Share Economics: Grecja

Pokazywanie postów oznaczonych etykietą Grecja. Pokaż wszystkie posty

How the Greek Banks Secured an Additional, Hidden €41 billion Bailout from European taxpayers

"In 2013 Greek taxpayers borrowed from the rest of Europe’s taxpayers €41 billion to pump into the Greek banks. This is well known. What is not known is that, also in 2013/4, the Greek banks received an additional, well hidden, €41 billion bailout loan from Greek and European citizens. This bailout was never authorised by any Parliament or even discussed in public anywhere in Europe.

This is how it worked: Bank X would lend money to… itself. It would do this by issuing a bond which it did not intend to sell. So, why issue such a phantom bond? Why write an IOU and give it to one’s self? The answer is: In order to hand this phantom bond over to the European Central Bank as collateral in exchange for a cash loan. Normally, of course, the ECB would never accept such a phantom bond as collateral. Accepting it would have been to accept a loan it gave to Bank X as collateral for the said loan. It would have been an assault on the meaning of collateral and a gross violation of the ECB’s rulebook. So, bank X, knowing this, took its phantom bond first to the Greek government and had it guarantee it. With the government’s guarantee stamped on it, the ECB then accepted Bank X’s phantom bond and handed over the cash. Why? Because the Greek taxpayer had, in the meantime, unknowingly provided the collateral for Bank X’s loan."

http://yanisvaroufakis.eu/2014/05/11/how-the-greek-banks-secured-an-additional-hidden-e41-billion-bailout-from-european-taxpayers/

Five explanations for Greece’s bond yield

"The biggest news in the sovereign debt world this week has come from Greece, which managed to sell some €3 billion in new 5-year bonds at a yield of just 4.95%. This is not what you might expect, given the macroeconomic situation:

Greece’s debt currently stands at about 320 billion euros, or 175 percent of GDP. It is rated nine notches below investment grade at Caa3 by Moody’s. Standard and Poor’s and Fitch rank Greece six notches below investment grade at B-.

So, how does one explain investors’ appetite to buy this debt at such low yields?"

http://blogs.reuters.com/felix-salmon/2014/04/11/five-explanations-for-greeces-bond-yield/

Lessons from the Greek PSI

"Lesson 4 (Biggest Lesson of Them All): Prolonging an unavoidable debt re-structure makes the problem far, far worse, especially when a bailout is given in order to shift bad assets from the banks’ books to the taxpayers on condition of austerity that causes both the private and the public sectors to shrink. Introducing a PSI after this sinister error is implemented, while exempting the official sector that implemented it (including the ECB’s SMP bond purchases), is to add insult to injury. And to make a much larger OSI more pressing and more painful for future governments around Europe."

http://yanisvaroufakis.eu/2014/03/12/lessons-from-the-greek-psi/

The Anti-Debt-Relief Crowd Is Wrong on Greece

"Yet whether Greece can pay the interest on its loans for now is not the issue. Greece’s problem is that absent relief, the debt will remain huge. By forfeiting commercial profit on its loans, the euro area is helping out, but these cheap loans still add to the public debt. Japan is one of the few other countries to have amassed such high levels of debt in modern times, and its “lost decade” is now in its 23rd year.

Until Greece’s nominal GDP growth, currently sharply negative, rises above the interest rate it pays on its debts, these will go on increasing as a proportion of the economy. This is simple arithmetic: Debt service costs add to the debt, the numerator, faster than GDP, the denominator, rises."

"The optimistic view that low interest rates make debt relief unnecessary follows in the same misguided vein. Greece is spending about 5 percent of GDP to service its debts, forcing it into the same vicious circle as Japan (which spends only 2 percent of GDP on debt service) and Italy (5.4 percent of GDP). This burden makes the task of turning Greece’s budget deficit into a surplus hopeless and undermines future growth. Flat growth and no inflation mean that the 3 percent interest Greece is paying on its debt remains too high to reverse the vicious circle that has bedeviled the commission’s forecasts."

