EU strips Greece of voting power, blow to sovereignty

[Yala]

Greece loses EU voting power in blow to sovereignty

The European Union has shown its righteous wrath by stripping Greece of its vote at a crucial meeting next month, the worst humiliation ever suffered by an EU member state.

The council of EU finance ministers said Athens must comply with austerity demands by March 16 or lose control over its own tax and spend policies altogether. It if fails to do so, the EU will itself impose cuts under the draconian Article 126.9 of the Lisbon Treaty in what would amount to economic suzerainty.

While the symbolic move to suspend Greece of its voting rights at one meeting makes no practical difference, it marks a constitutional watershed and represents a crushing loss of sovereignty.

"We certainly won't let them off the hook," said Austria's finance minister, Josef Proll, echoing views shared by colleagues in Northern Europe. Some German officials have called for Greece to be denied a vote in all EU matter until it emerges from "receivership".

The EU has still refused to reveal details of how it might help Greece raise €30bn (£26bn) from global debt markets by the end of June.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7252288/Greece-loses-EU-voting-power-in-blow-to-sovereignty.html

[wat0n]

Regardless of all the problems with the euro, they deserve it, actually.

[bararallu]

Bye Bye EU.

[Cellis]

I'm soooooooooooooooooo happy to see this inevitable tragedy

[bararallu]

Come on it was a train wreck from the outset. The assumption was always that the Germans were going to pay the way. They just arent going to do that. They covered the Italians a few years back, the Spanish etc. Now they just had enough. The economy sucks and they're unwilling to foot the bill. There are reasons that the Swiss never joined the EU, and that has nothing to do with privacy laws etc...

I'm also fairly sure that a 5th of the Greek economy is funded by German [and possibly British] tourists, who are all to willing to pay 10 dollars for a can of cola.

[dayag]

...The European Union has shown its righteous wrath by stripping Greece of its vote at a crucial meeting next month, the worst humiliation ever suffered by an EU member state...


Quick, admit Macedonia to the EU and make their humiliation complete!

:rofl:

[Yala]

and Italy is next.

[bararallu]

and Italy is next.

I say Portugal or Spain, but you may be right.

[Kachah]

Quick, admit Macedonia to the EU and make their humiliation complete!

:rofl:
And rename Former Yugoslav Republic of Macedonia into just Macedonia
and
Greece into Former European Republic of Greece:rock:

[Kachah]

I say Portugal or Spain, but you may be right.Portugal most likely. By the time Germany bails out Greece and Portugal it will be too late to deny the same for Spain and Italy, that's what really the Germans are worried about.
Given that Belgium and the UK are in only marginally better shape.. things that make you go "m-mmmm".
Good riddance, EU, see you never.

[wat0n]

Come on it was a train wreck from the outset. The assumption was always that the Germans were going to pay the way. They just arent going to do that. They covered the Italians a few years back, the Spanish etc. Now they just had enough. The economy sucks and they're unwilling to foot the bill. There are reasons that the Swiss never joined the EU, and that has nothing to do with privacy laws etc...

I'm also fairly sure that a 5th of the Greek economy is funded by German [and possibly British] tourists, who are all to willing to pay 10 dollars for a can of cola.

Yes, and the whole EU assumed that a common currency with no EU-level fiscal policy would work just fine, unfortunately they were dead wrong...

[takeo]

untill now, Euro worked well and it's stronger than $ or pound. Many Brits now think about adopting the euro, as well as icelandics and Swedes. Iceland formally requested to join the euro and EU. European economy suffered less during the recent crisis than the American economy. By the way the deficit of Greece is still smaller than the deficit of for example California. But I agree admission to the euro zone of some relatively poor southern European countries came too early, it should have been limited to the countries of North Western Europe. Now I 'm sure Poland, Hungary and others will be scrutinised before they'll ever be admitted to the euro, and European expansion is on a hold. Everyone will think twice before admitting countries like Ukraine or Turkey. Back in the 80's German chancellor Willy Brandt was against Greek entry, which he believed to be a half third world country. Greece was admitted mainly for political reasons.
But what makes me curious is why you people are so much against the EU and euro and wish them bad luck? Perhaps because it's a serious contender for the US? It's still the largest economy in the world. I'm not a real EU fan but at least as far as economics go, it made life better and easier for most of us, and now we have a strong currency. The greek debacle made the euro weaker, but it's still at a much higher level than 10 years ago compared to the dollar.

[Sanket]

It's still the largest economy in the world.

Different Countries!

[Mediocrates]

I'm agnostic on it. If Germany wants to bail out Greece, Portugal and Ireland. Fine. That's their deal. If not, the takeos of Europe will claim that Germany has become a Zionist dominated fascist state anyway, for NOT doing that. Who really cares either way?

[wat0n]

untill now, Euro worked well and it's stronger than $ or pound.

