EU’s debt deal is “kiss of death” for Greece

“Arguments for privatization aside, the deadly combination of higher debt and declining GDP had most economists convinced quite early on that austerity was killing Greece’s economy, and that a debt write-off would be at some point absolutely necessary for medium- and long-term recovery. However, Germany and its northern European allies had diametrically opposed this idea, insisting on even stronger doses of austerity, while balking at the prospect of a debt write-off.

At the same time, the idea of Greece exiting the euro was also an anathema to Germany and the eurocrats in Brussels. Keeping Greece in the Eurozone—even while its economy and society were going to bleed to death as a result of harsh austerity measures—was deemed absolutely imperative for the very survival of the euro, and for ensuring that all previous debts to European banks were going to be repaid. […]

In contrast to Tsipras’s outrageous claim that the debt deal represents a ‘historic’ agreement, in that it allows Greece to become a ‘normal country’ once again, the measures agreed on to make Greece’s debt sustainable will doom the country into becoming a permanent semi-peripheral debt colony of the EU. The deal simply pushes the debt into the very distant future, and locks society into a state of perpetual austerity by requiring that the government run exceedingly large primary budget surpluses. The deal is not a cause of celebration for Greece but, rather, a kiss of death. […]

At this point, with full budget surpluses running in the range of 5.3 percent (until 2022) and even 4 percent (from 2023-2060), ‘severe’ is not the right word to describe the level of austerity that will need to be enforced on the Greek population. A more apt term is ‘brutal’ austerity […]”


Greece, Germany and the IMF: the struggle continues

“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.”

Geplündertes Griechenland

“Die griechischen Renten wurden Schritt für Schritt um bislang 60 Prozent gekürzt, die nächste Kürzung ab Januar 2019 ist beschlossen. Jede dritte Altersrente liegt bereits heute unter 500 Euro im Monat, bei durchaus mitteleuropäischen Lebenshaltungskosten. Ganz allgemein sind die Einkommen unter das Niveau von 2003 gefallen. Allerdings auch nur für die Griechen, die überhaupt eine Arbeitsstelle haben, die offizielle Arbeitslosenquote liegt bei rund 20 Prozent, die Jugendarbeitslosigkeit bei über 45 Prozent. Nicht zuletzt deshalb sind bereits über 300 000 junge und qualifizierte Griechen ausgewandert. 40 Prozent aller Griechen können nicht rechtzeitig Miete und Rechnungen zahlen.

Das Gesundheitssystem ist in einem desolaten Zustand, mehr als 50 000 Griechen sollen in den letzten Jahren gestorben sein, weil sie sich eine medizinische Behandlung nicht leisten konnten. Drei von elf Millionen Griechen sind nicht mehr krankenversichert. Es ist üblich, wie in der Dritten Welt, dass Patienten Bettwäsche und Hygieneartikel ins Spital mitbringen müssen; ein Bakschisch hilft, eine Behandlung zu beschleunigen. Wenn die Apparate funktionieren und Medikamente vorhanden sind.”

Die Krise ist vorbei? Erzählt das mal den Griechen!

“Die Griechen wissen nur zu gut,

  • dass die öffentlichen Schulden nach acht Jahren des Leidens höher sind als je zuvor.
  • dass Banken unter faulen Krediten ächzen.
  • dass mehr als 300.000 junge, qualifizierte Griechen ausgewandert sind.
  • dass die gesamte wichtige Infrastruktur privatisiert wurde.
  • dass die Einkommen zurück auf den Stand von 2003 gefallen sind, womit griechische Familien laut der Statistikbehörde Eurostat im untersten Zehntel der Eurozone liegen.
  • dass es ein Albtraum ist, einen Job zu finden.
  • dass 40 Prozent der Menschen hier von Armut und sozialer Ausgrenzung bedroht sind.
  • dass einer von vier Griechen unter materieller Entbehrung leidet.
  • dass einer von drei Haushalten sich keine ausreichende Heizung leisten kann,
  • und 40 Prozent nicht ihre Miete und Rechnungen zahlen können.”

Why the debt deal with the EU is bad for Greece

“As a result, rather than ending the crisis once and for all by cancelling part of the debt and thereby sharing the burden of adjustment equitably with European creditors, this deal simply shifts the burden of adjustment onto future generations of Greek workers and taxpayers. […]

At the heart of Greece’s protracted fiscal crisis was always a highly contentious social and political question about the real meaning of European solidarity: Who should be made to pay for the presumed ‘profligacy’ of successive Greek governments, or the ‘excessive risk-taking’ of profit-hungry private creditors in the lead-up to the crisis?

The course of action that European leaders ended up settling on turned out to be very one-sided in this respect: Greece alone was to blame for its predicament, and therefore, Greece alone would be made to pay for it.

The real motivation behind the bailouts was always to safeguard the survival of a dangerously over-exposed European banking system—but this fact was quickly obscured.”

NZZ: Griechenland hilft nur ein Schuldenschnitt

“Letztlich führt nur ein tiefer Schuldenschnitt – selbst­verständlich gegen Auflagen – zu einem trag­fähigen Schuldenstand. Die Geldgeber müssen also ihre ‘Kredite’ teilweise abschreiben. Das nennt sich Haftung und gehört zu jeder marktwirtschaftlichen Ordnung; wer Risiken eingeht, trägt die Folgen. Ein Schnitt würde dazu führen, dass man bei maroden Staaten künftig wieder genauer hinsehen und höhere Risikoprämien verlangen würde. Die disziplinierende Kraft des Marktes wäre wiederhergestellt. Doch Europas Politiker werden sich hierfür kaum begeistern.”

Analysis: What taxpayer bailouts? Euro crisis saves Germany money

A bit older, but still au courant:

“But the truth remains that German taxpayers, as well as those in Finland, the Netherlands and elsewhere, are no worse off at all, and their finance ministries have racked up savings. […]

When giving presentations in Germany, Klaus Regling, the German who heads the euro zone’s permanent bailout fund, often cites two studies that show that Berlin has reaped substantial savings as an unintended consequence of the crisis.

One study, by German insurance giant Allianz, has calculated that Berlin saved 10.2 billion euros in 2010-2012 because of lower borrowing costs, as yields on its 10-year bonds fell from 3.39 percent to 1.18 percent now.

The other study, by Jens Boysen-Hogrefe of the IfW economic institute, suggests that the German federal budget saved 8.6 billion euros in 2011 due to low ECB interest rates and the safe-haven impact of investors putting money into Germany.

Those savings rose to 9.6 billion in 2012 and the safe-haven effect will alone be worth 2 billion in 2013, IfW said. […]

The heart of the misconception about taxpayers losses is the fact that in public discourse, the difference between lending and giving has ceased to exist.”