"TAP não sobrevive se se mantiver pública", garante Pinto Luz

[Pata-Hari]

Atomez, o certo é que Portugal sofrerá por comparação, sim. Mas até a UE decidir kickar alguém, acredito que ainda se passará algum tempo. E o timming não é certamente este em que se tenta restabelecer a normalidade e a confiança. Este esforço é demasiado caro para ser agudizado com crises adicionais - digo eu - ou seja, não vale um caracol.

(Obrigada pelos posts, são hiper interessantes e relevantes).

[pepi]

Espero que não se lembrem de se "virar" para Portugal...

[atomez]

O mais preocupante é que a nossa situação é quase igualzinha à da Grécia...

The new Iceland? Greece fights to rein in debt

The likelihood of Greece becoming the next Iceland and plunging into bankruptcy looms over a meeting of EU finance ministers in Brussels today as the Greeks prepare to take another pasting from their colleagues.

After years of profligacy, hosting the costliest Olympic games ever in 2004 and failing to rein in its spiralling public debt, the country was on the brink of defaulting on loans, according to some seasoned commentators.

And the uncomfortable prospect of the eurozone member being unable to pay its debts was one that investors were pondering in the wake of the Dubai crisis that has sent markets falling around the world.

With a public-sector deficit approaching 12.5%of GDP – more than four times the stipulated EU amount and nearly double the level announced by the previous conservative administration – the gravity of the situation has not been lost on Athens' new socialist government.

"Our economy is in intensive care," said George Papandreou, the prime minister, barely a week after assuming power in October. "This is without doubt the worst economic crisis since the restoration of democracy [in 1974]."

National debt – the highest in the EU and projected to rise to 135.4 % in 2011 – has made the outlook grimmer still. After years of posting 4% growth rates, the economy is expected to contract 1.2% in 2009 with unemployment levels tipped to top 9% amid growing poverty.

And yet it is not all gloom in Athens. The credit ratings agency Standard & Poor's, through its Greece analyst Marko Mrsnik, ruled out the possibility that the country would go bankrupt. "Although the public finance situation is worrying we will maintain our [A -] credit rating," he said in an interview with the authoritative Kathimerini daily at the weekend.

Today, the outgoing EU monetary affairs commissioner, Joaquín Almunia, who has used strong language to describe the country's financial woes in the past, appeared to agree. "Greece is not about to go bankrupt," he said.

Tellingly, the Athens stock exchange rebounded for a second day after falling sharply last week amid concerns over the fallout of Dubai's debt crisis and fears over the soundness of the Greek banking system.

The socialist government hopes to prove doomsayers wrong by implementing a €3bn (£2.7bn) fiscal stimulus programme to jumpstart an economy that is not only blighted by structural problems but thirsty for reform. By drastically reducing public expenditure, including defence spending, it says it can trim the deficit by 3.6 percentage points to 9.1% of GDP next year.

Within days of taking office, Papandreou, a staunch advocate of a "green" economy, announced that his ministers would have to make do with small "electric" cars and not the fleet of Mercedes their predecessors had used. Clamping down on widespread tax evasion and taxing the rich and church will, he hopes, also bring in badly needed revenues. The all-pervasive problem of corruption will also be targeted with Papandreou likely to call a rare meeting of party leaders to deal with the scourge in the coming days.

In a rare show of consensus, Greeks know their country's credibility is at stake. "The bitter truth is that we don't have the confidence of anyone in Brussels any more … for too long we have cooked the books," said a leading commentator, Yannis Pretenderis.

As he steeled himself for the Ecofin meeting in Brussels, the finance minister Giorgos Papaconstantinou, appealed for time: "Change takes time and time is an increasingly scarce commodity especially in today's jittery international markets ," he wrote in the Wall Street Journal. "The new government has hit the ground running. But restoring Greece's credibility will not happen overnight."

What Greece needed from its partners, he said, was a "suspension of disbelief", until the results rolled in.

[atomez]

After Dubai, will Greece be next?

