Greece missed a payment to the IMF of € 1.5 billion and the IMF refused to grant an extension.
As long as its creditors refuse to restructure the loans without agreements to further destroy the Greek economy, Greece is on its way out of the Euro zone.
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6 comments
I’ve been following this story for the past couple of weeks. Greece has a primary account surplus right now, but the debt payments have been sucking all that money back up before it can get into the Greek economy and create economic activity. There is literally no — zero — way that Greece can ever repay all the money it owes under the terms demanded. If the loans were marked down to 0% interest and a haircut taken, the banks could get *some* of what they are owed, but the banks are refusing to do that. So it looks like they’ll get *none* of what they are owed. Because they want to be evil in order to provide a “moral lesson”. Nothing more, nothing less. Certainly not because this is the best way for them to get repayment, because the chances of Greece’s citizens going along with this latest “ream your citizens for our profit” plan are zero, and zero.
If people aren’t employed they can’t pay taxes; the fewer people who pay taxes the less money the government has to pay its debts. Five years of austerity including forced sale of government assets and firing of government employees has reduced the income of the government and its ability to pay kits creditors.
The creditors, by demanding more, are going to get nothing. The economics are clear and well known, but bankers obviously don’t believe in facts.
The fear mongering from the BIS, the ECB, and all the other financial acronyms is making the Greeks terrified of how bad it could get if they don’t go along. After all, the way they look at it, they’re already down to $60 euros per day (of their own damn money, they might add), not having heat in the winter, and not being able to afford decent food in a lot of cases. They’re thinking of what this “worse” scenario would entail.
But I think of Iceland when I see all those financial overlords wringing their hands. I know Iceland isn’t Greece and the circumstances aren’t identical, but still, Iceland is hanging in there much better than if they’d just followed in lockstep with what they were told.
I just noticed today that the Eurozone is now not asking for immediate payment on the due debt (which they weren’t going to get anyway and should have recognized before going through all this crap). Maybe they’re coming to their senses? Nah.
At least we are now beginning to see people who have been invited to talk about Greece in the media acknowledging that the banks share responsibility for this mess, and the proposed ‘solutions’ just won’t work. As Badtux and many sane economists have been saying for a very long time, austerity is preventing economic recovery.
Wow, they DID vote no! Badtux nailed it about their not going for it. I really thought they might let fear hold them back. Most likely, this is the best thing for them in the long run, and perhaps it might make the European financiers blink. It’s time for the creditors to take a haircut and move on. Everybody made a bad deal, so everyone has to take a mark-down.
Still, it’s a tough row to get through before things look better for Greece, but it’s a great country. Really wish them all the best in this.
The Bankers have been bullying Greece from the beginning. All of the ‘bailouts’ have been going to the banks that made the bad loans to Greece. The Greek economy has been covering the other expenses, just not the ‘payday loans’ that the banks made.