Greece’s new coalition government has antagonized would-be friends with a confrontational style, world media reports find.
Greece May Have Blown Best Debt Deal
Reuters – Paul Taylor
Even if it survives the next three months teetering on the brink of bankruptcy, Greece may have blown its best chance of a long-term debt deal by alienating its euro zone partners when it most needed their support.
Prime Minister Alexis Tsipras’ leftist-led government has so thoroughly shattered creditors’ trust that solutions which might have been on offer a few weeks ago now seem out of reach.
With a public debt equivalent to 175 percent of economic output and an economy struggling to pull out of a six-year depression, Athens needs all the goodwill it can summon to ease the burden. It owes 80 percent of that debt to official lenders after private bondholders took a hefty writedown in 2012.
Since outright debt forgiveness is politically impossible, the next best solution would be for Greece to pay off its expensive IMF loans early, redeem bonds held by the European Central Bank and extend the maturity of loans from euro zone governments to secure lower interest rates for years to come.
“This step would save Greece’s budget billions of euros, while reforming the Troika arrangement, eliminating the IMF’s and the ECB’s financial exposure to Greece,” said Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics, who advocates such an arrangement.
It would lower the effective interest rate on Greek debt to less than 2 percent, far less than Athens was paying before the euro zone debt crisis began in 2009, and radically reduce the principal amount to be repaid over the next decade, giving Greece fiscal breathing space to revive its economy.
And unlike ideas floated by Greek Finance Minister Yanis Varoufakis to swap euro zone loans for GDP-linked bonds and ECB holdings with perpetual bonds, paying out the IMF and the ECB early would be legal and supported by precedent …
But if the economics make sense for Greece, the politics no longer add up for its partners.
A euro zone official said there had been exploratory talks with the previous conservative-led Greek government about such a plan last year, before then Prime Minister Antonis Samaras chose to bring forward an election he lost rather than complete a bitterly unpopular bailout program.
“Now it’s a political non-starter,” said a euro zone official. “There’s just no appetite in the euro zone for a grand bargain to take over Greece’s debt to the IMF and the ECB.”
Greece’s Poor Back to 1980 Lives
Washington Post – Matt O’Brien
In the last seven years, Greece’s economic collapse has wiped out all the progress its poor had made in the previous 28 years.
Now there are a lot of ways to think about how historic Greece’s recession has been. Its economy has fallen about as much as the U.S.’s did during the Great Depression. Its unemployment rate peaked at 28 percent.
And, as Derek Thompson points out, its cities have become filled with smog during the winters, because its people can’t afford to heat their homes any other way than burning whatever they can get their hands on.
But think about this last one. It probably gets us the closest to having a real idea what it’s been like to live through Greece’s slump.
Well, other than the chart above. It shows how much money Greek people from the richest to the poorest 10 percent have had after accounting for taxes and inflation the past 40 years …
That’s why it’s no exaggeration to say that Greece really does have a humanitarian crisis on its hands.
The left-wing Syriza government has made this a priority—they want food stamps for the hungry, healthcare for the sick, and electricity for people who can’t afford to keep on the lights—but even with a limited victory in its first round of negotiations with Europe, it’s not clear where the money’s going to come from.
Or if it will even have what it needs to pay back its creditors. It hasn’t helped that all this political uncertainty has killed what was a nascent recovery—which in this case, was a very relative term—and sent its economy back down again.
For Greece, Next Deadline Looms
CNBC – Catherine Boyle
Greece repaid one of its key loans on Thursday, but with the country’s coffers still close to empty, the government may merely have earned short-term respite.
As the holiday of the Orthodox Easter Weekend approaches, newly minted Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis are unlikely to be unwinding for the long weekend.
Greece has been given six working days by the euro zone technical staff of the Euro Working Group to come up with proposals for a reform agenda—on which further financial aid is conditional—ahead of a key meeting of euro zone finance ministers on April 24 in Riga, Latvia.
The struggling Greek economy still needs financial support. It faces two redemptions of bills for a total of 2.4 billion euros as soon as April 14 and 17.
“Euro area finance ministers are probably at the end of their tether, after ten weeks of the new government’s foot-dragging and game-playing, and any sympathy for the Greek position has long disappeared,” the economic research team at Daiwa wrote in a research note.