jueves, 29 de abril de 2010


By: Felipe Argote

The financial crisis is not developing in hours or days, even weeks. What happens is that analysts’ generally uninformed people react after the explosion of the crisis and analyzed retrospectively from the comfort of their offices the reasons for the carnage. It is similar to those Monday morning office coaches, explaining precisely like specialists why their favorite team lost the game on Sunday afternoon.

The Greek crisis does not start a week ago, even in February when there was talk of Greek tragedy as if it were the theatrical performance of Sophocles' tragic poet, that V century BC which Oedipus is perhaps his better known tragedy. The crisis began under the previous Greek government and continued during the current. In December last year, the Greek Prime Minister George Papandreau presented a plan to reduce the budget deficit to 8.7% of GDP. At that time was estimated at 12.7%, well above the 3% that under the agreement is the roof of the countries member of the European Union. The response of the risk rating agencies, namely Standard and Poor's, was breaking down the Greek sovereign bonds from A to BBB+. This grade would be cause for celebration for the Panamanian government if it were the sovereign risk rating of Panama, but not for a developed country member of the euro zone as Greece.

It is in February when it became known Papandreau plan, after approval by the European Union. These include, inter alia, raising the consumption tax known worldwide as VAT (value added) and in Panama known as the hardest ITBMS (imposed on the transfer of goods and services). This tax would raise no less than 21%. Additionally, reduced to 30% bonus to civil servants (thirteenth month in Panama)

This starts, of course, resistance movements of the population that translate into marches and strikes, while the finance ministers of the European Union decide to help finance a loan of Greek 35.000 billion Euros while the International Monetary Fund, always ready to do business in times of crisis will invest 15.000 million. Meanwhile, rating agencies are lowering the sovereign rating of Greece. Eurostat raised the budget deficit calculation of Greece to 13.8%.

Finally the catalyst is given on Tuesday 27 April when Standard and Poor's rating Greece reduces BBB+ to BB+ with that out of the investment grade better known as junk bonds. This generates the panic of debt holders who were trying to get rid of them like hot potatoes to the danger of bankruptcy in Greece and therefore non-payment of its obligations. As is the story repeatedly, comes the domino effect. The Greek crisis has had its effect throughout Europe starting with Portugal, then Spain, where unemployment levels have reached 20%, most recently Mexico and even the stock market in New York.

Finally, the euro has lowered its value to $1.32 per euro. According to Dominique Strauss Kahn, International Monetary Fund Managing Greece needs an injection of 150,000 million dollars to avoid bankruptcy and the subsequent effect on the global economy. This is three times as estimated by the timid European Union measures less than a month of May 19 when starting the maturity of bonds by almost 30,000 Greeks billion.

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