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Greece’s tax revenues collapse as debt crisis continues

Fresh evidence of the dramatic impact of the Greek debt crisis on the health of the country’s finances has emerged, with official figures showing tax revenues collapsing.

As talks continued over a proposed €86bn third bailout of the stricken state, the Greek treasury said tax revenues were 8.5% lower in the first six months of 2015 than the same period a year earlier. The bank shutdown that brought much economic activity to a halt began on 28 June.

Public spending fell even more dramatically, by 12.3%, even before the new austerity measures the prime minister Alexis Tsipras has been forced to pass to win the support of his creditors for talks on a new bailout.

Greece is due to make a €3.2bn repayment to the European Central Bank on 20 August.

Talks with the quartet of creditors, which includes the ECB, the International Monetary Fund, the European commission and Europe’s bailout fund, the European stability mechanism, are continuing, and Tsipras has suggested they are “in the final stretch”.

However, it remains unclear whether the prime minister, who was only able to pass the latest package of austerity measures with the help of opposition MPs, will be able to win the backing of his radical Syriza party for new reforms, at a special conference due to be held next month.

The IMF has made clear that it will refuse to commit any new funds until Greecehas signed up to a new economic reform programme, and eurozone countries have made a concrete offer to write off part of the country’s debt burden.

Sweden’s representative on the 24-member IMF board, Thomas Östros, said there was strong support for a new Greek rescue, “but it will take time”.

He also noted that Greece must adopt wide-ranging reforms first. “They have an inefficient public sector, corruption is a relatively big problem and the pension system is more expensive than other countries.”

Despite the grim news on the public finances, Greek stock markets bounced back yesterday, after three straight days of decline, with the main Athens index closing up 3.65%.

In a separate piece of more optimistic news, official figures showed that the unemployment rate has fallen to its lowest level in three years – though it remains at a historic high of 25%.

Greek shares plummet as the Athens Stock Exchange reopens

The Athens Stock Exchange (ASE) plunged 22.86 per cent this morning, after it resumed trading for the first time in five weeks.

The country’s banks – Piraeus Bank, National Bank, Alpha Bank, and Eurobank – were the biggest losers, each suffering heavy losses of around 30 per cent. Banks make up about 20 per cent of the Greek index.

The exchange had been shut down on June 26, ahead of the government’s imposed capital controls to stop the possibility of capital flight from the country.

 

Market mavens had been expecting the sell-off with, Takis Zamanis, chief trader at Beta Securities, yesterday saying “the possibility of seeing even a single share rise in tomorrow’s session is almost zero”.

It comes as Greek Prime Minister Alexis Tsipras agreed to begin negotiations on a new €86bn (£61bn) bailout deal.

Talks on the deal will continue tomorrow, with a view to wrapping up an agreement before 20 August, when €3.2bn is due to be paid to the European Central Bank.

The disagreement between Germany and the ECJ

Whenever you are in a room with European officials and discuss the euro, there is usually somebody who raises his finger and says: “This is all well and good, but it is ‘against the rules’.” It then gets very quiet.

“Against the rules” is a big thing in Europe. Most people do not really know what the rules are. But they do know that rules have to be followed.

The situation reminds me of a short story by Franz Kafka, Before the Law, where a man tries to seek entrance to a courthouse. A door keeper tells him that this is possible in principle, but not at the moment.

The man spends his entire life in front of the court waiting to be admitted. At the end of his life he was told that he could have gone through the door at any time. That man followed the wrong set of rules — rules of the mind, not of the law.

Rules of the mind is what we are dealing with in the European debate about the single currency. Many of these rules either do not exist, or they constitute some rather far-fetched interpretation of existing rules.

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Greek deal exposes the flaws in Europe’s heart

It would take a heart of stone not to feel for the Greek people over recent events. For all that their casual approach to taxpaying and their taste for generous government spending have contributed to their country’s economic woes, the agreement their government has now struck with its creditors amounts to nothing less than national humiliation. The country that quarried the foundation stones of Western civilisation is now humbled, forced to impose more austerity measures and allow billions of euros of state assets into an internationally-controlled trust because its creditors do not trust its politicians to keep their promises. All this only days after the Greek people clearly voted against austerity as a condition for international bailouts.

 

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Greece debt crisis: Eurozone summit strikes deal

Eurozone leaders have agreed to offer Greece a third bailout, after marathon talks in Brussels.

Amid one of the worst crises in the EU’s history, the head of the European Commission said the risk of Greece leaving the eurozone had been averted.

Greek Prime Minister Alexis Tsipras said that after a “tough battle”, Greece had secured a “growth package” and debt restructuring.

Greece will now have to pass reforms demanded by the eurozone by Wednesday.

