Euro Zone Crisis: Wildfires in Greece
Wildfires are threatening Greece’s third largest city, Patras on the western Peloponnese. High temperatures and gale force winds have added to the challenge of fighting the fire, whose main front is more than a kilometer long and which was most likely started accidentally or intentionally. Students and staff have been evacuated from the University of Patras campus as well as residents of a village, Ano Kastritsi.
Analyst Nicholas Spiro also spoke of wildfires in reference to Greece, in commenting on the International Monetary Fund’s new report on the Eurozone, IMF Calls on Eurozone to Take Determined Action in Response to Crisis, in the Guardian:
The IMF believes the eurozone is currently facing the worst of both worlds: it is sufficiently integrated for contagion to spread like wildfire but institutionally and politically unprepared to deal with its consequences.
Talk of contagion, of the sovereign debt crisis that began in 2009 in Greece spreading to other Eurozone economies, has proven too true. Last month, the small island country of Cyprus requested a bailout and Spain, whose economy is the eurozone’s fourth largest, requested a bailout of billions of euros for its failing banks.
In its report, the IMF — which has lowered its predictions for growth in Eurozone economies – called on the European Central Bank (ECB) to take a number of measures to fix the crisis. These include a “sizeable” quantitative easing package and granting the ECB full-fledged “lender of last resort” powers.
Such measures are unlikely to be pleasing to the likes of Germany, Finland and other strong members of the Eurozone who have relatively low unemployment and where economic growth continues.
Such measures are likely to be welcome in countries where austerity measures have slashed wages and jobs and raised taxes, recession lingers and borrowing costs are high.
The latter is Greece’s predicament. Leaders of Greece’s coalition government met Wednesday to agree to ways to make €11.7 billion in cuts required by the troika (the IMF, the ECB and the European Commission). Greece’s Prime Minister Antonis Samaras, Finance Minister Yannis Stournaras and coalition leaders need to cut €4.5 billion more. They also want to negotiate Greece’s bailout deal by extending the time period from two to four years to make changes though Stournaras admits that the country needs to regain “some of its credibility first by keeping to the pledges it made when it signed up to the international rescue package in March.”
Greeks, who have seen their disposable incomes fall by 40 percent, can hardly be in the mood, willing or able to accept more austerity.
Opposition leader Alexis Tsipras simply said that the three coalition partners are “lying” about saying there will no new austerity measures — that they intend to implement a “catastrophic plan” of such — and are at the beck and call of the troika:“The government is executing orders from the troika and is not serving the public interest.” Labeling the troika’s officeers “a failed committee of employees” who he would “refuse to meet,” Tsipras demanded “an emergency meeting of European leaders to discuss a new strategic plan for the Greek case.”
The wildfires are far from being put out yet.
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