Tag Archives: Greek default

PSI: Gift horse or Trojan horse?

Illustration by Manos Symeonakis

Given that Greece struggled for weeks to find just a few billion euros in savings to convince its eurozone partners to grant a second bailout, you’d have thought the wiping out of some 100 billion euros from the country’s debt pile — the largest restructuring the world has seen — would have been greeted with the world’s largest collective sigh of relief. It wasn’t.

The lack of high-fiving and back-slapping on the streets of Athens does not mean the bond swap should be dismissed. After all, it’s perhaps the first time in this crisis that all parties involved accepted that Greece can’t pay its debts and that they needed to do something practical about it.

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ELA: Easy as ABC?

There was an unusual sense of calm among eurozone leaders at last week’s summit in Brussels. The pain from the constant headache of the debt crisis seemed to have been dulled by a 1-trillion-euro aspirin. The European Central Bank’s decision last week to launch a second round of longer-term refinancing operations (LTRO), with eurozone banks borrowing more than 500 billion euros to top up their liquidity, appears to have calmed the markets and politicians. So much so that French President Nicolas Sarkozy essentially declared the crisis to be over.

Putting aside the questionable enthusiasm of a president seeking a second term in upcoming elections, the December LTRO, when the ECB also lent more than 500 billion euros, and last week’s liquidity operation have at the very worst bought the eurozone some time. Some of the LTRO money was spent by the banks on snapping up their government’s bonds, which has led to yields dropping for countries like Italy and Spain, which were facing unsustainable borrowing costs.

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Debating whether Greece should remain in the euro, while we still can

“I don’t want to hear your life story when you ask a question,” BBC presenter and debate moderator Zeinab Badawi warned the large audience at the Hellenic Cosmos theater in Athens on Tuesday night before the cameras started rolling for one of the most interesting discussions the city is likely to host this year. It was certainly not a night for personal tales. This was about the story of a country and its dramatic fall from grace and economic stability.

The subject of the debate – organized by Intelligence Squared – was whether Greece should remain in the euro or return to the drachma. What exquisite timing that the debate should take place on the same day the Eurogroup agreed on a new bailout for Greece, one which some think will be enough to keep the country in the single currency and others believe is bound to drive Greeks back to the drachma.

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Hard choices for the hard left

Much has been made recently of the rise of the so-called “hard left” in Greek politics. The most recent poll by Public Issue for Kathimerini newspaper put the combined support for the three leftist parties at 42.5 percent. This is indeed impressive. It’s indicative of the growing resentment at the successive waves of austerity that have left most Greeks foundering, and of the hapless handling of an admittedly complicated situation by the government.

What it does not herald, though (at least for now), is a united front against the EU-IMF loan agreement, or memorandum. The Communist Party (KKE) will not cooperate with any of the other parties and whether it receives 8, 12 or 20 percent of the vote is almost irrelevant. Coalition of the Radical Left (SYRIZA) leader Alexis Tsipras has made some less-than-vigorous attempts to bridge the gaps between the three but his efforts appear dead in the water.

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Et tu, Obama?

Illustration by Manos Symeonakis

Having seen the caliber of some of the Republican Party’s presidential candidates, it’s hard not to want with every fiber in your body for Barack Obama to succeed during his first term in the White House. But this week, thanks to the comments he made aboutGreeceafter meeting German Chancellor Angela Merkel, it was difficult not to feel respect for the American leader slipping away.

The headlines after the two politicians held their news conference inWashingtonrevolved around Obama and Merkel’s warning that the Greek debt crisis could bring the world economy to its knees if it’s not tackled properly. “America’s economic growth depends on a sensible resolution of this issue,” said Obama. “It would be disastrous for us to see an uncontrolled spiral and default inEuropebecause that could trigger a whole range of other events.”

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