27 November 2012

Flogging a dead horse

You thought the problem had gone away, didn't you?  Well it hasn't!  The EU, the IMF and the ECB (and, no doubt, other assorted acronyms) continue to wrestle with the Greek economy.

The Guardian reports the latest state of play:

European governments and the IMF sought to bury months of feuding over Greek debt levels in a tentative agreement that should see the release of up to €44bn in bailout funds needed to rescue Athens from insolvency.
But after almost 12 hours of talks for the third time in a fortnight between eurozone finance ministers, leaders of the IMF, the European central bank and the European commission struggled to reach a consensus, suggesting a lack of confidence that the effort to resurrect the Greek economy will bear fruit or that three years of European bailout policy was working.The meeting agreed to shave projected Greek debt to allow it to level at 124% of GDP by 2020, entailing a 20% cut in Greek debt by the deadline.
With the IMF demanding a writedown of Greece's debt by its official eurozone creditors and Germany leading the resistance to such a move, declaring it illegal, the meeting agreed on a mixture of measures involving debt buybacks, lower interest rates on loans, longer maturity periods on borrowing, and ECB returns to Greece of profits on its holdings of Greek bonds.
In an increasingly arcane dispute entailing sophisticated number-crunching over recent weeks, the IMF had stuck to a bottom line of getting the Greek debt level to 120% by 2020, far below what eurozone and IMF inspectors concluded was possible.
A debt sustainability analysis last week said the debt level would be 144% without eurozone action to write much of it off.

Nobody really believes that this agreement (if it may be so described) will resolve the Greek problems, but there is a smidgeon of hope that it will keep the lid on the problem for the next few months.


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