NP - Greeking Greece

[David Morris]

The implication of the IMF report is that Grexit is inevitable
<http://blogs.channel4.com/paul-mason-blog/greece-crisis-europe-turns-screw/4145>.
Without debt relief the Greek debt to GDP ration will rise to 200%. It will
be using 15% of its GDP simply to make interest payments and payments
coming due.

So we go back to the old problem that has dogged Greece since 2010. Yes it
has an inefficient, state-dominated economy that needs to be reformed; yes
it has antiquated and corruption-inducing restrictions on who can run
certain businesses. But you can’t modernise a place like Greece amid the
relentless downward pressure on growth that austerity measures produce.

By saying this – albeit in a secret document the Europeans wanted
suppressed – the IMF has shown it is a learning organism. It has abandoned
the dogma that predicted austerity would bring a 4% fall in GDP and drawn
conclusions from the 25% fall in GDP that actually occurred.

On Wed, Jul 15, 2015 at 10:24 AM, David Morris <fqmorris at gmail.com> wrote:

>
> http://blogs.channel4.com/paul-mason-blog/greece-crisis-austerity-deal-pointless/4197
>
> Decoding the IMF: Greek deal doomed, exit likely
>
> Step back further and take in the implications of the IMF’s secret report,
> leaked yesterday, into the dynamics of Greece’s debt. The IMF says – after
> the weeks of dislocation caused by the relentless bank run and the capital
> controls – that the austerity deal is pointless. Greece needs a massive
> debt write-off or large upfront transfers of taxpayers money from the rest
> of Europe. It needs a 30 year grace period in which it will stop repaying
> the loans.
>
> Yet the entire deal done on Sunday night was premised on not a single cent
> worth of debt relief. Vague commitments to “reprofile” debt – pushing
> repayment times backwards and lowering the interest rates – were all Angela
> Merkel could be persuaded to do.
>
> What this means is very simple: the third bailout agreed in principle on
> Sunday night is doomed to fail. First because the IMF cannot sign up to it
> without debt relief; second because, without debt relief it will collapse
> the Greek economy. This is even before you factor in issues like mass
> resistance to its details, or the total lack of enthusiasm for execution of
> the deal by the Syriza ministers who will have to do it.
>
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