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Updated 13.20pm
GREEK BANKS WILL reopen on Monday after a three-week closure with withdrawal limits being relaxed.
However capital controls remain in place, a government decree said.
The decree sets a weekly withdrawal limit at €420, with the daily limit remaining at €60.
The former Finance Minister Yanis Varoufakis has said Greece was subject to a programme that will “go down in history as the greatest disaster of macroeconomic management ever”.
In an interview with the BBC he said he believes the Greek programme hammered out this week is “going to fail”.
With his signature on the pact hardly dry, Greek Prime Minister Alexis Tsipras called it an accord he did “not believe in,” but said that he had accepted it to avoid a potentially catastrophic default and exit from the euro area.
“I had specific choices before me: One was to accept a deal I disagree with on many points, another was a disorderly default,” Tsipras told the Greek parliament.
“I don’t know if we did the right thing. I do know we did something we felt we had no choice over,” said Finance Minister Euclid Tsakalotos.
The revamped Greek government were sworn in today in an effort to enforce a third bailout accompanied by tough fiscal reforms opposed by a sizeable section of the ruling Syriza party.
Tsipras’ new spokeswoman Olga Gerovassili on Saturday repeated that the leftist government would attempt to counterbalance the “bad deal” with “compensating” measures to support the poor and the middle class.
Axing ministers
Yesterday, the Greek Prime Minister Tsipras axed ministers who had rebelled over draconian bailout terms, putting his house in order before a fresh round of tough negotiations with creditors including EU hawk Germany, which greenlit the deal.
The most prominent victim was energy minister Panagiotis Lafazanis, the head of a hardline faction within Tsipras’s party that has demanded the country leave the eurozone. His ally, the deputy minister of defence, was also axed.
The appointment of a TV soap opera comedian as junior labour minister has raised eyebrows but the new appointee, Pavlos Haikalis, insisted he had relevant expertise.
The reshuffle came just hours after the EU approved a short-term €7.2 billion loan to Greece, allowing it to make huge payments as early as next week to its creditors while a new eurozone debt bailout is being hammered out.
It also followed a crucial green light from German lawmakers for Chancellor Angela Merkel to begin negotiations on a new €86 billion bailout package.
The loan, to be given through the EFSM rescue fund, will allow Greece to make a critical payment of €4.2 billion due next Monday to the European Central Bank needed to keep the country in the euro.
However, while the third rescue plan for Greece has not even been finalised, already the parties at the center of the deal are raising doubts over its viability.
The key players — Athens, Berlin and the International Monetary Fund — have all voiced criticisms of the conditions that have been sketched out so far.
Their skepticism, which comes from more than just a circle of economists, will have to be addressed if the detailed negotiations to begin soon on Greece’s third bailout operation in six years are to be a success.
Merkel, who like Tsipras, faced rebels in her own party ranks, told German lawmakers that the deal with Athens was the last chance to prevent “chaos” in the crisis-hit country.
In the end she won broad approval from the Bundestag, where her “grand coalition” commands an overwhelming majority, with 439 voting in favour, 119 against with 40 abstentions.
Addressing the chamber before the vote, Merkel argued that “we would be grossly negligent, indeed acting irresponsibly, if we did not at least try this path”.
It was Merkel – leader of the EU’s biggest economy and effective bailout paymaster – who spearheaded last weekend’s marathon Brussels talks that brought Greece back from the brink of crashing out of the euro.
She said the alternative would have meant “watching on as the country virtually bleeds out, people no longer getting their money, where chaos and violence could be the result”.
Equally, “bending the rules until they’re worthless” was not an option, she said, arguing that for Europe this “would mean the end of a community bound by legal rules, and we wouldn’t agree to that”.
That was why, she said, “we are making a last try in tough, tenacious discussions” to seal a third aid package, “despite all the setbacks of the past six months and despite all legitimate scepticism”.
The German ‘Yes’ vote came a day after European Central Bank chief Mario Draghi boosted a vital cash lifeline to Greece’s struggling banks with 900 million euros that will allow them to open their doors for the first time in almost three weeks on Monday.
