Tuesday, 21 February 2012

Beware Greeks bearing debts

An agreement has been reached for a second bailout loan for Greece, plunging the country further into unsustainable debt.

I wonder if they think taking on another
€130bn of debt is a "historic moment"
The terms of the pay day loan are still vague and it all hinges on private creditors "voluntarily" writing off of 53.5% of their debts.  The Greek government is passing a law in case they don't agree to the "voluntary" write-off to force them to "voluntarily" write off the 53.5%.

Prior to the meeting, the EC, ECB, IMF, Netherlands, Austria and Germany had all said that they wouldn't be moved on a target of 120% debt to GDP ratio (ie. national debt would be no more than 120% of the total amount of money the Greek economy produces in a year) by 2020 but they caved in and upped it to 123%.

One of the conditions of the €130bn loan is even deeper austerity measures which is frankly bizarre given that a joint EC/ECB/IMF report was leaked last night that says the EU-imposed austerity measures have weakened the Greek economy and made it harder for them to meet their demands.

The BBC reports that the Greek government has agreed to "enhanced and permanent" external monitors to oversea the economic recovery.  This is clearly a reference to the Dutch demands for permanent representation of the EC/ECB/IMF in Greece to make their financial decisions for them.  The EU-funded BBC's wording suggests the agreement on this is a little softer than what the Netherlands were demanding but the Independent is more equivocal and it would seem that the Greeks have agreed to hand over permanent control of tax and spend to an unelected group of economists.

The unelected, EU-appointed Greek Prime Minister, Lucas Papademos, has called the loan and further damaging austerity measures that are being inflicted on the Greeks a "historic moment".  The protesters who've been rioting in Greece for the last few weeks might have a different opinion.  As I said yesterday: this isn't a bailout, it's a coup d'├ętat.