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Greek Budget Deficit To Pass 10% Of GDP, Country Stops Most Cash Outlays
While European banks may or may not succeed in delaying the inevitable unwind of the Eurozone by a month or two, the European credit catastrophe is taking on a grotesque form, first in Greece, where following news that the budget deficit will soar past an unprecedented 10% of GDP, the Greek government has halted virtually all cash outflows. Ekathimerini reports that "The government has decided to stop tax returns and other obligation payments to enterprises, salary workers and pensioners." In other words, the entire government has now virtually halted one half of its operations - the outlays - as the country reverts even more to its status as European bank debt slave, in perpetuity, or until the country breaks away from the Eurozone and reinstitutes the Drachma (which as Zero Hedge pointed out first in August, continues to trade When Issued at various desks) whichever comes first.
The Finance Ministry is desperately seeking ways to contain the fiscal deficit that has swollen due to additional grants to social security funds totaling 0.5-0.9 percent of GDP and due to the lagging of public revenues in the year’s first 11 months.
Finance Minister Evangelos Venizelos and his alternate, Filippos Sachinidis, met on Monday with the other high-level ministry officials and agreed to issue an order to the country’s tax authorities to immediately stop paying tax returns to taxpayers, companies and state suppliers.
They also decided to promote a new regulation at the start of 2012 allowing for old debts to be paid in 60 installments, at a minimum sum of 300 euros each, in an effort to bring more revenues into the state coffers.
Provisional figures for the first 10 days of December showed that public revenues remained at low levels, although a pleasant surprise came in the form of the special property tax paid through electricity bills. This revenue has exceeded expectations, although a share of that will have to be returned owing to errors made in calculating the tax for certain property owners.
As a result we are about to get, you guessed it, another downward growth revision. We have lost count how many there have been in the past year alone.
Under these circumstances, state revenues are expected to lag the revised target for 2011 by a considerable 1.5 billion euros at least, while the excess on the expenditure side will be calculated after the amount granted to the social security funds is established.
In conclusion, even Greece now admits terminal failure:
The only way to reduce the damage done to the 2011 budget by insufficient revenues is through further cuts to the Public Investment Program, but even then the deficit will be impossible to bring below 10 percent of GDP.
Sachinidis admitted in Parliament yesterday that both the government and its creditors have failed in their estimates for Greece’s macroeconomics this year, saying that this was also down to the financial program followed.
And while the next depoit update from the Bank of Greece will confirm the domestic bank run is soaring, and the country's financial system is a hollow shell, none of this matters any more: Greece is now officially bankrupt in all but name. At this point the best the banking cartel is to hope to bleed the country dry for a few more months before the people finally revolt at which point all bets are off.
Now, before we forget, there is this one other country that runs 10% deficits of GDP... Oh no, we just forgot who it was... Whoever could it be?
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Yeah, the Greek workers will just stand around until the EU comes up with a plan, sure they will.....
Austerity will continue until morale improves...or, until garbage collection, water distribution and sewage plants stop operating due to strikes.
Even the 'top 1%' need the above services.
My favorite greek trades: Long olives and garlic, short work ethic.
even garlic won't be able to stop The Return of Drachula...
Greece is bankrupt: Gee, what a shock. Who could have known?
http://vegasxau.blogspot.com
A verse for our good friends the Greeks
Your system most certainly reeks
Don't fret...give a cheer
For your freedom draws near
You should be defaulting in weeks
'Greece is now officially bankrupt in all but name.'
Amazing to see people still curious about 'how Greece will play out' & 'what will happen if Greece leaves the EZ' as if somehow a cheap drachma will keep vacationers from going to Crete.
Ah, I remember the days when the "suggestion" came that Greece had to be let in the EZ.
And the open and bungled attempt by Bush II to get Turkey into the EU.
G-man. you've been to Greece, right? Pretty simple what happens once they are taken off life support: EU negotiates a complete hand-over to the IMF. Then probably some violence and finally a return to what Greece does best... shipping, olive oil, tourism.
Can you imagine Greece having factories like Germany? Who in their right mind would build a factory in Greece?
The answer: The G-man, thats who :)
"Zorba Engineering to open huge Feta Cheese factory on Crete after mining operations falter"
Why has 'The Onion' not picked up this story?
Too bad Gutenberg (printing press inventor) doesn't love the Greeks the way he loves the usa gang-banksters.
thankfully we don't live in a country with a 10% of GDP deficit.......right?
not many of us ZHers are in Bhutan
Yes you are correct dear goldfreak, it is in fact 10.9% according to the official White House figures.
