Greek bailout

Greece Pushed Further into Economic Contraction by New Bail Out

greekdominoesYet another deal, yet more austerity. The Financial Times has the most detailed terms of the latest Greek bail out. We've dug out some details as well.

  • Bail out is €130 billion
  • Greek bondholders hair cut is now voluntary
  • If Greece sovereign debt holders volunteer to take a hair cut, it's up from 50% to 53.5%
  • Greece gets to go into more debt with lowered interest rates
  • Greek is supposed to get their debt to GDP ratio to 120.5% by 2020
  • The ECB is going to distribute profits on €40 billion of Greek bond holdings
  • More austerity cuts of 5% GDP by 2014
  • More privatization of €19 billion by 2015

Here's the money shot. Greece's GDP is expected to shrink by 17% when comparing economic output from 2009 to 2013. That is not a recession. Greece is in a depression.

Gez, why not just invade, rampage and pillage the nation? Must all war be economic these days?

There was a leaked internal document which says Greece will never get out of this debt and shrinking GDP means....more bail outs.

Delightful News Out of Greece This Morning (for bankers)

Traders in New York this morning were greeted with this happy headline from The Wall Street Journal:

US Stock Futures Higher; Buoyed by Greece

greece austerity protestYes indeed, the Dow Jones index is set to open at least 70 points higher because the Greek parliament approved the additional austerity measures demanded by the European Union, the European Central Bank, and the International Monetary Fund. In exchange for €130 million in a second bailout by the “Troika”, as the three lending institutions are called, Greece will have to cut its minimum wage by 22% and the government will have to lay off an additional 150,000 workers. This is in a country that is in its fifth year of recession, with an official unemployment rate of 21%. Business has virtually collapsed, with many private sector companies on the verge of bankruptcy. The health system is so starved for funds that a bacteria resistant to all medicines is raging through hospitals, forcing the chronically ill to decide whether to even risk seeking professional care. Poverty is reaching extreme levels and is well-entrenched among what used to be the middle class. Children are sent to school so hungry that they are fainting in the classrooms. As of last night, the crowds that were storming through Athens and other large cities no longer were content to throw rocks at the police; Molotov cocktails were used to set at least forty buildings in Athens on fire. The police in Athens, facing crowds estimated from 80,000 to 100,000 people, were forced off Syntagma Square, and appeared to have run out of tear gas. Journalists described the business center of Athens as a war zone. The country is slipping into social disorder, if not anarchy. But stock markets in Europe were up today on the happy news that the Greek parliament approved the additional austerity measures.