3 ms·

Reading the details of Juncker's €315bn investment, it just sounds like a new loan package, what makes this particular loan package good for economic growth?

elorant 11y ago
Because it goes directly to the economy rather than bailing out banks.
- ZenoArrow 11y ago
  I don't think it's quite as good a deal as you might think. First of all, the investment is €21 billion, not €315 billion. €315 billion is the projected return on that investment. Secondly, that €21 billion will be spread across a number of EU countries, Greece's share will be a fraction of that total. Thirdly, whilst SMEs are mentioned in the announcement, a larger portion of the investment returns are expected to come from long term investments. Long term investments generally refer to investments that have a low return on investment in the short term and better return in the long term, which can be a sensible way to invest, but those investments will be based on loans, and the interest accumulated on those loans doesn't necessarily start when the investment pays off (i.e. the interest could start straight after the loan is made, regardless of how long the return on investment is projected to take). Lastly, even if Greece got the full investment (which they aren't likely to), this €21 billion is a drop in the ocean compared to the existing debt, and furthermore will come with its own debt, it might help if it was managed right but it's a huge gamble and I'm not convinced it would make much of a dent in the overall debt. Perhaps I'm wrong, but I hope you can see why I have these doubts.
  - elorant 11y ago
    Oh I have doubts too, dozens of them. If you see the agreement you'll be dazzled by the amount of new taxes. But all things considered I still think it's the lesser of two evils. Because I don't think we could go to drachma in an orderly fashion. We'd go highly unprepared, the capital controls are a proof of how the government was caught with their pants down, and then all hell would broke loose.
    - ZenoArrow 11y ago
      There are risks with going back to the drachma, but the implementation can be handled sensibly. For example, set the currency value to match the Euro, so 1 drachma = 1 euro. That would give reassurance that savings wouldn't be lost, and while wages and product costs are likely to go through a period of notable fluctuations, it doesn't have to be dramatic.

elorant 11y ago

Because it goes directly to the economy rather than bailing out banks.

ZenoArrow 11y ago
I don't think it's quite as good a deal as you might think. First of all, the investment is €21 billion, not €315 billion. €315 billion is the projected return on that investment. Secondly, that €21 billion will be spread across a number of EU countries, Greece's share will be a fraction of that total. Thirdly, whilst SMEs are mentioned in the announcement, a larger portion of the investment returns are expected to come from long term investments. Long term investments generally refer to investments that have a low return on investment in the short term and better return in the long term, which can be a sensible way to invest, but those investments will be based on loans, and the interest accumulated on those loans doesn't necessarily start when the investment pays off (i.e. the interest could start straight after the loan is made, regardless of how long the return on investment is projected to take). Lastly, even if Greece got the full investment (which they aren't likely to), this €21 billion is a drop in the ocean compared to the existing debt, and furthermore will come with its own debt, it might help if it was managed right but it's a huge gamble and I'm not convinced it would make much of a dent in the overall debt. Perhaps I'm wrong, but I hope you can see why I have these doubts.
- elorant 11y ago
  Oh I have doubts too, dozens of them. If you see the agreement you'll be dazzled by the amount of new taxes. But all things considered I still think it's the lesser of two evils. Because I don't think we could go to drachma in an orderly fashion. We'd go highly unprepared, the capital controls are a proof of how the government was caught with their pants down, and then all hell would broke loose.
  - ZenoArrow 11y ago
    There are risks with going back to the drachma, but the implementation can be handled sensibly. For example, set the currency value to match the Euro, so 1 drachma = 1 euro. That would give reassurance that savings wouldn't be lost, and while wages and product costs are likely to go through a period of notable fluctuations, it doesn't have to be dramatic.