The Greek debt proposal is out

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The Greek debt proposal is out

Postby Suff » 02 Feb 2015, 21:31

It's quite clever really and has been well thought out by a very clever financial player. Even more interesting that Greece broke it in the UK....

Attempting to sound an emollient note, Mr Varoufakis told the Financial Times the government would no longer call for a headline write-off of Greece’s €315bn foreign debt. Rather it would request a “menu of debt swaps” to ease the burden, including two types of new bonds.

The first type, indexed to nominal economic growth, would replace European rescue loans, and the second, which he termed “perpetual bonds”, would replace European Central Bank-owned Greek bonds.

He said his proposal for a debt swap would be a form of “smart debt engineering” that would avoid the need to use a term such as a debt “haircut”, politically unacceptable in Germany and other creditor countries because it sounds to taxpayers like an outright loss.


This is quite interesting because the UK has already issued "perpetual bonds".

Mr Varoufakis said the government would maintain a primary budget surplus — after interest payments — of 1 to 1.5 per cent of gross domestic product, even if this meant Syriza, the leftwing party that dominates the ruling coalition, would not fulfil all the public spending promises on which it was elected.


Which is quite a climb down from the initial position.

Then the boxing clever statements...

Rather than ask for €7bn in aid that was to have been paid to Greece last year if it had met fiscal policy and structural reform conditions set by its creditors, the government would request only €1.9bn — equivalent, Mr Varoufakis said, to the profits earned by the ECB from its purchases of Greek government bonds after the 2010 rescue.


I mean, how could they say NO??? They're supposed to be helping, not making a killing on Greek Debt. This is going to put quite a lot of people in a quandary. I notice that the statement of bonds that are "indexed to nominal economic growth" was not explained in detail. But my bet is that they pay no interest unless the economy grows. Which means it is then in the best interests of the EU to make sure that Greece grows and does not suffer. Quite clever really and turns the tables on those who are making a lot of money out of Greek misery.

I expect Germany to say NO. But I also expect that they will be made to look overbearing and unreasonably grasping for profit. It's going to be an interesting year. Greece may get booted yet, but if it does, then Germany is going to have it's reputation dragged through the gutter.

Never a dull day in Euroland these days....
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Re: The Greek debt proposal is out

Postby Kaz » 03 Feb 2015, 08:35

That is clever and I hope it works out for the Greeks, they got sick of being used as whipping fodder by Germany and made a bold move voting in this new government 8-)
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Re: The Greek debt proposal is out

Postby KateLMead » 06 Feb 2015, 12:42

Suff wrote:It's quite clever really and has been well thought out by a very clever financial player. Even more interesting that Greece broke it in the UK....



I expect Germany to say NO. But I also expect that they will be made to look overbearing and unreasonably grasping for profit. It's going to be an interesting year. Greece may get booted yet, but if it does, then Germany is going to have it's reputation dragged through the gutter.

Never a dull day in Euroland these days....



It will not be The First Time Suff!!!!
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Re: The Greek debt proposal is out

Postby Suff » 06 Feb 2015, 17:31

The Euro is falling again.

It doesn't take long for the markets to realise that Germany manipulated the ECB to attack Athens where it was weakest (their Banks), immediately before the German finance minister was to lay the law down.

Personally, this is just my take on it so please share your own thoughts, I believe that if Syriza's back is put to the wall, then they will hold a referendum on Euro Exit. Stating that they did exactly what they said they would do and that they are blocked by Germany.

If the Greeks vote Yes in that referendum then Greece is out and Syriza is off the hook. If the Greeks vote No, then Greece is still in the Euro but Syriza is open to much more scope for negotiation and also much more scope to renage on the election promises. All based on a mandate from the people.

If those two are as smart as I think they are, they will use the people to drive the decisions. Democratically in a way which nobody can challenge.
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Re: The Greek debt proposal is out

Postby Suff » 07 Feb 2015, 12:51

Current response in the Irish press is interesting.

I particularly like this one

German public opinion is hostile to showing leniency towards Greece and the response of parts of the German media to the election of Syriza has been little short of unhinged. Two weeks ago, the conservative Frankfurter Allgemeine wrote that the Greek situation could not be compared to that of Germany during the 1953 London Debt Conference which wrote down most of post-war Germany’s debts because “Greece’s crisis was self-inflicted”. The article was later amended online to acknowledge that Germany had plunged the world into war.


I'm guessing that when it was politely pointed out to the Germans that dragging the world into a war which killed tens of millions of people, a war that nobody but Germany and Japan really wanted, could be called a touch "self inflicted" when they lost and wound up with crippling debt.

The fact that the world finally learned from the mistakes after WWI and did not impose crippling sanctions, reparations and debts on Germany; who had, in fact, killed and plundered their way across Europe and Russia, seems to have given Germany some kind of belief that it was only their own fiscal responsibility which made them an economic power.

In fact it was the leniency of the rest of the world which "allowed" them to become an economic power in the world of nations. It is notable that the ONLY way Germany is going to get a voting share in a permanent seat on the United Nations is through the EU and with either the French or British seat; or both. The world is not Quite as forgiving as Germany would have us believe.

Perhaps Ms Merkel might want to wind her neck in for a while. Of course that is an election loser in Germany..... So she won't.

I'm still hoping the Greeks will go to a referendum and then present the EU with an ultimatum they will find hard not to agree to. After all, if they really are democratic, then they must accept the will of the Greek people..... If they don't and cast Greece aside, it will start a chain reaction in motion which I believe will be very good for the EU, if very painful. Also for the UK it will be very good as we will move yet more of our trade out of the EU to the rest of the world. Further reducing EU influence in UK affairs.
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Re: The Greek debt proposal is out

Postby Kaz » 07 Feb 2015, 16:19

Did the Germans ever compensate the Greeks for all of the gold they stole during the war? :? :roll: I think they paid back £50 million in the '60s, but that can't anywhere near have covered it :?
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Re: The Greek debt proposal is out

Postby Suff » 07 Feb 2015, 17:28

I think the Greeks are somewhat more annoyed by the forced loan taken by the Nazi's and never repaid.

War reparations were one thing. Unpaid loans, as Germany is want to tell everyone, is another.

I think the arguments in the article are incorrect. The debt the UK is taking on now will still be our debt in 100 years if we do not pay it off. Even though everyone and every government which took that debt out are dead and gone.

Clearly many sins were forgiven to allow Germany to baulk the Russians in the Cold war. But that does not make it right and that does not mean that Germany did not do 3 generations of unrepairable damage to Greece.

So a strong German moral ground on debt forgiveness is a bit pot and kettleish. No matter how "good" Germany has been since WWII. After all we could have done like Russia and divided it up into pasture for Britain, France and the US. Where would they be now if we had done that?
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Re: The Greek debt proposal is out

Postby Kaz » 07 Feb 2015, 18:39

Precisely :?
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Re: The Greek debt proposal is out

Postby Aggers » 08 Feb 2015, 12:23

I can well understand Greece's point of view.

After World War II, Germany should have been severely punished for the
blood-shed they caused in their failed attempt at world domination.

And our stupid politicians who tricked us into joining the E.U., and those
who now are refusing to listen to the wishes of the people, should end up
in Hell.

All the trouble this country is now facing in future years is due to our
stupid system of government called Democracy. What a farce.
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