Euroland news...

Extracted, for original see....

http://www.bloomberg.com/news/2011-10-02/greece-approves-8-8-billion-in-austerity.html

Greece Approves $8.8 Billion in Austerity
By Marcus Bensasson and Maria Petrakis - Oct 3, 2011 11:20 AM GMT+0800

Greece’s government pledged to fire workers as part of a 6.6 billion-euro ($8.8 billion) austerity package designed to help secure a rescue-loan payout and a second European Union-led bailout.

The steps outlined by Prime Minister George Papandreou’s administration would leave a 2012 budget deficit equivalent to 6.8 percent of gross domestic product, missing the 6.5 percent goal previously set with the EU, International Monetary Fund and European Central Bank, known as the troika. Troika inspectors agreed to the proposed 2012 budget.

The euro dropped to an eight-month low against the dollar before European finance ministers gather today to consider an enhancement to the region’s rescue fund and the risk of a Greek default. Troika members had been squeezing Papandreou for deeper spending cuts as the country’s three-year recession sapped the revenue needed to close the fiscal gap.

“Important decisions which need to be taken on a European level depend first and foremost on us,” Papandreou told his ministers last night, according to an e-mailed statement from his office in Athens. “We need to show our dedication to reaching the goals.”

Parliament Hurdle

Greece’s measures, which require parliamentary approval, aim to secure disbursement of an 8 billion-euro loan payout this month and a second rescue of 109 billion euros agreed to by EU leaders on July 21. Under the proposals, the deficit this year would be 8.5 percent of GDP, compared with the 7.6 percent target previously agreed with the troika. Next year’s gap is seen at 14.7 billion euros, according to an e-mailed statement from the finance ministry last night.

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My Thots......

Outline of the approved steps that Papandreou's Admin agreed to suggest that those measures will cut the budget deficit for 2012 to 6.8%  vs the budgeted 6.5% set with the Troika, earlier in July.

It is probably what the humbled Greek govt pushed against the wall can achieve in the face of the harsh austerity pie the Greeks have to swallow.

This plan is presumably negotiated with the Troika implicit approval but must still need to pass Greek Parliament approval.

The Greeks must deliver in their half of the court according to what was agreed in July (in spirit, they have) before the troika can consider changes that can alleviate the harsh conditions meted out.
In spirit, they have,  becos there are many moving parts,  harsh austerity meant negative growth and shrinking GDP which exacerbates the deficit calculations. Nobody, not even those in the Troika can estimate the effect on the GDP arising from the changing austerity measures, so the 6.8%  (vs 6.5%)  should be acceptable....

That the 6.8% cannot be met  and is being implicitly approved, meant that  the troika acknowledges that there must be changes to the July agreement or to the existing Euroland setup; in order to rule out another round of default scares - which is what is bringing the markets to her knees....

Expanding the EFSF? Leveraging the EFSF? More Haircuts on the Lenders?

What would be brought back onto the table?