Monday, 19 September 2011

Crisis Chronology


June 15: The government nearly falls after protests in Syntagma square and a tumultuous debate in Greek parliament, a mid-term package of austerity measures and reforms worth 28bn over five years. George Papandreou speaks to Antonis Samaras over the phone (!) but they fail to agree on a grand coalition. Papandreou reputedly offers to quite the premiership but recalls the offer after outrage from his senior party officials.

June 16: Two Pasok deputies resign, temporarily reducing the socialist majority in parliament to 154.

June 17: After a reshuffle Finance Minister George Papakonstantinou is replaced by Evangelos Venizelos.

June 21: The new cabinet survives a vote of confidence in parliament along party lines.

June 29: Parliament votes in the mid-term austerity package by 155 votes in favour plus 138 against.

July 18: Taxi drivers begin a series of 24 hr strikes over liberalisation of their sector that turn into an indefinite strike. Their complaint is that outgoing transport minister Dimitris Reppas had promised them a number of licesnes capped at the current 24,000 for Attica, but incoming minister Yannis Ragousis rewrote the law with unlimited licenses and the possibility of group licenses that would allow the creation of cab companies.

July 21: Final agreement on a new 109bn euro bailout of Greece.

Friday September 9: German ECB board member Juergen Stark resigns over disagreement with the extent to which the bank has invested itself in risky eurozone periphery bonds.

Sunday Septmber 11: Finance Minister Evangelos Venizelos announces a property tax at the Thessaloniki International Fair. The tax will be levied through power bills and amount to 0,50 to 10 euro per square metre of property. It is to be levied in 2011 and 2012 and aims to raise 1.7bn euro of a 2bn euro revenue shortfall for 2011. But Venizelos admits in the same press conference that the economy is set to shrink by 5.3 percent, far above the 3.5 percent originally envisioned.
Philipp Roesler, German deputy chancellor and economy minister, said in a newspaper editorial on Sunday/Monday that "There can be no more taboos. That includes, if necessary, an orderly bankruptcy of Greece."

Monday September 12: World stock markets drop 2% on fears of a Greek default. The FT publishes a useful overview of how all four of Greece's funding sources are in trouble: the remaining portion of the first bailout loan (57bn), the new loan portion of the second bailout (34bn), the debt rollover scheme (54bn) and the privatisation plan (28bn).

Tuesday September 13: Angela Merkel declares that a Greek bankruptcy is "unthinkable until 2013" when the EFSF becomes a full-fledged aid mechanism.

Wednesday September 14: PM George Papandreou, Nicholas Sarkozy and Angela Merkel have a conference call during which Merkel and Sarkozy underline their support for Greece but on the strict condition that the reforms agreed to on July 21 are carried out to the letter. Papandreou asks them to control the statements re. Greek default from their cabinet members (deputy Chancellor and economy minister Philipp Resler was joined by Alain Juppe in public statements about a controlled Greek default).

Thursday September 15: George Soros publishes an article in the New York Review relayed by Reuters saying that bankruptcy by Greece may now be inevitable.

Saturday September 17: Ecofin and eurozone meeting in Wroclaw, Poland. Venizelos describes the climate as hostile. Papandreou, in London, announces cancellation of the rest of his trip to the US and returns to Athens. Antonis Samaras makes speech to TIF in which he reaffirms his traditional position that the reform memorandum between Greece and its lenders is flawed and needs renegotiation.

Sunday September 18: Papandreou holds emergency cabinet meeting reportedly to discuss further austerity measures. These include further cuts to public and private sector pensions, and public sector wages. Also reportedly discussed is a plan to immediately dismiss as many as 100,000 state workers by 2015 – far more than the number currently being considered. Samaras holds a combative press conference at TIF where he says that ND is going for one-party government, and if it doesn't get an outright majority in parliament the first time, it will hold out for a second round of elections. In other words, he is polarising his base and isolating the government. 
On the same day, Wolfgang Schauble tells Bild am Sonntag that he is sceptical about whether the new property tax will work. He also reiterated his standard position that without a positive review from the representatives of Greece's troika of creditors there will be no next loan instalment. Greece is due to receive 8bn in October. According to the FT, Greece has enough cash until the beginning of October. It quotes a finance ministry official as saying that aftetr October 10 "there will be big problems with meeting obligations, including pensions and salaries."

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