That's precisely the problem for Portugal, Ireland, Italy, Greece and Spain.

If they had their own currencies they could devaluate their currencies and stop the crisis some months later, but they don't so adjustment will be done the hard way (with internal deflation, high unemployment and very low or negative growth).

Krugman explains the problem very well, much better than I could:

http://www.nytimes.com/2010/02/15/opinion/15krugman.html?partner=rssnyt&emc=rss

[Yala]

I'm agnostic on it.

I also don't care one way or the other about the Euro. I think it will be a failure eventually, but I really don't care either way.

[ranchcer]

European central banks have been pumping millions into the system in order to absorb US
toxic debt, restart the economy and have the banks to generate some fresh profits. of course this doestn't come cheap and there is a price to pay. However to those who think that EU will disintegrate, i'll say come back another day:p one of the most stable currency in the world (5 per cent against the dollar las year) will not go down in flame b/c Brussels wants to enforce a little financial discipline among EU members, quite the opposite. it will bring around some in-depth reforms and longer term benefits.

[wat0n]

European central banks have been pumping millions into the system in order to absorb US
toxic debt, restart the economy and have the banks to generate some fresh profits. of course this doestn't come cheap and there is a price to pay. However to those who think that EU will disintegrate, i'll say come back another day:p one of the most stable currency in the world (5 per cent against the dollar las year) will not go down in flame b/c Brussels wants to enforce a little financial discipline among EU members, quite the opposite. it will bring around some in-depth reforms and longer term benefits.

I doubt the euro will go either, but it will hurt some of the weakest economies in the Eurozone by making adjustment much harder.

[Kenneth]

Exactly, the Deutsche Mark, I mean the Euro is here to stay, as is the EU, how can it afford not to, there are Chinamen in the Congo right now, ready to pick up where Leopold left off.

[takeo]

I'm agnostic on it. If Germany wants to bail out Greece, Portugal and Ireland. Fine. That's their deal. If not, the takeos of Europe will claim that Germany has become a Zionist dominated fascist state anyway, for NOT doing that. Who really cares either way?

Why single out Germany? France too is bailing out.

[takeo]

I also don't care one way or the other about the Euro. I think it will be a failure eventually, but I really don't care either way.

you hope it would be a failure (for whatever dark reason), but for the moment it's still a lot stronger than the dollar, which makes, for example, my travels affordable. (for exporting companies it's not an advantage tough)

[takeo]

European central banks have been pumping millions into the system in order to absorb US
toxic debt, restart the economy and have the banks to generate some fresh profits. of course this doestn't come cheap and there is a price to pay. However to those who think that EU will disintegrate, i'll say come back another day:p one of the most stable currency in the world (5 per cent against the dollar las year) will not go down in flame b/c Brussels wants to enforce a little financial discipline among EU members, quite the opposite. it will bring around some in-depth reforms and longer term benefits.

I agree, so far, the eurozone has been a succes story, and others want to join it (not only poor countries like Poland but equally Sweden, Iceland, and GB are thinking about adopting the euro). The Greek debacle learns them that they can't just trust figures provided by less reliable governments, that there needs to be more check and balance, and that countries like Bulgaria and Romania are not going to join the euro anytime soon.

[ranchcer]

I doubt the euro will go either, but it will hurt some of the weakest economies in the Eurozone by making adjustment much harder.
You are right, Waton. But so what? Southern European countries thought they had it all. The sandy beaches, access to the dulce vita by right of birth and the financial talent of George Soros to get rich overnight and fritter away wealth they never owned. Wrong. Time has come to brace for hard landing.
I hurts but everyone will live through it.
My sales volume in Spain shrunk 5 folds, i adjusted just like you put on your rubber boots and rain gear when a spell of bad weather hits you. Quite frankly, i could not care less. I taught my kids, long ago that a good saving account helps you enjoy to the fullest every cent you spend. I quietly chuckle to myself when i see this financial generation cut back on cigarettes and long drinks and i wish the current squeeze would get a little harder before the so-called recovery to allow some real butt-kicking here.
It also happens that a wise politician comes up with a good idea like pushing the retirement age to 70
for the Greeks, Spaniards, French and Italians, and I am sure an energy pill would follow to help them through hard work.
However, high unemployment figures in a miditerranean country have not the same relevance as in the US. The young and not-so young unemployed boosts the parallel economy and in times of needs has the option to live with members of his family under one roof while collecting state money. Hay que joderse .:D

[wat0n]

