New Greek Bailout Announced

It is an open question how long this bailout will plug the dam.  I continue to maintain the position that Greece is going to have to be let out of the Euro. Pulling this Band-Aid off a millimeter at a time is delaying any possible recovery of the Greek economy, and really the European economy, indefinitely.  All to protect the solvency of a number of private banks (or perhaps more accurately, to protect the solvency of the counter-parties who wrote the CDO's on all that debt).

Anyway, the interesting part for me is that with this bailout, the total cumulative charity sent the Greek's way by other European countries now exceeds Greek GDP, by a lot.

  • me

    Well... part of the "aid" package comes (if indeed it'll come) in escrow so that it can only be used to... pay external debt. Think about that for a minute.

    How come Iceland is the only nation on earth to tell badly investing banks to shove it while everyone else doubles over backwards to create ways to funnel general tax monies towards idiots who ought to be bankrupt?

  • Ted Rado

    Facing facts and taking your lumps when you have made a mistake is always the best way to go. Everyone, including the USG, is kicking the can down the road rather than dealing with the huge deficit problems. I knew better when I was a young man. And these people are supposed to be our LEADERS?

  • delurking

    "Anyway, the interesting part for me is that with this bailout, the total cumulative charity sent the Greek’s way by other European countries now exceeds Greek GDP, by a lot."

    Well, Greece is getting loans, which they will use to roll over a fraction of their debt, at a lower interest rate than they could get on the open market. They are defaulting on the other fraction.

    If there were no bailout, they would be defaulting on all of it.

    So, the total charity is the net present value of the interest rate difference between the open market rate and the rate they are getting, which is a lot less than what is published as the value of the bailout, which is always the amount lended.

    Anyway, you probably wouldn't be calling it charity if Greece just defaulted, but the end result is not very different.

  • SR

    I certainly hope you are preparing bids on operating California parks which are
    threatened with closure due to the myopic approach of our benighted politicians.

  • http://sevencontinents@mindspring.com Benjamin Cole

    The ECB needs to print more money.