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Exactly, the IMF, the EC or other governmental bodies will still be paid in full. In effect, the bailout loans increased the private sector haircut by both dela
by iwwr 15y ago
Exactly, the IMF, the EC or other governmental bodies will still be paid in full. In effect, the bailout loans increased the private sector haircut by both delaying and also adding extra super-senior debt on top of the existing one.
- peteretep 15y agoI have this theory, see, about the delays. The longer the delays have gone on, the more the Greek government has had to actually implement austerity measures - the more political capital those who want to see austerity and proper financial liberalization have had to force those through... So by the time some breathing room has been introduced, Greek society has undergone the necessary but painful changes towards a better long-term solution.
- iwwr 15y agoIf the bailout loans didn't come then, then Greece would have had to negotiate a debt restructuring then rather than now, gaining 1-2 years at least. As for austerity, there is the healthy streamlining and downsizing of public expenses and there is the hobbling of the private sector with new and higher taxes. The latter solution merely sinks the Greeks further. Public debt is not strictly meant to be paid off ever, but it should grow no faster than the overall economy for this indefinite deferral to work. It also means the productive aspect of society, namely the private sector, not be hindered by too high taxes or regulations.