You are right, Waton. But so what? Southern European countries thought they had it all. The sandy beaches, access to the dulce vita by right of birth and the financial talent of George Soros to get rich overnight and fritter away wealth they never owned. Wrong. Time has come to brace for hard landing.
I hurts but everyone will live through it.
My sales volume in Spain shrunk 5 folds, i adjusted just like you put on your rubber boots and rain gear when a spell of bad weather hits you. Quite frankly, i could not care less. I taught my kids, long ago that a good saving account helps you enjoy to the fullest every cent you spend. I quietly chuckle to myself when i see this financial generation cut back on cigarettes and long drinks and i wish the current squeeze would get a little harder before the so-called recovery to allow some real butt-kicking here.
It also happens that a wise politician comes up with a good idea like pushing the retirement age to 70
for the Greeks, Spaniards, French and Italians, and I am sure an energy pill would follow to help them through hard work.
However, high unemployment figures in a miditerranean country have not the same relevance as in the US. The young and not-so young unemployed boosts the parallel economy and in times of needs has the option to live with members of his family under one roof while collecting state money. Hay que joderse .:D

It isn't that simple, unless these workers become way more productive suddenly (and I doubt they will), the way for adjusting will be by lowering wages and cutting lots of construction jobs (because of the housing bubble).

It's not like sindicatos (unions for people who don't speak spanish) will accept it just like that... Not in Europe.

If you guys had you own currency this process would be easier because you could devalue the peseta and make Spanish stuff cheaper for the rest of us (though it would hurt those who have debt in foreign currency, this effect would be immediate while exports would take some time to increase, so there would be more pain in the very short run... But it would be better than having pain last maybe years because unions won't accept lower wages).

[ranchcer]

It isn't that simple, unless these workers become way more productive suddenly (and I doubt they will), the way for adjusting will be by lowering wages and cutting lots of construction jobs (because of the housing bubble).

It's not like sindicatos (unions for people who don't speak spanish) will accept it just like that... Not in Europe.

If you guys had you own currency this process would be easier because you could devalue the peseta and make Spanish stuff cheaper for the rest of us (though it would hurt those who have debt in foreign currency, this effect would be immediate while exports would take some time to increase, so there would be more pain in the very short run... But it would be better than having pain last maybe years because unions won't accept lower wages).

Rumours to destabilize financial markets are not new, neither is the perpetuation of old cliches. As i said earlier, EU will live through the present crisis and come out stronger. Until recently, Spain was regarded as one of the most dynamic European economy. Its leading position in the building industry is a doubled-edged sword in the present world context. Of course, as Europe's 5th largest economy with over 12 per cent of Eurozone GDP, a bail out is out of the question. Its banking system is quite regulated and conservative which mitigated the impact of the present turmoil. You are right, rising taxes o freezing wages will not be accepted by the trade unions ( more flexible than one might think btw) Spaniards are property owners which means heavy mortgage obligations to meet.
The challenge lies in convincing the powerful regional governements to cut back public spending in order to get the budget deficit wthin the EU 3 per cent limit. To be honest, I am more concerned with the political implications. Spaniards like the french vote with their heart in times of prosperity but are renowned for they lousy vote when things turn sour. Ojo que viene la derecha :unsure:

[Mediocrates]

Therein lies the problem. Greece and company can't reasonably take the austerity measures being demanded of them and they can't fix the problems themselves while at the same time no one else can w/o suffering equally. Looks like the only sane remedy is to let the weaker economies contract on their own. It shouldn't take more than 3-4 years for things to stabilize on their own.

[bararallu]

How can they? They are so bloody unionized it would take a war to shake things up. Not a credit crisis. People see exactly how countries back themselves into corners following the siren lullaby of socialism.

[wat0n]

Therein lies the problem. Greece and company can't reasonably take the austerity measures being demanded of them and they can't fix the problems themselves while at the same time no one else can w/o suffering equally. Looks like the only sane remedy is to let the weaker economies contract on their own. It shouldn't take more than 3-4 years for things to stabilize on their own.

Indeed, though we must separate Greece from Spain for example, Spain has good banking regulation and the Gov't run surpluses until very recently (because of the spike in unemployment and thus in jobless claims, and also because of a decrease in revenues because of the bad economic conditions) while Greece's Gov't has run deficits for years if not decades and it's debt-to-GDP ratio is much higher than Spain's (some 100% vs 40% before the crisis). I don't know the situation in Ireland and Portugal, but Greece is an special case, that's why they are going to be bailed out (or that's what I think at least)...

The thing that all of them share, though, is a VERY strong currency in fact way too strong for their economies to adjust without facing a significant economic crisis...

[Mediocrates]

I hate to say it but is the text book definition of "Moral Hazard". There is very little incentive for any of the smaller or less wealthy countries to worry about the rules.

[wat0n]

I hate to say it but is the text book definition of "Moral Hazard". There is very little incentive for any of the smaller or less wealthy countries to worry about the rules.

Indeed, but Spain is not small, and they were a good "fiscal citizen" (to say it in a way ;)).

As for Greece, like I said I think they'll be bailed out, but they will still suffer from austerity forced by the EU (and anyway, this is what the IMF does when they bail out any country)