04-09-2017, 02:02 PM
According to the latest figures from the International Monetary Fund, the Greek government owes almost 180 per cent of the country’s yearly output and this debt is denominated in a currency the Greek government can’t print. Creditors rarely get all their money back in those sorts of situations, so they’re demanding high interest rates to compensate for the risk of large losses. The high external debt level is also why ratings companies have classified Greek sovereign bonds below “investment grade”, which in turn prevents Greek government bonds from being purchased by the European Central Bank unless the country is in a “programme” approved by the IMF and company, which is yet another clear signal private investors should stay away. Thus the Greek government must regularly beg its “official sector” creditors for money needed to cover any spending beyond what’s collected in tax, even though almost all the funds raised this way in the past few years have been used to cover payments on earlier loans made by those same creditors, rather than spending on actual Greeks. The result of all this: recurring crises, punishingly high costs of capital, depressed asset values, a dearth of investment, catastrophic unemployment, and one of the largest sustained declines in output since 2008 of any country in the world since 1980. The only places to have done worse over the same length of time either suffered civil wars, collapses in the prices of key commodities, or both.
What if Greece got massive debt relief but no one admitted it? (Part 1) | FT Alphaville
Pierre Moscovici, the EU’s economic- and monetary-affairs commissioner, notes that Greece’s GDP per person has fallen by 45% since late 2009 and unemployment is nearly 50%. This is the worst performance ever by any advanced country.
Exit strategy: Leaving the euro would be devilishly difficult | The Economist