To prevent a catastrophic “Grexit”, the parliament in Athens early yesterday adopted reforms on pensions, taxes, labour laws and state asset sales that were harsher than those Greeks had rejected in a 5 July referendum.
The about-face sparked violent street protests and speculation of early elections in Greece, where the hard-left Syriza party came to power in January polls on a mandate to reject austerity.
Merkel has been harshly criticised for forcing more austerity on Greece, using the threat of a five-year euro “time-out” that had been floated by Finance Minister Wolfgang Schaeuble.
But dissenters at home complain Merkel has been too soft, leaving German taxpayers to lend out billions they are unlikely to ever see again.
The mass-circulation Bild daily, which has long campaigned for a Grexit, demanded “politicians must show their true colours” – and 65 of Merkel’s party members indeed voted ‘No’ or abstained.
Germany is one of several EU countries whose parliaments must sign off of any debt deal for Greece, as the legislature in Austria also did yesterday.
The public mood in Germany was mixed between pro-European sentiment and anger with the Greek government. A new Forsa poll found 53% of respondents backed new talks, while 42% were against.
Schaeuble – who says he personally thinks a Grexit would be best for the country – nonetheless vowed: “We will do everything in our power to make this last attempt a success.”
He reiterated however opposition to debt relief for Greece – something IMF chief Christine Lagarde today again stressed would be necessary.
Lagarde, asked whether the bailout plan could work without reducing the crushing debt burden of €320 billion, said “The answer is fairly categoric: ‘No.’”
German Left party leader Gregor Gysi recalled that post-World War II Germany benefited from a write-off of half its debt and said in parliament: “Mr Schaeuble, I am sorry, but you are in the process of destroying the European idea.”
© – AFP, 2015 First published 17 July 2015 21.45pm
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The Irish banks are the problem; they are not part of the solution.
The Irish banks, when unleashed on defaulting home mortgagors, will cause pandemonium and will trigger even greater holes in their capital adequacy. The Irish banks are actually insolvent. Some buy to let lending on property is just a superficial pretence that they are back in business.
The elephant in the room is that the Irish banks are bust, insolvent, broken, wrecked and no one wants to recognise that hard reality.
The true extent of mortgage debt default has not yet been properly accounted for by the Banks.
One magazine broadly agrees with your analysis.
http://moneyweek.com/money-morning-ireland-irish-economy-property-and-stocks-60900/
one room to the other room lucky to have the house ..who do you think you are codding Mr Kenny
The emperor has no clothes. Today does not change our dismal economic reality. Combined public and household debt is unsustainable. The burden of debt is too great for Ireland.
The reality is that Ireland is a failed economic state and a steadily failing economy. We can deny that reality for a while but reality will will come knocking on the door.
Platitudes about recovering part of our sovereignty are meaningless and trite.
The article above is a much needed reality check but people will not listen to that reality.
The dismal legacy of he false boom years is a permanent yoke on the necs of the Irish people who, according to Enda Kenny, have only themselves to blame.
The Banks will continue to pursue strategies which are mildly beneficial to the banks but deeply damaging to a failing economy. The mortgage impairment crisis in 2014 and 2015 will be the final nail in the coffin. There is no escaping our fate. The centre cannot hold.
Damien is right to point out the myth that banks have much interest in the real economy of businesses, employment and production of goods and services.
The real economy is merely a sideline that gains them entry to the real game of rent extraction in partnership with the rich, plus, recently, the marvellous public ‘insurance’ that ensures any losses are passed on to ordinary citizens or ‘socialised’.
Globally, this ‘laissez faire’ model has been promoted thru’ deregulation over decades.
Banks have become funds for the purchase of existing assets to be rented out at excessive profit and/or capital gains, with a banking licence tacked on.
Integration with the payments system and various cross connected derivative bets ensure that any failure topples them all in a domino effect, so that governments are obliged to cover any losses they make. This construction was no accident, rather quite deliberate.
