Tag Archives: PSI

Greece’s debt problem is eminently solvable. How about imminently?

The speed with which the eurozone’s key players reacted to Greece’s coalition government narrowly winning a vote on the latest austerity and reform package was impressive. If they could show the same haste and purpose in addressing the economic capitulation threatening to undermine Greek society and politics, we might be in for better days.

Even before 153 out of 300 Greek MPs had voted in favor of the legislation last Wednesday, which foresees more than 18 billion euros of cuts and tax hikes over the next four years, European Economic and Monetary Affairs Commissioner Olli Rehn admitted that Greek debt was not sustainable but that the most obvious method for tackling this problem, restructuring, was not an option.

A few hours after the vote, having seen the three-party coalition in Athens stagger over the finishing line, German Finance Minister Wolfgang Schaeuble said Greece would not immediately receive the 31.5-billion-euro loan tranche, which it had been expecting since the summer to recapitalize its wheezing banks and moisten the lips of its liquidity-parched market. The eurozone, it seems, has developed a dangerous penchant for self-harm.

Continue reading

Advertisements

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.

Continue reading

Will anyone be left standing at the end of Greece’s marathon?

Illustration by Manos Symeonakis

Of all the European leaders, Economic Affairs Commissioner Olli Rehn is perhaps the last you would expect to have a finger on society’s pulse. Yet it was the Finnish technocrat who produced the most apt analogy at the end of an epic Eurogroup session that ended on Tuesday morning with eurozone finance ministers agreeing a new bailout for Greece.

“In the past two years and again this night, I’ve learned that ‘marathon’ is indeed a Greek word,” Rehn told reporters. There seemed to be an exquisite timing to the marathon reference, even though most journalists were too bleary-eyed at that point to appreciate it. Marathon can refer to one of two things: one of the most decisive battles in history, in which the ancient Greeks repelled the threat of the Persians and a disastrous future, or the long-distance race which marks the lung-busting effort of messenger Pheidippides to inform the Athenians of victory over the invading army.

Continue reading