Market Surges On Non-News That Greece Has "Reached" An Austerity Plan
Somehow the fact that Greece has "reached" a deal on its austerity plan is supposed to be good for 100 pips on the EURUSD even though this is not news, and has been priced in for a long time. Furthermore it does absolutely nothing to dampen the fear and loathing that this plan will be met by the broader Greek population. But with markets that have absolutely no liquidity and monkeys controlling the buy and sell algos, one can only sit back and laugh.
Greece has won the consent of a team of EU-IMF inspectors for its new five-year austerity plan on Thursday after committing to an additional round of tax rises and spending cuts, sources with knowledge of the talks said.
"We have a deal," said one of the sources.
Another source close to the negotiations said that a few remaining technical details would be finalised on Friday.
Finance Minister Evangelos Venizelos announced on Thursday Greece's Socialist government would lower the minimum threshold for income tax to 8,000 euros a year, increase the tax on heating oil and impose a one-off solidarity levy on income of between 1 and 5 percent.
What deal? Did the Greek population say they will vote for this austerity plan? This is nothing short of pathetic attempts to manipulate the market.
What was the alternative: no plan, in which Europe's bankers would all go bankrupt overnight? Right.
And here are the terms from the newly proposed plan:
Greek Finance Minister Evangelos Venizelos on Thursday unveiled measures to help Greece plug a shortfall in the austerity plan agreed with inspectors from the European Union and International Monetary Fund.
Venizelos said that when he took office last week, the shortfall stood at 5.5 billion euros. Subsequent adjustments brought the figure down to 3.8 billion euros and the measures announced on Thursday were aimed at closing that gap.
Following are the measures announced:
- One-off solidarity levy on personal income ranging between 1 and 5 percent, according to income: Those earning 12,000 to 20,000 euros a year will be taxed at 1 percent. Rate then climbs to 2 percent for incomes of 20,000-50,000 euros, to 3 percent for 50,000-100,000 euros and to 4 percent for those earning 100,000 euros or more. Lawmakers and public office holders to pay a 5 percent rate.
- Tax-free threshold on income lowered to 8,000 euros annually from current level of 12,000 euros, with the lowest rate set at 10 percent and exemptions for young people up to 30 years, pensioners over 65 years and the disabled.
- Annual levy of 300 euros on the self-employed.
- Small tax hike for heating and diesel fuel for companies.
- Public spending cuts of 400 million euros in 2011.
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