, reality has a problem. It's unbelievable to see the same representatives of the banking interests and of neoliberalism saying that nothing can change. It reminds me of religious fundamentalism. There have been so many changes in Europe in the last two weeks." Mr Bournos said that even if the EU cut off payments the Greek government could still pay salaries and pensions from its domestic tax revenues. He said the country would seek alternative sources of financing from China, Russia and the Middle East.
"If Athens doesn't stand by its word, that is a democratic decision," said the Bundesbank chief, Jens Weidmann, in an interview with the Suddeutsche Zeitung newspaper. "But that means the basis for further financial aid falls away." Mr Weidmann insisted the consquences of Greece leaving the euro "would be more serious for Greece than the rest of the eurozone". Jonathan Tepper, an economist with Variant Perception, said a debt default and Greek euro exit would happen at only moments' notice after weeks of denials by all concerned. "To avoid immediate runs on banks, it would be done in a 'surprise' announcement over a weekend when markets and banks are closed," he said. "If necessary, Monday and Tuesday would be declared bank holidays as well." During this period, diplomats in Athens have been told, cash machines would be turned off and all banks closed. Inside, staff would be "redenominating" euro notes into the new drachma, probably by rubber-stamping them. Capital controls would be imposed to stop Greeks transferring money out of the country electronically and border checks would be reinstated to prevent them taking out unstamped euros in suitcases. Mr Tepper is one of a growing number of economists who believe that the so-called "Grexit" might actually be better than years and years of EU-mandated misery. "In the past century, 69 countries have exited currency areas with little downward volatility," he says. "The experience of emerging-market countries, such as Argentina, Russia and the 'Asian tigers,' shows that the pain of devaluation would be brief, and rapid growth and recovery would follow." Most economists think that a new, free-floating drachma would immediately crash by up to 50 per cent against the euro and other currencies, effectively halving the value of everyone's savings and spelling catastrophe for those on fixed incomes, like pensioners. | |||||
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