Not even a remote chance that we crash before Europe.
If the American tanks are forced to roll in then the American tanks are forced to roll in. Obviously that would make the dollar their reserve currency...probably now and forever.
American tanks "are forced" to roll into about 192 countries as it stands now to maintain reserve currency...and no reserve currency that isn't gold last forever.
Forget Greece. I suggest that Canada should be first on your list.
Consider the advantages. Proximity. All those lovely natural resources. Tiny military. You can invade on two, or three, or even four fronts.
Trust me, it'll be even more of a cakewalk than Iraq. They will be strewing rose petals in your path. (I'm assuming that the Canadian climate permits cultivation of roses. If not, you may have to postpone the invasion while they import some.)
In other news, Japan's deficit is 15% of GDP, America's deficit is about 10-12% of GDP... and that isn't even based on REAL GDP because it would be much higher.
Japan 2012 budget : taxes income 42 trillion yen. Budget? 90 trillion yen. They are spending more than twice they bring in revenues.
Greece are AMATEURS.
'Greece are AMATEURS.'
No, no we must continue to disparage and discredit those lazy bastards if for no other reason than to not disturb our bias.
I tgought you guys were talking about Hong Kong....
Here we go again...
GREECE MUST DEFAULT! SHOW THOSE FUCKERS THAT NOBODY FUCKS WITH DEMOCRACY AND FREEDOM! EITHER IT IS CALLED IMF, MERKEL, EUROPEAN UNION, BERNANKE OR WHATEVER!!
...
No, Greece should changes rules how their GDP accounting works because simple scam of donors is not enough anymore.
Tyler,
Yesteday Greece had 2.5b Euro debt payable to the PSI's. Any news what happened to this tranche?
It's as if this issue just disappeared :)
Exactly...what the hell happened? Everyone was talking about how December 19th was the big day...and then...nothing. WTF.
Fire up the printing presses bitchez!
I'd like to know how far they plan on dragging this circus?
How many more IMF injections are they going to "pledge" to this black hole and how many times this non-issue will be transformed in a catalyst for market direction?
Greece has already been bankrupted. It's their frenetic delusion that banks will be able to somehow not accept a much larger cut, that makes them pledge even more taxpayer money into their already flawed plans.
Did they really expect that their profligate credit pumping to, unable to be sustained & corruption-prone, economies of the past two decades, would be miraculously fixed with a two year massive public cut and a "painless" social obliteration?
If so, they should have made enough provision for private armies and bunker spending, because I'm not seeing a positive ending in for this charade.
Greece will soon catch up with USA. I'm talking the real numbers not the official. Look at under the carpet defense/MIC; and I don't mean for Feta country.
Why would anyone put three month money into this sink hole? Craziness - full tilt retard!
Dec 20 (Reuters) - Greece sold 1.3 billion euros ($1.69 billion) of three-month T-bills on Tuesday, with the yield rising by 5 basis points compared to an auction in November, its debt agency PDMA said.
The sale's bid-cover ratio was 2.91, down from 2.94 in the previous auction. Greece paid a yield of 4.68 percent, up from 4.63 percent in the Nov. 15 sale, PDMA said.
Tuesday's sale included 300 million euros in non-competitive bids.
Monthly T-bill sales have been Greece's sole source of market funding since it was shut out of bond markets early last year when its derailed finances triggered the country's worst crisis in decades.
Because it's not their money.
Just default already. Btw where in the heck is Gpap. These bureaucrats need to be held responsible for their financial mismanagement. Any bets he's leaving Greece to live in some exiled land that does not have diplomacy with Greece.
Use Bernanke and the US Federal Reserve's swap lines to stuff the Fed with garbage in exchange for dollars! Keep stuffing the US federal Reserve with garbage. All of Europe should take advantage of dumping it's garbage debt on the Bernanke and the Federal Reserve.
Cutting off pensioners ... I can see trouble here. 1,000,000 little old greek grandmas marching on the capital, kicking police-military butt all along the way.
Don't mess with the greek grandmas!
Ace of Spades.
the ultimate solution for the people who are suffering now is - to DECOUPLE FROM THE SYSTEM by introducing your own money surrogates ION (I Owe my Neighbour) and NOM (my Neighbour Owes Me). It can be in myriad of forms starting by helping in the garden and feeling the need to return the favor and ending with contracts in the written form.