This question is technically a category error, since Dubai World is not a state but a state-owned company. But many investors rightly do not care about the difference. Last week investors started to fret about sovereign default in earnest. So what about Greece?

We were already wondering about a Greek default at the beginning of this year, when eurozone bond spreads suddenly widened. In February Peer Steinbrück, the former German finance minister, abruptly ended the speculation by saying the eurozone would act if someone got into trouble. There was no concrete action plan. No work had been done to amend European treaties. There was no budgetary appropriation. Just a sentence. Investors believed him and all was well – for a while.

The speculation is now back, but there is one difference. The eurozone will not come to the rescue this time, verbally or otherwise, unless Greece meets a number of conditions the European Union is likely to impose in the coming months.

The EU’s authorities, rightly or wrongly, are more afraid of the moral hazard of a bail-out than the possible spillover effect of a hypothetical Greek default to other eurozone countries. If faced with a choice between preserving the integrity of the stability pact and the integrity of Greece, they are currently minded to choose the former. To safeguard what is left of the stability pact, they are determined to link any help to a country’s willingness to comply. Otherwise the EU fears it might lose all leverage over budgetary processes elsewhere in the eurozone. And no country in the eurozone has flouted the pact more than Greece.

Here are the numbers. This year, the budget deficit will rise to 12.7 per cent of gross domestic product – and this assumes there are no further accounting tricks to be uncovered. Deutsche Bank calculated in a recent research note that the country’s public debt-to-GDP ratio is headed for 135 per cent. Gross external debt – private and public sector debt owed to foreign creditors – was 149.2 per cent at the end of last year. The real exchange rate has gone up by 17 per cent since 2006, which means the country is losing competitiveness at an incredible rate. Had Greece not been in the eurozone, it would be heading straight for default.

The government’s 2010 draft budget foresees a deficit reduction to about 9.1 per cent of GDP. But the number is misleading. The lion’s share of the total deficit reduction effort is earmarked to come from tax measures, and most of those from the fight against tax evasion. Tax evasion is always the item first on the list of desperate governments. The European Commission and Europe’s finance ministers, who have heard this story before, are rightly asking for genuine deficit reduction. So is George Provopoulos, the Greek central bank governor, who demanded that two-thirds of the entire deficit reduction effort should come in the form of spending cuts. If the Greek parliament confirms the government’s soft budget next month, the European Commission will almost certainly judge the effort insufficient and demand a supplementary budget. It might also ask for structural reform, including pension reform.

If the Greek government refused to comply, which is quite possible, the next step could be the penalty procedure under the stability pact. So instead of helping Greece, the EU might be asking Greece to pay a penalty. This in turn would aggravate Greece’s financial position in the unlikely event that the government would agree to pay it.

The current strategy of the EU is to raise the political pressure – perhaps even provoke a political crisis – with the strategic objective that the Greek government might eventually relent. It is a dangerous strategy that could easily backfire. Even if George Papandreou, the Greek prime minister, were sympathetic to the EU’s demand, he would face enormous political headwinds if he tried to implement draconian austerity measures. This would be the very opposite of what he promised during the recent election. The real problem is that the Greek people have not been prepared by their political leaders for what lies ahead.

So what happens if Greece cannot meet a payment on its bonds, or fails to roll over existing debt? About two-thirds of Greece’s public debt is held by foreigners. According to calculations from Deutsche Bank, Greece is looking to raise some €31bn ($46bn, £28bn) in new borrowing and €16bn to roll over existing debt next year. In the absence of help from the eurozone, the Greek government would have to resort to the International Monetary Fund if it were to encounter difficulties refinancing the debt. Unlike Argentina, Greece cannot devalue, and leaving the eurozone is not a realistic policy option either. Latvian-style austerity could thus come one way or the other, with or without default. But it might be politically easier for the present government to have austerity imposed on it from the outside than from the inside. This is another reason why the EU would be happy to let the IMF take a lead.

Just as the Greek people are unprepared for austerity, investors are unprepared for what awaits them. I would still bet that outright default is unlikely. But I wonder whether the current Greek bond spreads reflect the true risks.