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Wednesday, December 16, 2009

Greek tragedy: Is Kenya following in the same footsteps?

I was looking at the short history of Greece. The uncontrolled government spending in the name of welfare, the high taxation, the corruption...etc. The only thing that Greece out-does Kenya is government deficit which is projected to be 12% of GDP (the EU thinks its going to be higher) and the high level of indebtedness. My God!! We are walking down the same path! And they don't have a restrictive economy with protectionism in Agriculture and energy sectors. Boy are we in trouble. Follow the story here

Dec 15 (Reuters) - Greece has been in turmoil since then Prime Minister Costas Karamanlis called early elections in September, 2009 seeking a new mandate to deal with Greece's economic slowdown.
The government was dragged down by discontent with the economy, scandals, the worst riots in decades and its handling of bushfires which had ravaged large areas of the country.
Oct. 2009 - The snap election on Oct. 4 returns George Papandreou's socialist PASOK party to power with a comfortable majority. It will hold 160 seats in the 300-seat parliament. The new government discloses the 2009 budget deficit will be 12.7 percent, more than double the previously announced figure.
Nov. 2009 - The new government pledges in its 2010 draft budget to save the country from bankruptcy by cutting the deficit while keeping electoral promises to help the poor amid the economic crisis. The final budget draft is submitted on Nov. 20 and is due for adoption on
Dec 23. 2009 - Greece aims to cut its budget deficit to 9.1 percent of GDP in 2010 to assure EU partners and markets it is serious about restoring fiscal health, its final budget draft shows.
-- It also sees public debt rising to 121 percent of GDP in 2010 from 113.4 percent in 2009. EU forecasts on Greece for 2010 are worse, with the deficit seen at 12.2 percent of GDP and national debt rising to 124.9 percent of GDP, the EU's worst.
Dec. 2009 -- S&P on Dec.7 puts the country's A- sovereign rating on negative watch. By 1215 GMT the next day, Greek bank stocks <.FTATBNK> shed almost 6 pct, extending the previous day's losses, as the S&P report said Greek lenders faced the highest risk in Western Europe. The broader Greek market <.ATG> falls 3.6 percent. Yield spreads between Greek and German 10-year government bonds widen to as much as 226 basis points - the highest since April.
-- The same day, Dec 8, Fitch Ratings, which had cut Greece to A- when the government revealed the higher deficit, cuts Greek debt to BBB+ with a negative outlook, the first time in 10 years a ratings agency puts Greece below the A investment grade.
-- Shares in Greek banks deepen losses to fall almost 8 percent while the euro hit a day low after the downgrade. On Dec. 9, Papandreou says he is determined to win back the country's lost credibility.
-- On Dec. 14, Papandreou outlines policies to cut the country's ballooning budget deficit and try to regain the trust of investors and EU partners before a strike planned by leftist parties for Dec. 17 to protest against austerity measures.
-- Papandreou announces a 10 percent cut in social security spending in 2010. Says he will abolish bonuses at state banks and slap a 90 percent tax on private bankers' bonuses. Vows a serious fight against corruption and tax evasion, calling them the country's biggest problems.
-- He announces a drastic overhaul of the pension system in six months and a new tax system that will make the wealthier carry more of the burden.
-- On Dec. 15, markets fall in reaction to Papandreou announcements and workers immediately protest the cuts in social security.
-- Greek bank shares drop 2.9 percent in early trading, with analysts citing market concerns about the government failing to announce tougher measures to shore up the country's finances.
Copyright 2009 Reuters, Click for Restriction

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