Greece won't hit defecit targets

Graham_Devon

Markets are in panic mode again, as Greece has shocked us all <ahem> and told us they can't hit their bailout conditions, but they still want the money.

Of course they will get the money regardless and shares will rally again.

European stock markets opened sharply down on news that Greece is likely to miss targets to cut its deficit.

Athens announced that the 2011 deficit is projected to be 8.5% of GDP, down from 10.5% in 2010 but short of the 7.6% target set by the EU and IMF.

The government, which on Sunday adopted its 2012 draft austerity budget, blamed the shortfall on deepening recession.

Share indexes in London, Frankfurt and London opened between 2.5% and 3.5% lower. Asian stocks also fell.

Hong Kong's main index fell 5%, and Australia closed 2.7% down. The euro was 1.3328 against the dollar, an eight-month low.

Inspectors from the International Monetary Fund (IMF), European Union (EU) and European Central Bank are in Athens to decide whether Greece should get a key bail-out instalment.

Greece needs the 8bn euros (£6.9bn; $10.9bn) instalment to avoid going bankrupt next month.

Bankruptcy would put severe pressure on the eurozone, damage European bank finances and possibly have a serious knock-on effect on the world economy.

Unfortunately however, America's annoyance will very soon be completely justified.

wymondham

This is what annoys me - did anyone really think they would manage it??????? Yet all of a sudden share prices plundge on the 'shock'! ....... this is one big very silly game really isnt it?

The_White_Horse

why should they get it? if they do, i know what i would do if i was ireland, spain, portugal, italy etc. keep on spending baby, the free money is on its way!

ILW

The_White_Horse wrote: »

why should they get it? if they do, i know what i would do if i was ireland, spain, portugal, italy etc. keep on spending baby, the free money is on its way!

That does appear to be the case.

In Greece they have made all sorts of noises about raisning taxes, but are still not collecting them.

Most of the civil servants that have been laid off are withing a year of retirement and have gone with full pensions.

The German electorate are soon going to start turning rather nationalistic as they see themsleves as funding a rather lavish lifestyle for many Greeks.

IronWolf

The_White_Horse wrote: »

why should they get it? if they do, i know what i would do if i was ireland, spain, portugal, italy etc. keep on spending baby, the free money is on its way!

Hardly, the Greeks are already going through a very painful recession, with severe public sector cuts and mass strikes. Even if they are getting loans from the Eurozone, no sane country would want to end up like them.

pqrdef

Wow. 8.5% of GDP!

Not bad at all, considering GDP is plummeting.

If they keep this up, they'll be down inside the 3% target within 3 years.

In fact, I'd place a bet that within 3 years their borrowing position will be healthier than the UK's. Except of course, it is already.

MacMickster

wymondham wrote: »

This is what annoys me - did anyone really think they would manage it??????? Yet all of a sudden share prices plundge on the 'shock'! ....... this is one big very silly game really isnt it?

Unfotunately, it seems that the only people who expected Greece to have complied with these conditions are the people with our financial futures in their hands such as Pension Fund managers, bankers etc.

It fills me with much the same confidence that I would have in a blind bus driver heading towards a cliff.

IronWolf

pqrdef wrote: »

In fact, I'd place a bet that within 3 years their borrowing position will be healthier than the UK's. Except of course, it is already.

Uhm, I think not. The UK can still issue bonds to the market at reasonable interest rates. Greece on the otherhand cannot, noone will lend to it, which is why it needs to be bailed out all the time.

Graham_Devon

Well I've just sold out and taken a hit of 48% on one of my shares.

Had enough. Have another 2, just waiting for some news on one, and the other I'm down 62%, so no real point in selling up.

When I see so called investors cheering on 0.4% rises, I know it's a sign of desperation.

The best thing I have read today is Greece can be compared to a a very large turd on a string swaying dangerously close to a fan. Unfortunately, in front of that fan, is europe.

pqrdef

IronWolf wrote: »

Uhm, I think not. The UK can still issue bonds to the market at reasonable interest rates. Greece on the otherhand cannot, noone will lend to it, which is why it needs to be bailed out all the time.

I'm not surprised, given Frau Merkel's fondness for haircuts.

But there's nothing in the UK economy that justifies our current safe-haven status.

Our deficit reduction programme faces two big political risks. First, GDP is flatlining and everybody is telling Osborne to do something about it.

Second, council spending cuts are supposedly going to bite deeper and deeper all the way to the next election. But Cameron is never going to allow that - he's going to throw the gears into reverse at some point before 2015.

An attack on sterling and UK Treasury bonds would be harder and more expensive to mount than the attack on Greece. But I'm not convinced we could withstand it without a big devaluation and a big increase in interest rates.

ILW

pqrdef wrote: »

An attack on sterling and UK Treasury bonds would be harder and more expensive to mount than the attack on Greece. But I'm not convinced we could withstand it without a big devaluation and a big increase in interest rates.

At least that is an option we have.