Greece to default without labour reform

Greece to default without labour reform

Greek Prime Minister Lucas Papademos says the country faces ‘‘uncontrolled default’’ in March unless unions and employers can quickly agree on labour cost cuts to boost competitiveness.

At a round of meetings with social partners, Papademos said the labour issue would affect an EU-IMF evaluation of Greece’s economy later this month that will determine the conclusion of a debt-saving agreement for the country.

‘‘Without the agreement and the funding linked to it, Greece faces an immediate danger of uncontrolled default in March,’’ Papademos warned.

‘‘Social partners must exert a great effort in negotiations to improve competitiveness in the economy and boost employment,’’ the prime minister said on Wednesday.

‘‘We cannot expect other EU states and international organisations to continue to fund a country that does not adapt to reality and does not deal with its problems,’’ Papademos added.

‘‘Our actions and decisions in the coming weeks will decide everything,’’ the he said, calling for a conclusion to labour talks by the end of January.

Greece’s leading union earlier on Wednesday rejected calls to cut labour costs and insisted it would hold employers to existing wage agreements.

‘‘We are not prepared to retreat even a single step on safety salaries for poor workers ... we have signed an agreement, we call on (employers) to honour their signature,’’ said Yiannis Panagopoulos, head of the main private sector union GSEE.

This could get very interesting as the embattled debt-burdened country tries to fight off default. I understand that protests continue in Greece though there is little mention of it in the media? Well looks like union-backed protests and who knows what else is gonna escalate in coming weeks with a government initiated war on workers' wages and conditions. I'm not supporting either side here, just wish to report the story as yet another development in the ongoing EZ sovereign debt crisis.

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If the Greeks were smart they would default. But they are afraid and just like Yoda said----- "fear will lead to the dark side".

Here's some commentary from ZeroHedge:

When it comes to the markets one can easily ignore the fact that the world is one big ponzi and things, as we know them, are coming to an end as long as the can can be kicked down the street at least one more time. In other words, without a hard deadline, there is nothing that can force change upon a system already in motion, no matter how self-destructive. Unfortunately, the clock in Europe is ticking as a deadline approaches, and somewhat poetically, the place where it all started is where it may end. In March Greece faces a redemption cliff: if by then the €130 billion promised to it by the Troika as per the July 21 second bailout, is not delivered, it is game over - first for Greece which will default, then for the ECB, which will be forced to write down holdings of Greek bonds, in effect wiping out its equity and credibility, and lastly, for the Euro, which will see a core member leaving (in)voluntarily.

Refer to link for rest of article.