Tuesday, 8 November 2011

Loukas Papademos Candidacy On The Ascendant

Former Bank of Greece Governor Loukas Papademos is again today considered the favourite for prime minister in discussions among Greece's political leaders. His candidacy was said eysterday to have waned in favour of Nikiforos Diamantouros, the highly regarded head of Greece's Ombudsman for a decade.

A banking source told The New Athenian that Papdemos had raised the bar on negotiations between Prime Minister George Papandreou and opposition leader Antonis Samaras by placing strict conditions on the table. Among them is a stipulation to hold elections no sooner than May, allowing the interim government time to ratify the October 27 bailout offer from Brussels, implement reforms and cement a new relationship with the Eurogroup and financial system. The banking source also said Papademos was keen on appointing Vasilis Rapanos, head of the National Bank of Greece, as finance minister in place of Evangelos Venizelos.

The coalition is designed to unite ruling socialists and opposition conservatives, whose bickering over the past months has brought the government to its knees. Conservative leader Antonis Samaras has completely abandoned his anti-austerity stance and adopted the government position that ratification of the latest bailout deal from Europe is “inevitable”. 

Earlier today the prime minister thanked the cabinet for what he called historic reforms decades overdue, and collected their resignations. 

1 comment:

  1. Very sophisticated articles and blog posts are being published every day about technical solutions to the Greek and European debt problem. They range from Eurobonds to EFSF-leveraging to Modest Proposals, etc. etc. There are undoubtedly brilliant minds at work.

    Here is an appeal to all those brilliant minds: the Greek debt is not going to go away regardless how smart the technical solutions are. On the contrary, the foreign debt of Greece is going to rise going forward; it cannot decline (unless the discussed haircut comes through but even that will be but a drop on a hot stone). So why devote so much brainpower to something which has no near-term solution instead of applying it to specific proposals as to how the Greek economy could become strong? The stronger the Greek economy becomes, the greater the likelihood that more Greek debt can eventually be repaid (or rather: refinanced in capital markets).

    The appeal is: come up with proposals how the Greek economy can be transformed into a value-generating, competitive market economy, and grow! One such proposal is here (http://klauskastner.blogspot.com/2011/09/endgame-for-greece.html). Come up with many more!

    One could argue that no growth plans for the economy can be implemented before the debt problem is solved. True. But keep it simple!

    My suggestion: commit to the holders of Greece's sovereign debt that, say, 10% of government expenditures will be allocated to interest payments over the next 10 years. And then let financial engineers work out combinations of amounts/tenors/interest which can be supported by that amount of interest payments.

    Growth is the answer to most debt problems!


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