BRUSSELS (AP) — Disagreements over Greece’s massive budget deficits and how to make up for the funding shortfalls led international debt inspectors to suspend their review and leave Athens on Friday, as the finance minister warned an even deeper recession will hurt its deficit-cutting efforts.
The unexpected departure of Greece’s debt inspectors — officials from the European Commission, the European Central Bank and the International Monetary Fund — marks yet another occasion of conflict between international institutions demanding greater reform efforts and a government and country that are reaching their limits.
Greek Finance Minister Evangelos Venizelos, who denied there were any serious disagreements, said Greece’s economy will likely shrink up to 5 percent this year — even more than the 4.5 percent decline seen in 2010 and far above the 3.75 percent drop in 2011 output expected just three months ago.
A return to growth next year also looks increasingly unlikely, Venizelos warned.
The ever worsening recession will make it harder for Greece to cut its budget deficit to 7.5 percent of gross domestic product by the end of this year, as it had promised in return for the bailout loans it needs to avoid bankruptcy.
Greece has been slashing spending and raising taxes since the government discovered in late 2009 that it was running a much larger deficit than its predecessors had claimed — some 15.4 percent of economic output — and that it had run up almost euro300 billion in debt.
As Venizelos prepared his nation for even more economic pain in a news conference Friday, the finance minister vowed that there will be no further “revenue generating measures,” government jargon for tax increases.
“The main thing for us is to halt the recession,” Venizelos told journalists. “To not have actions or omissions that will make the recession deeper and will not allow us in 2012 to have a better macroeconomic performance.”
Venizelos said the departure of the so-called troika had been foreseen and that the experts would return in less than two weeks, once the government had finished its draft budget for 2012.
The talks “were conducted and are being conducted in a very friendly and creative climate,” Venizelos added.
But a European Unions official told the Associated Press that the interruption of the troika’s mission was unplanned and that it came amid disagreements over the level of Greece’s deficit in 2011 and 2012 and how to deal with those budget shortfalls.
The mission had been expected to conclude early next week, the official said. He was speaking on condition of anonymity because of the sensitivity of the issue.
Greece was granted a euro110 billion ($157 billion) bailout from other eurozone countries and the IMF in May 2010 and has been promised an extra euro109 billion to keep it afloat until mid-2014.
Since then, the EU, the ECB and the IMF have been checking on the country’s reform efforts every three months, adjusting their economic projections and demanding more cuts to make up for shortfalls.
Their departure Friday brought back memories of a similar incident during their most recent mission in June, when the troika left Athens and only returned weeks later, after Greece’s parliament passed an extra euro28 billion in cuts and a euro50 billion privatization plan.
But it is unclear whether there is room for even more efforts this time.
Greece’s troubles are being worsened by a slowing global economy, with growth tapering off even in strong countries like Germany and the U.S.
Venizelos said Greece’s deficit targets have to be adjusted for the worse-than-expected recession, since much of the economic decline is outside the country’s control.
The finance ministry declined to release new projections for its 2011 deficit, but press reports have put the figure above 8 percent. The troika, meanwhile, insists that the technical adjustment for the steeper recession would raise the target only to about 7.7 percent from 7.5 percent currently.
Greece has been struggling to meet its targets, particularly those for revenue, not only because of poor economic growth but also because tax evasion remains rampant and it has been slow to implement reforms its creditors say will make it more competitive.
In a statement Friday, the troika said it “temporarily left Athens to allow the authorities to complete technical work, among other things, related to the 2012 budget and growth-enhancing structural reforms,” adding that it plans to return by mid-September.
That leaves little time for the troika to complete its final report before Greece has to receive its next aid installment, some euro8 billion, at the end of September.
Eurozone nations are also struggling to finalize the terms of the second Greek aid package. A demand from Finland to get collateral for its contributions to the rescue loans has angered other countries, while Greece has threatened to abandon a crucial bond swap deal for private investors unless it gets 90 percent participation.
Amazon.com Inc has proposed a hiring spree of 7,000 jobs in California if state leaders put a recently enacted online sales tax on hold for two years.
The offer comes as California contends with the second-highest unemployment rate among U.S. states and broad anxiety about the national economy.
The tax, which took effect on July 1, requires retailers outside of California to collect sales taxes on online orders made through California-based affiliates. If it is not enforced until 2014, the largest Internet retailer also would drop its effort to put a measure to California voters that would repeal it.Comments »
WASHINGTON (AP) — The House Republican agenda this fall will focus on repealing environmental and labor regulations that GOP lawmakers say are driving up the cost of doing business and discouraging employers from hiring new workers.
