Greece has lived too long beyond its means on falsified data, intentional or negligent. While the previous government announced a deficit of 6% of GDP, George Papandreou, just took office in October 2009, revealed a deficit of 12.9% and public debt to 115% of GDP, while the limit Brussels is fixed by 3%. The euro fell from the clouds. Widespread tax evasion – the shadow economy exceeds 20% of GDP – bloated government spending, burden of staff: emergency measures needed. Athens offers a drastic austerity plan: reducing government spending and health spending, freezing salaries and bonuses of officials, raising the age of retirement guaranteed approval cash loans !!!???! !!???!!!. Greece promises to bring back this way its public deficit to 8.7% of GDP at end 2010, but not convincing.Riddled with debt, it will borrow 53 billion euros this year if she wants to get out. If Europe does not help, bankruptcy is a nightmare scenario that nobody wants because it could snowball. But Greece also must avoid at all costs the social explosion that growls at her.
2) Why so much reluctance in Germany?
The German Chancellor has requested that a country can be excluded from the euro area "last resort" in case of repeated infringements Maastricht rules. Photo credits: AFN
