07-15-2015, 05:08 AM
The German government has just agreed, in principle, to another multibillion-euro bailout of Greece — the third so far. In return, it has received promises of economic reform from a Greek government that makes it clear that it profoundly disagrees with everything that it has just agreed to. The Syriza government will clearly do all it can to thwart the deal it has just signed. If that is a German victory, I would hate to see a defeat.
Germany’s conditional surrender - FT.com
Meanwhile, ordinary Germans, Dutch, Finns and others also have every right to feel aggrieved. When they joined the euro, they were told that there was a “no bailout” clause in the treaty setting up the single currency. That was meant to reassure taxpayers that they would never have to pay the bills of other eurozone countries.
Germany’s conditional surrender - FT.com
Assuming that the leaked deal is about right, and that it can be passed by the Greek parliament (and the loans approved by Germany, Finland etc), it seems more likely than not that we’ll see a sharp rebound in economic growth in Q4 of this year. These are my reasons for saying so
Greece — time to look on the bright side — Bull Market — Medium
The agreement continues to require primary budget surpluses (net of interest payments), rising to 3.5% of GDP by 2018, which will worsen Greece’s slump. Re-profiling the country’s debt, which is implicitly part of the agreement, will do nothing to ameliorate this, given that interest payments already are minimal through the end of the decade. As the depression deepens, the deficit targets will be missed, triggering further spending cuts and accelerating the economy’s contraction.
Saving Greece, Saving Europe by Barry Eichengreen - Project Syndicate