EU Demands Greece Reduce Deficit as Bloc Crafts Aid
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Feb. 28 (Bloomberg) -- European Union governments are piecing together a possible rescue package for Greece as they demand it first intensifies efforts to slash the bloc’s biggest budget deficit.
With EU Monetary Affairs Commissioner Olli Rehn flying to Athens tonight for talks, German lawmakers say euro-area officials are crafting a plan to grant Greece about 25 billion euros ($34 billion) in aid should the need arise, possibly by using state-owned lenders such as Germany’s KfW Group to buy its debt.
German Chancellor Angela Merkel and Luxembourg Prime Minister Jean-Claude Juncker signaled today that Rehn will warn Greece it must do more to regain control of its budget and can’t rely on taxpayers elsewhere to help until it does. Adding to the political pressure, the fiscal strategy of Greek Prime Minister George Papandreou’s government may soon be tested by investors as it readies a sale of as much as 5 billion euros of 10-year notes.
“Greece won’t be allowed to sink on the condition it respects its commitments to stabilize its budget,” French Finance Minister Christine Lagarde told Europe 1 radio today. “We have a certain number of proposals in the euro zone, involving either private partners or public partners or both.”
Bear with us dear reader, as we once again write about deflation.
The velocity of money is continuing to fall.
This is yet another deflationary signal.
Yet all the central planners in the US, Europe and elsewhere continue to fight deflation tooth and nail by bailing out failing companies, adding stimulus packages to the economy and now sovereign states like Greece.
As the public slowly wises up to the futility of the Fed's reflation goal, we should see velocity of money continue to fall as we move from a spending mentality to a savings way of thinking.
This is one of the strongest indicators yet of deflation.