About 15,000 protesters marched through the city center Sunday ahead of prime minister George Papandreou’s first speech after his summer vacation, chanting slogans such as “get the IMF out of Greece” and “make the banks pay for the crisis.” The Greek PM says no new austerity measures is needed if the country stayed its fiscal course. However, the people in the streets are still a bit skeptical; the police arrested a 49-year-old man for attempting to throw a shoe at Papandreou.
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“I have every confidence that at the end of the year we will have reduced, in accordance with our commitments and decisions, the deficit by 40 percent,” Papandreou said in Thessaloniki, northern Greece, yesterday.
“As long as we are progressing well, there is no need for any new measures.”
Papandreou also said his government averted “certain default” by agreeing to wage and pension cuts and tax increases in return for a 110 billion-euro ($139.5 billion) emergency-loan package from Euro-area nations and the International Monetary Fund on May 2.
The measures have hit employment and spending, with the economy shrinking for a second year and inflation rising to the highest since Greece adopted the euro.
The government plans to cut the budget deficit to 8.1 percent of gross domestic product this year from 13.6 percent last year.
Papandreou said a debt restructuring would have been catastrophic.
He also took the opportunity to announce a cut in taxes on retained earnings for companies to 20 percent in 2011 from 24 percent, and emphasized that the 4% tax cut will provide incentives to create jobs.
According to Bloomberg, about 15,000 protesters marched through the city center yesterday ahead of Papandreou’s speech, chanting slogans such as “get the IMF out of Greece” and “make the banks pay for the crisis.”
Police arrested and then released a 49-year-old man for attempting to throw a shoe at Papandreou.
Starting The Tax Hunt
Officials from the EU, IMF and European Central Bank, called the “troika” in Greece, begin a new round of visits in Athens tomorrow, primarily to discuss Greece’s planning for the 2011 budget, which is due to be submitted to parliament early next month.
The country expects to receive a second installment from the troika, of 9 billion euros, this week.
Papandreou said the country has begun seeking information from international banks to hunt down Greeks with accounts abroad who aren’t paying their taxes. A measurement already embraced by several other countries, amongst them USA and Estonia.
Look To Norway!
Greece’s economy contracted in the second quarter more than originally estimated, shrinking 1.8 percent from the first quarter. From a year earlier, GDP declined 3.7 percent.
The jobless rate in June slid to 11.6 percent from 12 percent in May.
Markets will be gradually convinced of Greece’s progress, Papandreou said, pointing to purchases of Greek debt by Norway’s $450 billion Government Pension Fund Global.
The extra yield that investors demand to hold Greek 10-year bonds compared with German bunds rose as high as 957 basis points on Sept. 8, just 16 points short of the record touched on May 7.
For those who are not too familiar with the investment strategy of the Norwegian Pension Fund, I’d like to add that at least 10% of total its total bond holdings are already invested in the PIGS-countries, (the fund refuse to disclose its holdings in Ireland), 50% of its equity investments are placed in the tumbling Chinese stock market and the so-called “Oil Fund” is the fourth largest shareholder in BP.
The smartest investment they’ve done so far is shorting the banks in Iceland just before they went down.
The Norwegian Pension Fund Global owns 1% of all the listed shares in the world, and 2% of all European.
Related by the Econotwist:
Default Now Or Default Later; Greece Still Withholding Critical Data
Morgan Stanley: Governments WILL Default
Brussels Tells Athens To Shut Up And Take The Pain
Greece About To Enter The Death Spiral
A European Revolution by December?
2000yr-Old Secret Organization Makes Threats Against Greek Navy Supplier
EU: Trading Bailouts For Weapons
Greece: Corruption Behind Crisis
Norway’s Government Pension Fund Takes $25bn Hit