“To its credit, the Fund [IMF] saw what was happening and gave up on its austerity program. Germany did not. In early 2012, numerous reports surfaced of growing friction between the IMF and the EU countries over the Greek program. The Fund was upset that the EU (Germany in particular) was focused almost completely on getting Greece to reduce its government deficit. The Fund insisted this one dimensional approach had failed. Clearly, the IMF was attempting to distance itself from the austerity measures imposed on the country under the insistence of the EU. […]
But Germany and other countries who foolishly lent Greece monies do not want any defaults. Are they not engaged in wishful thinking?
- Where are the funds to pay off these debts going to come from?
- What happens when the European Central Bank stops buying up Greek bonds?
Consider what Greece would have to be paying in interest on its debt at market rates. 5% of €320 billion works out to €16 billion annually. And when you add to that paying off its maturing debt…. The Fund is right to be concerned. The Europeans are ‘kicking the can down the street.’ And Greece is supposed to run a surplus of 3%+ indefinitely? This ‘crisis’ has just been extended.”