07-01-2015, 12:12 AM
It’s not that the troika won’t do a deal with Greece, it’s just that it won’t do a deal with Syriza. Even if the basis for one could be found, the IMF, the European Commission and the European Central Bank would not trust the current government to implement it. In such circumstances, they would rather not have one at all, and damn the consequences.
For Greece's international creditors, regime change is the ultimate goal - Telegraph
Thanks to austerity imposed since 2010, Athens has accomplished a primary national budget surplus. Spending, net of interest payments, is about 1 percent of GDP, and private-sector wages have fallen some 25 percent. Contrary to the predictions of German Chancellor Angela Merkel and IMF Managing Director Christine Legarde, those have not rekindled growth. GDP is down 25 percent and national debt has soared from 130 to 180 percent of GDP. Servicing that debt would require a primary surplus of almost 6 percent of GDP — assuming creditors would accept a paltry 3 percent on bonds — and send Greece into a death spiral.
Why Greece must default or restructure its debt—commentary
Has the IMF's austerity program worked so far? No. Austerity has been the rule in Greece since the first debt-restructuring program was approved in 2010. But Greece's unemployment rate has nearly tripled since, and annual gross domestic product has dropped 100 billion euros, or almost 30 percent. Greece's slashed spending and tax hikes brought the nation's "primary deficit," or deficit before debt-service payments, into surplus territory in 2010. But the program was the equivalent of slamming on the economy's brakes: Output dropped so rapidly that the primary deficit is now again 2 percent of Greek gross domestic product even with tough controls on spending. That's not much different than the U.S., but the U.S deficit as a percentage of output is declining because the U.S. economy Is growing.
7 things investors need to know about the Greek crisis
Following a “no” vote, Greece would at the very least be subject to prolonged capital controls, and the Greek government would likely be forced to pay salaries in IOUs rather than euros. Without an aid package, Greek bank deposits would stay locked up indefinitely. Higher public spending promised by Greece’s far left government would only be possible if Greece converts to its own currency and begins printing it; if so, existing bank deposits would be compulsorily converted to a rapidly depreciating new Greek drachma, dramatically eroding the value of Greek citizens’ financial assets. Faced with this reality, Greek voters will likely act in accordance with the opinion polls that have long shown them to prefer staying in the E.U. and Eurozone to Grexit.”
Greece Riles Markets, But Grexit Risk Low? - Emerging Markets Daily - Barrons.com
“The International Monetary Fund, the European Commission, and the European Central Bank relieved Greece of 107 billion euros ($119.85 billion) in debt. … The Greek government has debts that include €38.7 billion borrowed from private investors, €15 billion from Greek banks, €31.8 billion from the International Monetary Fund, €19.8 billion from the European Central Bank, €7.2 billion from national central banks in the euro zone, and €194.7 billion from euro-zone governments (including €57 billion from Germany, €43 billion from France, €37.7 billion from Italy, and €25.1 billion from Spain). Some of the borrowing has been turned around to repay older debt, for net obligations of nearly €250 billion.”
Greece Riles Markets, But Grexit Risk Low? - Emerging Markets Daily - Barrons.com
Just imagine a Greek shepherd, in between milking his ewes and goats and preparing that delicious feta cheese, taking a look at the list of prior actions that the country's creditors had asked Greece to do, in order to make up his mind on how to vote in the referendum. The Greek shepherd would have to be at ease with notions such as "medium-term fiscal strategy" or "decompressing the wage distribution across the wage spectrum," and ponder carefully whether it is a good idea to adopt "a holistic NPL resolution strategy, prepared with the help of a strategic consultant." What sort of politician, having been elected by his people to deal with bailout negotiations, throws responsibility for a complex, technical deal back to the people in the 11th hour of talks that are so important for the country's economy that breaking them off leads to imposing capital controls?
Use the Greek Debt Crisis to Dismantle the Eurozone - TheStreet