Penance for Greek Financial Sins

Greece has been given the financial cold shoulder by the council of the European Union, strongly urging the greek government to correct the underlying issues with their economy.

The Greek deficit rate currently sits at over 12 percent, 9 points higher than acceptable within the Eurozone. Other nations within the EU have comparably high rates, Spain at 9.6 percent and Ireland higher still at over 12. There is a notable lack of the same heavy language from the commission on either nation’s deficit rate. In Ireland and Spain the public debt rate is under a third of Greece’s, at 86 percent.

Moody’s Investors Service said yesterday that the country’s fiscal statistics have been “undermined by years of mismanagement.”

“Greece’s poor track record in implementing fiscal reform mean that success can’t be taken for granted,”Sarah Carlson, a London-based sovereign at Moody’s, said.

The EU Council’s strong greek stance comes from the country’s years of falsified financial statistics. It stressed that an independent statistical bureau was as important as fiscal reform.

For its part the Greek government finds itself, now, between a rock and a hard place. Forced to cut spending and hike taxes, there is already labour backlash in the form of strike action from Greece’s powerful unions.

If Greece doesn’t manage to reign in its deficit rate by the EU 2012 deadline, it can expect further action, including the possibilities of sanction.

The Finnish EU-commissioner Olli Rehn says that the EU cannot build a safety net and wait for the weakest countries to fall in it.

”It would be a serious threat for the mentality in the euro area. The weakest countries could easily just float in the stability and
benefits given by the Union.”

Last week European Central Bank President Jean-Claude Trichet said no nation can expect any special treatment.


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