*Greece defaults but default arranged in such a way that tax payers will pay more
*All of the 109-billion euro new Greek bailout will go for financing Greek debt until 2014
*ESF to be able to buy debt on secondary market and issue bonds; transfer union cemented
*Key issues of Greek insolvency and lack of competitiveness not addressed
*Outright EU fiscal union and eurobonds avoided due to pressure from German parliament and electorate
*Eurozone continues on unsustainable trajectory of debt, low growth; next crisis preprogrammed
Thursday’s eurozone summit was hyped as a make or break moment for single currency bloc. But if the aim was to provide ease for eurozone tax payers, who are seeing an ever greater proportion of their taxes being transferred to an elite under the pretext of having to pay interest payments on fractional-reserve bank debt, it largely failed.
Clearly worried that the German parliament and electorates will rebell, the elite have pulled back from the brink of a creating an outright fiscal union and seem to be resorting, instead, to an ever more elaborate and subtle system of smoke and mirrors to pursue the same objetive — looting tax payers – albeit a little less aggressively, thereby allowing the eurozone to limp along a little longer as it is sucked deeper into a debt death spiral.
German economist Hans-Werner Sinn swept aside the hype and today strongly criticised the new Greek bailout package “as bad news for tax payers”, according to The Telegraph.
“Germany and France should not make policies that lead to the collectivisation of debts in Europe.
The financial markets are reacting very positively to yesterday’s agreements. As this is a conflict of apportionment between Europe’s tax payers and investors, this is bad news for tax payer,” Sinn said in an interview with Reuters TV.
“The socialisation of losses goes on as merrily as before: the extra money which is being given to the Greeks virtually as a present will never been seen again,“ Sinn told Die Welt.
Reiner Holznagel, vice president of Germany’s League of Taxpayers, also criticised the new eurozone bailout deal.
“There has to be improvement in this respect so that taxpayers aren’t constantly faced with new liability risks,. The EU decision that the bailout fund in the future can buy debt of states in crisis by itself seals the transformation into a liability union,” he said.
True, a precedent was set: a eurozone country was allowed to default on their debt. But Greece’s default was arranged in such a way that it will actually cost tax payers more money.
Greece is to get a new bail out of €109 billion – and all of this will end up in the pockets of the banks.
According to Austrian media, 88 billion will be used for refinancing Greek souvereign debt until 2014. Greece is set to spend 30 billion euros plus every year until 2015 on debt refinancing; in 2015 , a staggering 75 billion euros will be required by Greece to pay the interest. Read the rest of this entry »