House Majority Leader Eric Cantor, R-Va., says in a memo to his fellow Republicans that as soon as Congress returns to Washington next week he will start bringing up bills to repeal or restrict federal regulations. He also said the House would also act on a small business tax deduction.
The memo was released Monday.
The GOP approach to job creation comes as President Barack Obama prepares to announce after Labor Day a broad jobs package expected to include tax cuts, infrastructure projects and help for the unemployed.
“By pursuing a steady repeal of job-destroying regulations, we can help lift the cloud of uncertainty hanging over small and large employers alike, empowering them to hire more workers,” Cantor said in his memo.
He said that in the first week after Congress returns from its August recess the House will vote on a bill preventing the National Labor Relations Board from restricting where an employer can locate in the United States.
The bill is in response to an NLRB lawsuit against Boeing Co. claiming that the manufacturer violated labor law in opening up a new airplane production line in South Carolina. The agency alleged that Boeing was punishing workers in Washington state for past strikes and wants the company to return the work to Washington. Boeing denies the claims.
The next week the House will consider a bill to delay implementation of new Environmental Protection Agency emission and air pollution rules for utility plants until the full impact of the Obama administration’s regulatory agenda has been studied. Cantor said the new rules could drive up electricity bills in many parts of the country by 12 to 24 percent.
Also on the agenda are new EPA emission rules for boilers that Cantor said could put 200,000 jobs at risk and similar regulations for cement and coal ash.
PARIS (AP) — President Nicolas Sarkozy’s government has bowed to economic reality, admitting its growth forecasts were overly rosy and announcing an euro11 billion ($16 billion) austerity package in a bid to ensure that France doesn’t miss a vital pledge to cut its deficit.
The government unveiled the package of spending cuts and tax increases two weeks after France came under fire by investors who feared the country’s high debt and deficit levels, as well as its role bailing out weaker European partners like Greece.
Prime Minister Francois Fillon said the austerity package is vital for France to keep its pledge on deficit reduction and maintain its triple A credit rating.
France has not managed to balance its budget in three decades, and Sarkozy has staked his credibility on hitting a series of deficit targets over the next three years.
Fillon blamed the international economic slowdown for France’s failure to achieve the 2 percent growth this year that Finance Minister Francois Baroin said only last week was still within reach.
The country now expects to grow only 1.75 percent this year, and the same amount in 2012. The government had built its 2012 budget, a critical election year for Sarkozy, on a target of 2.25 percent growth.
Sarkozy’s austerity package consists largely of closing tax loopholes and scraping deductions for the country’s largest companies. But it also includes a euro200 million tax hike on the country’s wealthiest taxpayers via a 3 percent “exceptional contribution” on incomes over euro500,000.
It would be “treasonous” if Chairman Ben Bernanke tried to use Federal Reserve policy to stimulate the economy before the election, Texas Governor Rick Perry said at a campaign stop in Iowa.
During an appearance in Cedar Rapids, in what appeared to be a backyard with a child’s slide, Perry invoked folksy language to explain what he’d like to do to Bernanke if the chairman decides to engage in more quantitative easing.
According to a video appearing on the left-leading website Think Progress, a reporter asked Perry what he would do about the Federal Reserve.
Standing next to a “Perry President” sign, the governor replied, “If this guy prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas.”
“I mean, printing more money to play politics at this particular time in American history, is almost treacherous, or treasonous, in my opinion,” he added.
This could be the bottom folks…short term that is since we have many structural problems; at least good for some mom trade. Berlusconi speaks in 25 minutesComments »
short covering coming into the markets…..Comments »
WASHINGTON (AP) – President Barack Obama has signed legislation to increase the nation’s borrowing authority and avert a potentially catastrophic government default.
Obama signed the bill privately in the Oval Office little more than an hour after the Senate voted final passage. It capped months of contentious and partisan debate. The compromise bill paired an increase in the debt ceiling with promises of more than $2 trillion of budget cuts over the next decade.
Pardon me, I know most of you don’t care about state specific politics. However, given how Michigan was the only state to my knowledge to be in a recession during the housing boom, and the general pathetic level of public finances that can be found here, I thought I’d pass this along.
The effort to recall our new governor here in Michigan, the estimable Mr. Rick Snyder, after coming out of the gate hot in response to the cuts in our bloated and most ineffective education system, has flamed out horribly.
Today, in a local newspaper, it was reported that the effort managed to raise $24,089.
(laughter) I’ve been flicking these people off as they passed out papers on the corners for months, so this is pretty vindicating for me.
A good amount of that money came from out of state. Although an all volunteer movement, it’s looking increasingly like an epic fail from these tots. They have until the beginning of August to come up with the 800,000 some odd signatures they need to put Snyder up for recall. I look forward to pissing on their graves.Comments »