Europe comes First

[Suff]

Says the Greek finance mister.

Then he goes into how Greece has to stop taking loans and how Greece needs to "reschedule" half it's debt.

In many ways he's right. Greece is running a surplus in it's budget. The only reason that it needs to borrow money is to pay interest on the loans it has. Those loans are from the EU and the IMF. But Greece needs to borrow to pay the interest. Which means they'll never pay back the principal.

In short the EU has already paid the money and it's gone. What Greece wants to do is stop paying interest on that money and get back to a healthy economy. Then, when they don't need to borrow money, they can save to pay off the debt. This is what they are saying.

The EU and the IMF are saying NO. That Greece must continue to borrow money so that they can pay interest on the loans that they have been forced to take from these same lenders. It's like the bank saying you have to take perpetual loans to pay back one big mortgage when you have lost the house and are, essentially, bankrupt. In the end you will wind up old, with no money, having paid a fortune to the banks and you will still have the debt.

I can't blame Greece for trying to get out of it. The old adage is true, if you borrow £100,000 the banker owns you, if you borrow £100 Million you own the banker. Greece has already defaulted on 75% of it's debt but the last 25% is EU debt and they refused to let Greece both default and stay in the Euro. In fact the 75% was all private investor debt and they had no compunction in making them take the risk of that debt. Yet when it comes to the EU, they refuse to take the same risk.

Personally I still think that the wealthier states will burn Greece for having the balls to stand up to them. In the hope that it will keep the others in line. I hope they do it too because it will be the first small tug on the unravelling of the whole ball of yarn they have created. Personally I believe the whole edifice has to come down before they can think about building a new one which actually works...

So I'm in the background shouting "Go for it Greece!!"

[Workingman]

In many ways he's right. Greece is running a surplus in it's budget. The only reason that it needs to borrow money is to pay interest on the loans it has.

Exactly. It is like telling the bank manager that your wages are not enough to make your mortgage payments and him giving you a loan so that you can use it make up the shortfall every month then extending the mortgage from 25 to 35 years.

What is happening to Greece is bollocks economics and all the parties involved know it.

[cromwell]

So the interest on the loan is such a great amount that Greece needs to take out loans just to pay the interest????

So they will never get out of debt.

How can this be resolved? The people who lent the money will want it back but will never get it; Greece will only get deeper and deeper into debt..so?

[Suff]

Literally and exactly. I'm just surprised it took the Greeks so long to figure it out. FUD (Fear, Uncertainty and Doubt), is a powerful tool and the EU uses it to great effect. But it has it's limits and once it has been used the genie is out of the bottle. Few in Greece will believe a word the EU says without additional verification.

Way to go. Germany knew this but decided that consigning Greece to the pits of hell for a century was "good for the Eurozone and good for Germany".

Go figure.

I was reading this in the press in 2010. How the IMF were talking more pragmatic approach and the EU was marching in and destroying every negotiation. Had the EU not been involved, the IMF could have sorted the whole situation out by now and the EU would be back on track and back to growth.

Well done the EU. Never misses a chance to miss an opportunity. If it was not apparent how much sway Germany has over the EU before, nobody should be in any doubt today.

More interesting reading as time goes on. 10 days to the next EU meeting at which Athens and Berlin must meet.....