Euro zone, IMF secure deal on cutting Greek debt

Comments (14)
kommy wrote:

What is a flip-side of creditors decision to soften the credit conditions for Greece. No more money: Greece left alone to weather the storm.

Read more at: http://theeuropeanaffairs.blogspot.ca/2012/11/is-this-look-of-desperate-person.html

Nov 26, 2012 8:34pm EST  --  Report as abuse
usagadfly wrote:

Like many countries, Greece owes huge debts for money supposedly borrowed by the Greek people. Well, maybe. What if these countries, their ordinary people simply repudiate the debt owed and kick the people who borrowed it all, and who have prospered from the money, out of the country, revoking their rights to retain property or economic interests in businesses? The top 5%?

Then the people would have to live within their means. They would have to to some extent take care of their weak and elderly whose money was taken under false pretenses by the “government”, or the people who controlled it. They would no longer be able to borrow money. Would that be so bad? For the banks it would be bad, for the lenders who simply never said “no” because they expected some powerful thug to take what they wanted from the weak. What kind of government is that? But such a thing would stop the borrowing and stop the profiteering without enslaving entire countries.

Nov 26, 2012 9:30pm EST  --  Report as abuse
dareconomics wrote:

Click here for chart:

http://dareconomics.wordpress.com/2012/11/26/greek-can-kicked-past-german-elections/

The chart above from ZeroHedge helps to show what is really driving the Greek bailout deal. If you thought it was the welfare of the Greek people , then you have not been paying enough attention to the Eurocrisis.

In the chart above, GDP continues its descent until after German elections in the fall of 2013. Then, the number begins rising dramatically. This is no coincidence. The purpose of the this deal is to avoid problems for a few more months to enable Merkel’s reelection. The GDP numbers are realistically poor until the fall, because Germany needs them to be. Actual money is needed to plug funding holes until the election.

After the election, it makes no difference what happens, so unrealistic projections may be used instead of real money to plug financing holes. The next time Greece needs to be bailed out, Merkel will try to get a longer term deal to keep Greece in the euro. If the political calculus does not favor another bailout for Greece, she will allow it to default. It’s that simple.

While the deal expertly defers the Greek problem for another few months, it will do nothing to arrest the descent of the economy. The Greek people receive nothing for their suffering except malaria and more suicides. The Greek politicians receive money to hand out to their cronies at the banks.

The IMF did well. It conceded to allow the Eurozone to raise the sustainability goal to 124% Debt to GDP in exchange for an agreement to reduce Greece’s debt to under 110% by 2022. The only way to reduce the debt ratio that low by 2022 is for the Eurozone to forgive Greek loans. I am skeptical that this will happen, but we will have to wait until 2016 to see if I am correct. In politics, that is a lifetime, and Schaeuble’s language is vague enough so that he can claim that nothing was promised.

The German led Eurozone did very well in this deal. In exchange for maintaining the status quo for a few more months, they gave up peanuts:

Lower interest rate on bilateral loans
Relinquishing profits an ECB held debt
Extending the maturity of the loans
Deferring interest payments for 10 years
Loaning the money to Greece to buy back its outstanding debt

The first two points actually help Greece, but the last three are mere window dressing. Extending the maturity of the loans and deferring interest payments for 10 years ensures that the Greeks will be debt slaves long after Samaras, Merkel and Juncker have retired to their summer homes.

The Greek buy back is actually bad for Greece, because it will not be able to obtain replacement financing on such generous terms:

http://dareconomics.wordpress.com/2012/11/21/greek-bond-exchange-is-a-bad-idea/

At least it makes the numbers look good today.

While the whole deal is a scam whereby Petros is being robbed to pay Pavlos, the biggest lie comes to us courtesy of the biggest liar in the Eurozone. Ladies and gentlemen, Mr. Jean-Paul Juncker:

“This is not just about the money. This is the promise of a better future for the Greek people and for the euro area as a whole, a break from the era of missed targets and loose implementation towards a new paradigm of steadfast reform momentum, declining debt ratios and a return to growth,” he told a 2 a.m. new conference.

He’s right about one thing. It isn’t just about the money. It’s about German elections. See you at the next Greek bailout summit, J.P.

Nov 26, 2012 10:45pm EST  --  Report as abuse

The numbers in Greece are insurmountable. The numbers in Spain and Portugal are worse, particularly Spain. Somehow I think that the Germans will abandon their hopes of empire in favor of keeping a German way of life. You’ll note how I mentioned Germany alone. France is doomed by way of their weak and unpopular government. Who is left? The Dutch and Nordic countries? When do you think they’ll pull the plug? Save yourselves, Northerners. There is no hope of a resurgent European empire. Asia is the future. At the very least, keep what you have.

Nov 26, 2012 11:58pm EST  --  Report as abuse
LoveJoyOne wrote:

They just pushed the problem down the road four more years.

There is now way Greece will be running a budget surplus by then. That’s just ridiculous.

Nov 27, 2012 12:07am EST  --  Report as abuse
ALALAYIIIAAAA wrote:

i agree.it is temporary solution.my friends in greece are saying the same story ever darker bcause they live inside the problem.

Nov 27, 2012 2:32am EST  --  Report as abuse
JoeObserver wrote:

where will the money come from? Print more money like Zimbabwe then.

Nov 27, 2012 2:42am EST  --  Report as abuse
gffffe wrote:

Stop Greece. We must not food them.

Nov 27, 2012 4:11am EST  --  Report as abuse
ALALAYIIIAAAA wrote:

Gfffe@
i would prefer it if you didn’t say nonsence.There is always a ground for such debate and it is called “BILD”.

Nov 27, 2012 4:47am EST  --  Report as abuse
scythe wrote:

meanwhile the usa federal reserve prints itself 40+ billion dollars per month to keep the economy from imploding under 16 trillion dollars of debt

that’s not growth – it’s a debt tumour

a foodstamp and credit card economy

Fed Undertakes QE3 With $40 Billion Monthly MBS Purchases
http://www.bloomberg.com/news/2012-09-13/fed-plans-to-buy-40-billion-in-mortgage-securities-each-month.html

Nov 27, 2012 4:50am EST  --  Report as abuse
ALALAYIIIAAAA wrote:

Joeobserver@
Read the whole agreement and then comment.Speculations are only for uneducated individuals

Nov 27, 2012 5:03am EST  --  Report as abuse
breezinthru wrote:

I’d like to hear what Ireland’s finance minister has to say about the Troika’s accomplishment.

I also wonder about the finance ministers of Portugal and most particularly Spain. Are they satisfied with the terms of their debt repayment or are they perhaps thinking of making an appointment at the Troika Barbershop?

Nov 27, 2012 5:07am EST  --  Report as abuse
ALALAYIIIAAAA wrote:

breezinthru@
they have to say nothing at all.
when the germans presented greece as “virus” or “special case” everybody agreed on that plus they isolated greece and nobody visited greece not even holande a so called friend of that country.in addition i remember exactly rajoi’s words :spain is not greece.now they have to face reality and stay in the corner.when the greeks called for solidarity they whistled indifferent.

Nov 27, 2012 5:28am EST  --  Report as abuse
dunelm8 wrote:

so what if Merkel is not elected in 2013?

Nov 27, 2012 6:41am EST  --  Report as abuse
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