And absolutely nothing has been done about it by the political classes. In fact, these ‘systemically’ important ‘too big to fail’ banks are now bigger than ever.
The payments system banking of the high street needs to be separated, as it was following the 1929 crash, from the casino and ‘derivative’ bet banking operations, as a minimum.
But it would appear that the banking lobby has already effectively bought politics and most of the public service advisers, media and mainstream academe.
Mike Hall, well and truly said.
DEFAULT THE ONLY OPTION
So Damien you are basically saying young Irish Citizens were screwed by developers in the noughties, screwed by the Troika for the past three years, and are going to be screwed by bankers and vulture capitalists for the rest of there lives. How did we let this happen under our noses and did nothing?
Welcome to Ireland David. The elite in this country screw it up time and time again. Generation after generation. Just watch reeling in the years, its the same story decade after decade. The PAYE worker foots the bill, and theres no accountability for those who screw it up.
The PAYE will pay.
The law should be set up in away that if the borrower can’t service the loan he just has to hand back the house ,the bank made a decision when they loan the money that the value was in it ,I know it Is not a simple as it sound,s but some mechanism could be worked out ,it would make them more cautious ,it would alter the power they have and stop the big jump in value and it would also control the house selling agents that were riding the wave .
Actually it is as simple as it sounds and works in places such as the US. There are several advantages to the system one of which is that banks that push up a property bubble by imprudent lending pay the cost when mortgages default and they can’t just hound the borrowers forever.
Foreclosure is the name of that system but now it is too late for that solution. The Irish Banks will find that they can’t get blood out of a stillness.
It was the lending policies of the Banks which caused the massive asset bubble. Now they will try to get their pound of flesh. They will fail. The money is not there. The reality is that any home possessions will simply crystallise large losses.
The banks will end up carrying out massive write downs but only after they have caused untold misery.
The situation is totally unsustainable but we comfort ourselves with the delusion that we have successfully exited the bail out.
At least we no longer have to hear commentators describe the Irish electorate as the most intelligent and sophisticated in the world. This electorate putFianna Fáil coalitions into government three times in a row. Madness.
A property obsessed nation followed its love affair with property like a moth to a flame.
Property has been our destruction hastened by plentiful cheap euros.
The Baron of Ballsbridge showed us the madness at work but he was just holding up a mirror to the rest of us.
Ronan Lyons explains here the stimulus for a “no brainer” speculative culture.
http://www.ronanlyons.com/2009/06/12/property-a-shining-example-of-never-a-better-time-to-save/
Most newspapers want this reality hidden from us so their beloved coalition can boast about “regaining sovereignty”
“A Nation once again” – me hole.
It is rather depressing reading the above and the comments. What a mess this country is. I think the saddest thing is the meek reaction of the people. Where is our fight or sense of pride? Why are we not standing up for ourselves.
I guess the reality is that the majority are comfortable enough – in jobs and without huge debts – and not overly willing to see any real change. For the minority who are unemployed or underemployed it is a case of suck it up.
What hope is there for young people who want to get decent employment, start a family and have a home? People are simply locked out with no opportunity. What a legacy has been left.
Where do you arrive at the figure of 52% of pay deducted in Paye/Prsi & Usc? If a Single person is on €33k, they pay €7900 in the three taxes. That works out at 23.8%. A long way off 52%
Good analysis! Question is: what happens next? It doesn’t need an accountant to tell you Ireland is enslaved forever.
If you haven’t seen the Oscar-winning documentary ‘Inside Job’ already I recommend you do now.
Only the little people get hurt, only the little people. We need an Oliver Cromwell to deal with this.
politican vs banker = golf buddies
Great article – a day after a TD suggest Nama are selling off greatly reduced properties to developers. Will we ever be able to stop the money junkies ie bankers, politicians, charity bosses, developers etc? They can’t wait to get their next fix. Like most junkies the price is paid for their addiction by others. It won’t stop until somebody kicks them out of their homes and their comfortable jobs.
have your say