Greece's national debt is €301 billion. Population is 11 million - so a
family of four owes €109,500.
Average net salary is €14,000 - so (assuming a family of four has one average
earner) that debt is 7.8x annual income. This is their share of the national
debt only - it does not include their own mortgage or personal debt.
Sustainable? My arse...... Even if the haggling to knock off €20 billion
succeeds, the result is still bullshit.
How many times does the obvious have to be said?The Greek debt is so great
that there is no realistic prospect of it ever being repaid. Creditors and
creditor governments and institutions are just trying to buy time until some
further write down or orderly default can be implemented that will not be too
politically damaging to them. All the time hoping that Greece's current account
balance can be kept moving into the black so that further bailouts to cover
current government spending can be avoided.
All this fancy financial footwork has one goal only, to save the Euro. No one gives a damn about the mess the Greeks have got themselves into and for which they will pay dearly, and rightly so.But for how long can Greece avoid social and political explosion while they are the guinea pigs for a heroic surgical experiment designed to save the architects of the Euro from the folly of their creation.
All this fancy financial footwork has one goal only, to save the Euro. No one gives a damn about the mess the Greeks have got themselves into and for which they will pay dearly, and rightly so.But for how long can Greece avoid social and political explosion while they are the guinea pigs for a heroic surgical experiment designed to save the architects of the Euro from the folly of their creation.
2 comments:
German Finance Minister Wolfgang Schäuble is a clever orator. In comments to the press on Tuesday, he first made sure to praise Greek reform efforts before turning to the most recent measures passed to prop up the heavily indebted country. Then he said that the new aid package, aimed at reducing Greece's overall debt load and giving the country two extra years to meet its budget deficit reduction targets, won't cost German taxpayers a penny. It is a bold statement. And one that leaves plenty of room for interpretation. Particularly given Schäuble's follow up. Berlin, he said, will suffer a "reduction of revenues." It is a typical Schäuble formulation: a bit ambiguous and slightly misleading. But the numbers are clear enough. Germany will forego some €730 million ($944 million) in revenues in 2013 as part of the deal hashed out on Monday night in Brussels between euro-zone finance ministers and the International Monetary Fund. It is a compromise that avoids, for now, the kind of debt haircut that Berlin had been so opposed to. But it marks the first time that the crisis in Greece will have a direct effect on the German budget. The deal clears the way, finally, for the payout of the long-awaited next tranche of emergency aid for Athens. Whereas that tranche was originally to be €34.4 billion, euro-zone finance ministers lumped it together with the next chunk of aid due and approved the payout of €43.7 billion. Before it can be delivered, however, German parliament must approve the plan pushed through on Monday night, which it is expected to do on Friday. Parliaments in Finland and France also have to clear the deal, but neither is expected to block it.
Despite the fact that Greece's government had carried out reforms and passed a harsh austerity budget, the release of the next round of money was delayed for weeks by a disagreement between its lenders - the International Monetary Fund (IMF) and European Central Bank (ECB).
These had agreed to grant Greece a two-year delay in the speed of spending cuts, in order to take some of the pressure off the country's heavily depressed economy.
However, the extension inevitably meant the Greek government would be overspending for longer, and would therefore run up bigger debts than previously anticipated.
This ran into an objection from the IMF, who made clear that it could not lend money to a government whose debts it considered ultimately unlikely to be paid back.
The IMF's litmus test, laid down as a condition of Greece's latest bailout, is that the government's debts should fall to 120% of the country's annual economic output by 2020.
On Tuesday, the IMF and eurozone agreed that, in order to hit a slightly increased target of 124%, the Greek government's debts would have to be alleviated in three ways:
by requiring Athens to back some of its existing debts from private sector lenders at current depressed market prices
by the ECB passing back to Greece the profits it has made on Greek government debts it owns
by cutting the interest rate Greece must pay on existing bailout loans
Germany and other eurozone governments opposed cutting Greece's debts by simply writing off some of the 150bn euros (£122bn; $195bn) of bailout loans already extended.
The German broadcaster ARD says the deal brings a direct cost to the German federal budget - 730m euros next year and 660m euros in 2014.
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