How Greece Outflanked Germany and Won Generous Debt Relief | Marketwatch

[Fred Sanders]

http://www.marketwatch.com/story/how-greece-outflanked-germany-and-won-generous-debt-relief-2015-08-24

"Alexis Tsipras, who is likely to continue as Greek prime minister after precipitating a general election for next month, arrived in power in January attempting to resolve an “impossible trinity”: relaxing the economic squeeze, rescheduling Greece’s unpayable debts, and keeping the country in the euro.

Satisfactorily achieving all three aims appeared unachievable — and it was. Yet Tsipras appears to have achieved greater success than Angela Merkel, his main European sparring partner. The German chancellor, too, promised her electorate three unrealizable goals. However, frightened of being made a scapegoat worldwide for ejecting Greece from the euro EURUSD, -0.7229% , she seems to have caved in to international pressure even more than Tsipras.

The big question is whether, once the full generosity of Greek debt relief becomes widely known, other large-scale debtors around the world — ranging from indebted Chinese local authorities to borrowers from Italy, Portugal and Spain — will demand similar concessions from creditors."

.......

"The new €86 billion low-cost Greek bailout will probably not be fully redeemed until 2075 — a similar extension of loan repayments that was granted to West Germany in 1953, with some long-standing borrowings not repaid until 57 years later, in 2010.

Further effective Greek debt reductions will occur in the autumn as part of a deal to keep the IMF as a direct underwriter of Greek debt. Germany’s insistence on bringing in the IMF is politically expedient yet economically contradictory. Greece’s biggest creditor believes the only way to make its lending domestically palatable is to keep on board another lender (the IMF), which will do so only if Germany asks its taxpayers to shoulder fresh burdens through stretching out loan repayments and lowering interest costs."

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Effectively a write off of Greek debt....Well done Tspiras. Capitalists will be shocked to learn that socialists CAN govern.

[MFrohike]

1. It's always fun to visit Bizarro world

I wouldn't advise living there, like the writer, but it's not bad for a quick trip. How else do you explain adding new debt to existing debt and then claiming it's a debt reduction?

[Fred Sanders]

2. Please read the whole article for the answer....the debt relief is over two generations!

I am not an economist but if I could amortize my mortgage for 60 years at a fixed rate of near zero...as Germany did for 56 years....

[MFrohike]

3. I get it

He's arguing that Greece got debt relief, a point the IMF would hotly contest, by adding 86B euros to their already considerable debt load. I get that he's trying to argue they got good terms, but it's asinine to claim relief when the overall load is ridiculous.

Tsipras has shown himself to be a master politician at home, but he's completely incompetent when dealing with Merkel, Draghi, and the rest. The mere fact that Schauble called his bluff and offered to pay Greece to the leave the Eurozone just destroys the author's claim that Tsipras is some kind of wunderkind negotiator. He brought bubblegum to a gun fight and ended up knuckling under not even a week after that harebrained referendum. That's not the record of a successful negotiator.

[Fred Sanders]

5. Once again your conclusion is wrong because you have the economic facts wrong.

[MFrohike]

9. Ok

Perhaps you and the author can explain to the IMF why their projection of Greek debt, including this latest bailout, to be unsustainable, even under their notoriously rosy predictions of economic growth, is wrong?

[Yo_Mama]

8. That was on the table last year, before all this.

Germany had explicitly suggested that in turn for real Greek domestic reforms, a lengthening of debt terms was reasonable.

Where Germany has always stuck is in writing off more debt nominally (and ECB is not willing to do it either), or extending more bailouts without domestic reform.

[Nye Bevan]

4. So both sides can plausibly claim victory.

Seems like the best solution everyone could have hoped for. Congratulations all around.

[pampango]

6. The German far-right won't be happy. They wanted to cut Greece loose not help it. n/t

[geek tragedy]

7. Greece has received debt relief? nt