At one point (could still be for all I know…ah, checking, no, she’s moved) The Guardian’s US economics editor. Now apparently at Mashable:
Greece said it will close its banks on Monday after a wild weekend in which worried Greeks lined up at ATMs to withdraw their savings, and European banks said they would not extend the country’s economic bailout past Tuesday.
Umm, there are no European banks saying anything at all about extending a bailout. There’s the European Central Bank, saying that it won’t increase the Emergency Lending Assistance. But calling that a “European bank” is exactly the same as calling the Federal Reserve an “American bank”. European banks as banks, just aren’t involved in this. Greek banks, yes, the central bank, yes……
Could it be that we’ve actually found an economic reporter not even good enough for The Guardian?
The European Commission requires Greece to make major cuts to its budget before it can get the final payment. Greece, in turn, doesn’t want to make the spending cuts, which it believes will hurt Greek retirees and weaken its social services.
Umm, what spending cuts? There’s tax rises galore but in the actual document she links to no spending cuts. Tax rises, yes….
Greece has to pay about $1.8 billion on Tuesday to the IMF, which lent it money for the last bailout. There’s a lot of pressure here, since no country has ever defaulted on a loan to the IMF.
Snigger….Sudan, Peru, Liberia, DR Congo, Somalia, Panama, Zambia, Guyana, Yugoslavia, Vietnam, Zimbabwe, Iraq……
No advanced nation has defaulted on the IMF since WWII, true, which means since the IMF was set up. But that “advanced” is a pretty important qualifier.
As with consumer foreclosures or bankruptcies, a default shows a country to be untrustworthy in its intention to pay back its debt, which, in turn, makes it hard to borrow more money. At the least, countries that default have to pay very high interest rates to borrow again — and since they default in the first place because they’re broke, they can’t afford high interest rates, either.
Interest rates are usually lower after a default. For the debt burden is reduced, see?
Greece may not get away so easily, however, because it is not a standalone economy, but is instead integrated into the 19-member European Union.
That’s the 19 member eurozone, not the 28 member European Union. and it’s the EU which is the Single Market into which Greece is integrated.
If Greece leaves the EU — a “Grexit” — then it will undermine the entire purpose of the economic union, which is to see its members through all troubles.
Grexit refers to Greece leaving the eurozone, not the EU.
Importantly, the ECB also said it will not increase its aid to Greek banks to make up for the money lost as citizens keep pulling out their money.
Greece’s banks are already surviving on a financial lifeline from the country’s central bank — an unusual move that the European Union allowed to keep the country from an economic crash while the fate of its bailout is being decided.
The ECB is the country’s central bank. The Bank of Greece is just the local office of the ECB.
To understand how extreme that is, consider the equivalent in the U.S., which would mean that Bank of America and Wells Fargo would survive not by doing business, but only on loans from the Federal Reserve. (That, by the way, has never happened).
What? The Fed has never provided liquidity assistance? What the hell was TARP then? Exchanging cash for qualifying assets…..
Greece fully expects the ECB’s ELA — remember, that is the emergency liquidity — to keep the country’s bank’s afloat.
Hey, we’re all guilty of the grocers’ apostrophe occasionally…..
Alternate Greek Finance Minister Nadia Valavani
Deputy Finance Minister
Not all of these are important corrections of course. But I do think it’s interesting that we’ve managed to find this rara avis. Someone whose economic reporting isn’t up to the standards of The Guardian.
At one point, when she was there, I managed to get Larry Elliott to insist that her stuff was nothing to do with him…..