Thursday April 24, 2014 Search
Weather | Athens
21o C
15o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Europe must face facts and forgive some of Greece's debt

Greece and its creditors are wrestling with the country's debts yet again. It probably won't be the last time. As long as they keep making the same mistake, the next agreement is no more likely to succeed than the others.

Back in 2010, Greece was given one of the biggest bailout programs in history. It got new lending in return for fiscal austerity, but its debts weren't reduced: Creditors were spared any write-offs. Experts objected that the program put too big a burden on Greek taxpayers, that this was neither politically nor economically sustainable, and that creditors should be made to take losses. They were right then, and they still are.

There's been some limited bailing in of creditors since then, an extension of maturities and lowered interest rates, but the basic pattern hasn't changed. As a result, Greece's debt keeps rising. It now stands at roughly 180 percent of gross domestic product. This is plainly unsustainable.

The new fix under discussion, according to a recent Bloomberg News report, would extend Greek loan maturities further, to 50 years from 30, and lower the interest rate paid by 0.5 percentage point. Another bailout loan, adding 15 billion euros, also looks likely. All this might keep the show on the road and allow the so-called troika representing Greece's creditors -- the European Commission, the European Central Bank and the IMF -- to say that the country can meet its debt target of 124 percent of GDP by 2020. Of course, after every previous negotiation, they also said that Greece was on track.

The arithmetic keeps failing because the politics and economics refuse to play along. Greeks have come to hate the troika (and especially Germany, whose views have carried great weight), blaming its members as much as their own leaders for a prolonged depression that has left 60 percent of young Greeks unemployed. Growth is forecast to turn positive this year, for the first time since 2007, but on the current approach austerity and the suffering that goes with it will have to continue for years. The pro-bailout coalition that rules Greece is fragile. Without debt reduction, the new program is no more likely to stick than its predecessors.

The troika, to be sure, has reason to doubt the Greek government's commitment to reform. Many of the changes the troika is demanding -- such as abolishing laws that protect professions, distort prices and make it hard to fire unproductive public servants -- would be good for the country. Yet the public trust needed to enact such sweeping reforms was exhausted long ago. A measure of explicit debt forgiveness, even now, might help to change that.

Investors, for the moment, aren't worried that Greece might soon crash out of the euro area, so the pressure for a new approach isn't intense. In a way, that's unfortunate. Greece still needs debt forgiveness -- and the European Union needs to show that it's capable of learning from its mistakes.

[Bloomberg]

ekathimerini.com , Wednesday February 12, 2014 (10:50)  
Putting the party above the country
Strong card in debt talks
It´s too soon for Europe to declare victory
Reality´s other side
European court awards damages for ´degrading´ migrant detention conditions
The European Court of Human Rights (ECHR) on Thursday awarded 8,000 euros in damages each to two plaintiffs who filed a suit against the Greek state over the "degrading" conditions of their ...
Police on high alert for Greek Cup final in Athens on Saturday
Police in Athens are to mount a major security operation on Saturday with the aim of ensuring the soccer cup final between Panathinaikos and PAOK is not marred by violence. The game is due t...
Inside News
Greece´s NBG launches 5-year bond to raise up to 750 mln euros
Greece's largest bank National Bank (NBG) will issue a 5-year, fixed-rate bond to raise up to 750 million euros ($1.04 billion) and boost its liquidity, the bank said in a stock market filin...
ANALYSIS
Samaras meeting with Dimon key to Greek return to bond markets
Shut out of international bond markets for four years, Greek Prime Minister Antonis Samaras wasn’t going to take any chances with his country’s return. He began months ago lining up investor...
Inside Business
BASKETBALL
Never underestimate the Greek hoopsters
Olympiakos and Panathinaikos, who between them have won the last three European crowns, won again at home on Wednesday to take their Euroleague play-off series with Real Madrid and CSKA Mosc...
BASKETBALL
Reds and Greens stay alive in Euroleague
Easter – and home advantage – worked wonders for Panathinaikos and Olympiakos who stayed alive in the Euroleague play-offs beating CSKA and Real Madrid respectively on Monday in Greece. Shak...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. European court awards damages for ´degrading´ migrant detention conditions
2. Greece´s NBG launches 5-year bond to raise up to 750 mln euros
3. Police on high alert for Greek Cup final in Athens on Saturday
4. Samaras meeting with Dimon key to Greek return to bond markets
5. Central Athens cleanup a sign of Greece´s turnaround
6. Three missing from cargo ship that went down off Crete
more news
Today
This Week
1. Putting the party above the country
2. Strong card in debt talks
3. Three missing from cargo ship that went down off Crete
4. Central Athens cleanup a sign of Greece's turnaround
5. Samaras meeting with Dimon key to Greek return to bond markets
6. Police on high alert for Greek Cup final in Athens on Saturday
Today
This Week
1. Ground-breaking Good Friday mass signals thaw in Cyprus
2. Greece startup leaders say they can’t break jobless cycle alone
3. Mayoral candidates clash over Athens mosque plans
4. Government looks to kick on
5. Greece offers to help find Turkish F-16 lost in 1996
6. EU struggles to unpick the knot of Russia-Ukraine gas logistics
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.