Things I don’t understand – 1 – The Greek Debt
What is the Problem with the Greek Debt?
Some history, Greece entered the Euro zone in 2001, giving up the Drachma. Everything went swimmingly until about 2009. What happened in between?
One of the things about the Greeks is that they made tax avoidance a national sport. They also started paying the civil servants lots. On top of that they all retired young, very young.
To cover the shortfall between the non existent tax income and the payments out the Greek government sold their debts. France and Germany were happy to buy the bonds for guaranteed income and governments don’t go broke, do they?
Then, of course people realised that the American banks had been trading in worthless junk bonds based on worthless mortgages on shacks. As the extent of the mess that the bankers had got us all into became clear the balloon went up over the Greek debt. All of a sudden the Greek debt did not seem all that secure. People started selling the bonds. Greece kept selling bonds to make up its shortfall, and the interest it had to promise to pay to keep making the sales went up and up.
It all had to end in tears. The Europeans, who had been happy to let the Greek debt spiral, watched as the plug was pulled. Then they sent in the accountants. The answer was to get the Greeks to pay back the money, cut public spending, and apologise (I made the last bit up).
OK, so my analysis may lack in detail, and accuracy, but the history is not what I do not understand, hard as it might be to believe.
What I Do Not Understand About The Greek Debt
Is
The Greek debt, which the Germans say can not be written of is €315 billion. And yet the European Central Bank are preparing to create out of nothing €1.1 trillion for a programme of quantitative easing.
Why Not Just Give The Greeks Some of That €1.1 trillion?
That would get rid of the Greek debt, at a stroke!
What have I missed? Makes sense to me.
Phil’s British Heart Foundation Donation – you know it makes sense
