Meanwhile, in yet another KICK the CAN moment, in a now nearly 4 year global kicking motion, preparations are being made
European markets are taking the bailouts in stride, with smallish losses, as the expectation now is that no one will ever take medicine, and moral hazard is now ingrained in world markets. Don't worry if you missed this story, I expect in summer 2012 we'll be talking about a new round of monies handed to the Greeks so they can keep the European bankers whole. And don't forget the Irish who should be ready for their second rescue soon enough. Round and round we go, where the bailouts end, no one knows.
- The European Union is urgently working on a second bailout package for Greece in a race to release vital loans next month and avert the risk of the euro zone country defaulting, EU officials said on Monday.
- Greece's conservative opposition meanwhile demanded lower taxes as a condition for reaching a political consensus with the Socialist government on further austerity measures, which Brussels says is needed to secure any further assistance.
- Moves to plug a looming funding gap for 2012 and 2013 were accelerated after the International Monetary Fund said last week it would withhold the next tranche of aid due on June 29 unless the EU guarantees to meet Athens' funding needs for next year. Senior EU officials held unannounced emergency talks with the Greek government over the weekend, an EU source said.Greece currently aims to raise 50 billion euros from privatizations by 2015 to help stave off a fiscal meltdown, but the country lacks a proper land registry and ownership of many potentially lucrative assets is legally uncertain.
- Greece took a 110 billion euros ($158 billion) rescue package from the EU and IMF last May but has since fallen short of its deficit reduction commitments, raising the risk of a default on its 327 billion euro debt -- equivalent to 150 percent of its economic output.
- The tax cuts sought by the opposition could aggravate a revenue shortfall which a "troika" of EU/IMF inspectors found on a review mission in Athens, due to be concluded this week.
- EU officials said a new 65 billion euro package could involve a mixture of collateralized loans from the EU and IMF, and additional revenue measures, with unprecedented intrusive external supervision of Greece's privatization program. "It would require collateral for new loans and EU technical assistance -- EU involvement in the privatization process," one senior EU official said, speaking on condition of anonymity.
- Extra funding for Greece faces fierce political resistance from fiscal conservatives and nationalists in key north European creditor countries -- Germany, the Netherlands and Finland -- complicating EU governments' task.
- Mass unemployment and wage and benefit cuts due to the EU/IMF austerity plan have triggered spontaneous youth protests in Greece as well as a series of one-day strikes by powerful trade unions.
- Weekend comments by an Irish minister that Dublin too may need a second rescue package may also fuel alarm about further bailouts. Transport Minister Leo Varadkar told The Sunday Times newspaper that Ireland was unlikely to be able to return to capital markets next year as foreseen in its EU/IMF program. "It would mean a second program (of emergency loans)," he was quoted as saying.
- The European Central Bank for its part continues to oppose any attempt by EU politicians to restructure Greece's debt mountain, even by asking investors to accept a voluntary extension of bond maturities.