"(Charles Wyplosz is a professor of economics at the Graduate Institute of International and Development Studies in Geneva.)"

http://www.bloomberg.com/news/2013-10-01/the-anti-debt-relief-crowd-is-wrong-on-greece.html

PONZI AUSTERITY: A definition and an example

"Ponzi austerity is the inverse of Ponzi growth. Whereas in standard Ponzi (growth) schemes the lure is the promise of a growing fund, in the case of Ponzi austerity the attraction to bankrupted participants is the promise of reducing their debt, so as to liberate them from insolvency, through a combination of ‘belt tightening’, austerity measures and new loans that provide the bankrupt with necessary funds for repaying maturing debts (e.g. bonds). As it is impossible to escape insolvency in this manner, Ponzi austerity schemes, just like Ponzi growth schemes, necessitate a constant influx of new capital to support the illusion that bankruptcy has been averted. But to attract this capital, the Ponzi austerity’s operators must do their utmost to maintain the façade of genuine debt reduction."

http://yanisvaroufakis.eu/2013/11/08/ponzi-austerity-a-definition-and-an-example/

Looking back on the Global, European and Greek (post-2008) crises

"How did the EU profit from Greek indebtedness all these years?

The implicit contract between Greece and the European Common Market, as the European Union was called back in 1980, was simple: Greece would open up its borders to northern European imports and Northern Europe would transfer surpluses to Greece. The hope was that, in the process, investment funds would also flow into Greece to support local industries thus “balancing” out Greece’s trade and capital flows vis-à-vis Europe. However, the reality was that the funds that flowed in simply inflated asset prices while, catastrophically, they came hand-in-hand with the collapse of Greek industrial facilities which were quickly purchased by northern European companies, closed down, and turned into warehouses for their imports (e.g. the white goods industry that was purchased by Siemens which then used “badge engineering” tactics to sell imported refrigerators in Greece, under Greek labels). When in the 1990s the Eurozone was being concocted, and interest rates collapsed Euroland-wide, the process sped up massively and Greece’s hitherto risk averse and debt-hating households began to borrow more, purchasing German and other northern European goods as if there was no tomorrow; funded by the flow of northern European cash that was actively seeking higher returns in the European Periphery, often resorting to predatory lending of households and governments alike."

http://yanisvaroufakis.eu/2013/08/17/looking-back-on-the-global-european-and-greek-post-2008-crises-interview-with-d-polymenopoulos/

[WSJ] IMF Admits Mistakes on Greece Bailout

"The International Monetary Fund has admitted to major missteps over the past three years in its handling of the bailout of Greece, the first spark in a debt crisis that spread across Europe.

In an internal document marked "strictly confidential," the IMF said it badly underestimated the damage that its prescriptions of austerity would do to Greece's economy, which has been mired in recession for the last six years.

But the fund also stressed that the response to the crisis, coordinated with the European Union, bought time to limit the fallout for the rest of the 17-nation euro area.

The IMF said that it bent its own rules to make Greece's burgeoning debt seem sustainable and that, in retrospect, the country failed on three of the four IMF criteria to qualify for assistance."

"The paper added that the targets and the underlying macroeconomic projections weren't revised to reflect what was actually happening in Greece for 18 months, until December 2011.
The IMF had originally projected Greece would lose 5.5% of its economic output between 2009 and 2012. The country has lost 17% in real gross domestic output instead. The plan predicted a 15% unemployment rate in 2012. It was 25%.

Slowing the pace of austerity would have helped Greece's economy, but wasn't politically possible, the fund said."

http://online.wsj.com/article/SB10001424127887324299104578527202781667088.html

Monetising the… ECB: The latest insult to be added to Greece’s multiplying injuries

"Last week another installment of the cruel theatre of the absurd, also known as the ‘Greek Rescue’ (and more recently re-released as ‘Greece’s success story’), was delivered silently: Not for the first time, the bankrupt Greek state borrowed from one arm of the Eurozone to give to another, with massive interest to boot. To be precise, the Greek government borrowed €4.2 billion from the European Stability Mechanism (ESM) in order to repay the… European Central Bank (ECB) €5.6 billion, leaving the ECB with a profit of €2 billion plus from this hideous transaction. Re-pay what exactly?"

http://yanisvaroufakis.eu/2013/05/20/monetising-the-ecb-the-latest-insult-to-be-added-on-greeces-multiplying-injuries/

Strony