Is it okay to celebrate the new agreement a little later?

Who doesn’t want to celebrate a great success, especially if it ensures the preservation of his country from total financial disaster which until recently had being consider inevitable.

And there is much need for celebration indeed, for an outburst of joy, a success, a breakthrough from all this discomfort and painful failures the country experienced since the outbreak of the “Greek crisis”. But ultimately, if the joy and celebration doesn’t translate into something meaningful that will change, everyone’s lives for the better, then there is the risk that sadness and disappointment will follow, together with an abrupt landing into harsh reality.
We have seen the same so many times in the past twenty months, sometimes with the Memorandum which was suppose to get us out of the crisis and ensure the solution to our problems, sometimes with the updated memorandum which was suppose to take under consideration issues not included in the first one and sometimes with the huge success of the Summit of March 25 when Greece would solve its problems with the lowering of the interest rate on loans and their extension.
But the problems were not solved, and the country came to beg for the fifth loan installment which had already required the toughest measures ever taken by a democratic country after the Second World War and which no one explained that it would be possible not to take the fifth installment if the spread was still soaring, regardless if the country had nothing to do about it.
Immediately after the success of the Meeting of March 25, I predicted that the Greek problem wouldn’t have being solved and the country would be at a dead-end before the end of 2011 in which time Greece had to ask for new a support package. This was something that the Finance Minister didn’t admitted thus far, on the contrary, he pointed out that the decisions of the Summit were  absolutely essential and ancillary for Greece. However, only a few hours later, invited by journalists to answer the questions raised in my article, the Minister dropped the bombshell: Greece is likely to need new loans before 2012 and it is likely to turn to the European Stability Mechanism (ESM) for them, and that the ESM will require a new Memorandum.
From the joy of absolute success journalists fell to the shock of the dramatic revelation that not only absolutely nothing was certain as to the direction of a solution, but the only certainty was that Greece would go bankrupt if it wouldn’t be able to take new loans accompanied with new Memoranda, new measures and new guarantees.
The sequel was even more frightening as an entire nation was learning the most onerous financial terminology. Learning by heart the ratings of rating agencies, the maturity dates of each new series of bonds, the spread, the CDS, bankruptcy, selective or not and everything else that helped to understand what happens in the country and how it would influence them, and their family.
And then for the first time, the Finance Minister pressed start on the bankruptcy countdown and said, ‘bluntly’ that if Greece had not voted the ‘wrong’ but ‘necessary’ midterm austerity package and did not proceed to the approval of the privatization program, then the country would be led to default and nightmarish living conditions.
Soon, in the hype of statements by officials, started to appear words such as tanks, dead, blood, and the scene of horror took unimaginable proportions for most Greeks. The midterm austerity package was voted, the privatizations approved and yet the horror of the fifth installment was continued until the eleventh hour, to be followed after its end, with the first threatening statements about what else, the sixth installment.
This is how we came to the summit of July 21, 2011 and we all talk, once again, about historical moments and the final deliverance of Greece. The need for celebration is certainly greater than ever. What better than a definitive victory of Greece against the EU and its creditors, after twenty excruciating months.

It came, however, is it really time for celebration? Is the decision of the Synod of July 21 the ultimate solution to the Greek crisis? Has Greece been saved and if so what exactly does this mean?

The decisions of the Summit of July 21, 2011 are different but directly related to those of the previous meetings. It would be impossible to take the decisions of the Summit of July 21, 2011 without the previous once. However these decisions retain the same basic components as the once before them. One of the most important components is to continue making and implementing tough austerity programs in countries with fiscal problems and high debt, with the goal of devaluation in the interior to lighten the pressure on the euro and the reduction of the deficit to 3 % and if it is feasible to achieve a primary surplus.
But the examples of Greece, Ireland and Portugal have shown how difficult this approach can be. It pushes people and economies to their limits, increasing the likelihood of ‘accident’ or ‘accidents’.
Let us not forget that the first Memorandum of Greece was supposed to achieve internal devaluation of 25-30%, while a year later the IMF admitted in its report that the plan failed due to external factors that have prevented internal devaluation.
It even went a step further by explaining that Greece now need internal devaluation of 35%, approximately, considerably higher than before the measures …
“All member countries of the euro zone will strictly adhere to the agreed fiscal targets, improve competitiveness and will address macroeconomic imbalances. Deficits in all countries except those enrolled in the program should be reduced below 3% at the latest by 2013, “is what Article 9 of the Agreement Summit says and this means that in order for banks to avoid record losses, taxpayers of the countries of southern Europe should suffer double taxation for the next 5-15 or even 30 years depending on the state of things, so on one hand they pay normally and as always their contribution to the state and the other hand they pay the loans and interest the state owes to the banks.

Indirect taxes, tolls will be springing up everywhere, special contributions, reduced wages and pensions, prolonged periods of high unemployment and low growth, are some of the situations southern Europe countries should get accustomed to for many years.
So for once let us be careful and avoid hasty celebrations for the new stimulus package of 109 billion Euros (is the 50 billion privatization plan included, as well as the contribution of Greek banks? If so, then perhaps the EU’s involvement is limited to 22 billion and that of foreign banks under 30 and that after multiple safeguards and in a frame of 30 years).
Let’s wait for the dust of impressive statements to settle down and to look with patience and realism its details. And then, let us resolve with clarity and undeniable data whether we should start the party of sweet victory or not.

Panos Panayiotou
Stock market technical analyst
source: http://www.xrimanews.gr/oikonomia/10756-peirazei-na-panhgyrisoyme-th-nea-symfwnia-me-ligh-kathysterhsh