Poland is urging Greece to seek help from the Paris Club - the informal group of creditors which has organised agreements worth $553 billion since it was founded in 1956. Poland's economy minister (also previous prime minister of Poland, and Brigadier General in the country's volunteer fire service), Waldemar Pawlak, said today: Where the Greek debt is concerned, it is necessary to call on the broad institutional experience of groups like the Paris Club which has carried out restructuring in several dozen countries. Good solutions are required and they've proven themselves. There should be no political declarations about Greece going into a controlled default because this leads only to destabilising. Instead, public and private institutions should lead restructuring in order to stabilise the Greek situation in a civilised manner. 
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Wednesday, September 14, 2011
Poland is urging Greece to seek help from the Paris Club - the informal group of creditors which has organised agreements worth $553 billion since it was founded in 1956. Poland's economy minister (also previous prime minister of Poland, and Brigadier General in the country's volunteer fire service), Waldemar Pawlak, said today: Where the Greek debt is concerned, it is necessary to call on the broad institutional experience of groups like the Paris Club which has carried out restructuring in several dozen countries. Good solutions are required and they've proven themselves. There should be no political declarations about Greece going into a controlled default because this leads only to destabilising. Instead, public and private institutions should lead restructuring in order to stabilise the Greek situation in a civilised manner. 
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Hopes that the talks between the German, French and Greek leaders could bear fruit helped calm Europe's stock markets on Tuesday and halted the run on bank shares. But the jittery mood was underlined by an increase in the interest rates Italy has to pay when it borrows from the financial markets. Despite rumours that China was in talks with Rome about investing in Italy, the yield on five-year Italian bonds rose to its highest level since the single currency began in the 1990s.
The latest phase in Europe's debt crisis was prompted by the resignation of Germany's Jürgen Stark from the council of the European Central Bank, seen by the markets as a sign that Europe's paymaster was opposed to the ECB continuing to buy Italian and Spanish bonds in order to drive down interest rates. Evidence that Greece is way off track with its EU-IMF deficit reduction programme has added to the gloom.
Merkel insisted that Europe was doing all it could to avoid a Greek default, although the interest rate on two-year Greek bonds was approaching 100% last night, a sign that the markets believe the two-year crisis is coming to a head.
Economist Harry Dent sees a cataclysmic drop in stock prices that’s going to erase more than 70 percent of the market’s value by 2013, with the Dow Jones Industrial Average plunging to 3,000.
"I think the stock crash started in late April. This is just the first wave down,” Dent, who heads his own economic research firm HS Dent, tells CNBC. The Dow has dropped about 15 percent from its April 29 high.
“The Dow Jones, . . . I think the crash really starts some time in early 2012," says Dent, author of the upcoming book "The Great Crash Ahead."
He sees the market downturn that lasted from October 2007 to March 2009 and took 8,000 points off the Dow as a guide to what’s going to happen this time around. Global consumption is headed down, Dent says.
"Baby boomers around the world, and all the developed countries — Europe, North America, Australia — they have peaked in their spending cycles. They've been driving up real estate prices and stock prices and the economy for decades, and now they're going to be saving and not borrowing," Dent says.
Not everyone agrees with Dent that stocks are in trouble.
Vanguard Group founder John Bogle sees annual returns of 7 percent for equities in coming years. "Your money will double in 10 years," he tells The Wall Street Journal.
“How bad is that? People ought to get over the illusion [of higher expectations.]”
Read more: Economist Dent: Dow Will Plunge to 3,000 in 2013
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Mr Barroso confirmed on Tuesday that the EC would present "options for the introduction of Eurobonds," but warned that they shouldn't be viewed as a panacea for the region's problems.
"We must be honest: this will not bring an immediate solution for all the problems we face and it will come as an element of a comprehensive approach to further economic and political integration," he told the European Parliament in Strasbourg.
"This is a fight for the jobs and prosperity of families in all our member states. This is a fight for the economic and political future of Europe."
The European Parliament has long called for the introduction of euro area bonds, which would grant weaker countries access to cheap funds but push up borrowing costs for countries such as Germany.
Germany has remained strongly opposed to the idea of eurobonds, while legal experts said a ruling by Germany's top court has made it virtually impossible for Berlin to sign up even if it wanted to.
Analysts also recognised the limitation of a eurobond solution:
"It (Barroso) could be a turning point and a major step forward as countries with higher debt levels will have the ability again to finance themselves," said Klaus Wiener, chief economist at Generali Investments.
"But if we get euro bonds, there will be some strings attached. There will be strong governance in terms of fiscal prudence otherwise it can not work."
Mr Barroso’s comments came as Poland's Finance Minister said the EU could be destroyed by the debt crisis dragging down the currency area.
"Europe is in danger," Jacek Rostowski told the European Parliament.
"If the eurozone breaks up, the European Union will not be able to survive, with all the consequences that one can imagine."
ITS1789
14 September 2011 9:25AM
The Big Problem with allowing Greece to go to the wall and default, which seems to be happening, is that a Greek collapse could drag down several large European banks and begin a avalanche that could easily get out of control, leading to a second Great Depression, or a semi-permanent "recession" in Europe. Could Greece be just the beginning of a collapse involving all of southern Europe? Italy, Spain, and Portugal, and what about France?
Essentially, the corrupt ruling elite in Greece, who have profitted so enormously from the Greek financial bubble, are more than willing to push the massive cuts to the living standards of the Greek people through. However, these cuts, also termed "reforms" are so asocial, destructive, and economically insane, that one risks a revolution in Greece which will topple the government and could lead to something close to civil war if the regime tries to cling to power with the help of the military, which isn't unusual in Greece.
The Greek elite are trying to push through the "reforms" as quickly as possible, but the Greek people are resisting, and complaining that they don't see why they should pick up the tab for the gambling debts incurred by the ruling elite. Let the elite go bankrupt, not the people, as I heard one out of work Doctor say the other day.
But the markets want rapid cuts to the Greek standard of living regardless of the risks involved. The people, democracy itself, is putting a break on the speed and depths of the cuts required to satisfy the markets.
Increasingly, and not just in Greece, the markets are losing faith in democracy which they regard as an obstacle to "reform" and a restructuring of the welfare state concensus.
It should concern people, regardless of their political stance, that the markets are becoming sceptical about the "slowness" and "weakness" inherent in bourgeois, liberal, democracy. Increasingly, in elite circles, one hears questions being asked about the "viability" of democracy in relation to the economic crises we face, and that our problems are really economic, but fundamentally, political in nature. Which is code for dumping democracy and moving towards authoritarian rule, which would have the strength and resolve to push through the necessary "reforms" even in the face of "selvfish" opposition from the people
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