Wednesday, November 28, 2012

An opinion on debt forgiveness and a summary of the 'deal'

Below are a couple of very interesting articles:

Greece does not need debt forgiveness (by Daniel Gros)
Another ad hoc deal or a step towards a solution? (by openeurope)

Daniel Gros describes very well that it is less the level of debt than the interest rate which matters. At the current (subsidized) low interest rates, a well-functioning Greek economy might not have difficulty servicing the debt as it presently stands.

openeurope gives a beautiful summary of the 4 elements making up the latest 'deal' (debt buy-back, interest rate reduction, deferral of interest & extension of maturities, dispersal of ECB-profits on trading Greek bonds). It also explains what the 'deal' means for future prospects of Greece and, most importantly, of Greeks.


  1. I can make only one comment about the buyback: The possibility of an accident is high. So, if the buyback wasn't CAREFULLY planned and FULLY PUT into place before its announcement, then we are dealing with a bunch of idiots.

    1. That is EXACTLY my argument! One can't have a package where a major pillar is subject to uncertainty. Even if that major pillar eventually turns out as a great success, it is still a fairly chancy way of handling things.