An EU statement spoke of up to €86bn (£61bn) of financing for Greece over three years.

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Greek Finance Minister Quits Despite ‘No’ Vote

Greece’s finance minister has announced his resignation after Greek voters decisively and “bravely” rejected a tough new bailout deal. Yanis Varoufakis said he had been “made aware” some members of the eurozone did not want him at the meetings of finance ministers.

He quit as the leaders of France and Germany prepared to hold emergency talks, adding: “I shall wear the creditors’ loathing with pride.” GREECE-EU-REFERENDUM-DEBT Varoufakis: “Aware” he was not welcome by some eurozone members Thousands of people waving flags and chanting “no, no, no” celebrated through the night in the centre of Athens as just over 61% snubbed demands for further austerity measures. Creditors had wanted more spending cuts in exchange for extending the country’s multibillion euro bailout deal until November. 1/23 People stand in front of a giant screen with referendum results at the Zappion conference center in Athens “No” supporters celebrate on a street in central in Athens Gallery:

Greece Referendum: Supporters Of The ‘No’ Campaign Celebrate Greece referendum “No” supporters celebrate referendum results on a street in central in Athens Greece referendum People stand in front of a giant screen with referendum results at the Zappion conference center in Athens “No” supporters celebrate on a street in central in Athens Gallery:

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Greece – How will Greece vote in Sunday’s referendum?

Large parts of the world are still struggling with the burden dumped on their shoulders by the financial crisis – even now, eight years after its onset.

And there are dangers not far beneath the surface that could easily cause a new setback.

Even if those risks don’t materialise, the outlook for this year, the IMF has said, is economic growth that is only “moderate with uneven prospects across the major countries and regions”.

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Greece closes banks after bailout talks break down

Greece has closed its banks and imposed capital controls to prevent financial chaos after the breakdown of bailout talks with its international creditors.

The move, which left many depositors scrambling for cash, came at the end of a weekend which saw Greece lurch closer to a potential exit from the European single currency, confronting the eurozone with a rupture unprecedented since its launch in 1999.

The escalation in the Greek debt crisis triggered a sharp reaction on financial markets on Monday. The euro was down by almost 1 per cent and European stock markets experienced heavy opening losses.

Greece’s financial stability council, grouping the banks, regulators and government, decided to impose the controls on Sunday night after the European Central Bank said it would freeze the amount of emergency loans it supplied to keep the Greek banking system afloat.

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Greek banks thrown fresh lifeline as ECB extends emergency support for the fourth time in a week

Greek banks were handed another funding lifeline yesterday as panicking savers continued to withdraw cash from the country’s crippled lenders.

The European Central Bank extended so-called emergency liquidity assistance (ELA) by nearly €1billion to around €89billion – the fourth increase in a week.

Greek banks have become dependent on ECB support as customers worried that the country and its financial system are on the brink of collapse withdraw billions of euros of savings.

But the lifeline could be cut in the coming days – forcing Greek banks to close – if Athens does not secure a deal with its creditors to stop the country defaulting on its debts.

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Why this week is vital for Greece and the eurozone

Why is this a crunch week for Greece?

The Athens government has been in debt talks with its international creditors for months in a bid to get them to release a last chunk of held-up bailout funds and avert bankruptcy. It needs the money to meet debt repayments and without it there is a fear that Greece will end up defaulting, which could precipitate its exit from the eurozone.

Talks at the weekend ended in a stalemate. Eurozone finance ministers meet on Thursday, possibly the last chance to unlock badly needed rescue funds for Greece before it has to repay €1.6bn (£1.2bn) to the International Monetary Fund at the end of June.

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Europe’s End Game

Finally, the endgame. After weeks of posturing, Greece is running out of time to escape bankruptcy and a forced exit from the European single currency. By Friday, as both sides scrambled to fix up a fresh round of talks for this weekend after the International Monetary Fund’s negotiators flew home in frustration, it appeared that European officials had been discussing how they might manage a Greek default.

It’s hard not to be mesmerised by the day-to-day drama of walkouts, public posturing and political intrigue, which may finally reach its conclusion in the coming days.

But as Greece hurtles towards the brink, it’s worth asking how we got here. The euro was always meant to be a political project above all – lifting Europe’s stragglers up to the living standards of the rest and, in doing so,k cementing the political ties between Athens and Antwerp, Madrid and Munich. Joining the club was a badge of political sophistication, as well as economic advancement; and clubbing together, it was thought, would help the European economy to act as a counterweight to the might of the dollar and the hegemony of US-style market capitalism.

It’s a measure of how far the eurozone has departed from that founding mythology that the IMF, the fountainhead of economic neoliberalism, has sometimes found itself having to act as a moderating force as the bailout talks have dragged on in recent weeks.

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