Economics

Kam povede most MMF pro Řecko?

Jun 21, 2017 Mohamed A. El-Erian

CURYCH – Mezinárodní měnový fond vzkřísil starou metodu – běžně používanou v 80. letech během latinskoamerické dluhové krize –, která by umožnila Řecku, aby se příští měsíc vyhnulo vyhlášení platební neschopnosti vůči evropským věřitelům. Tato úleva zároveň poskytuje MMF a jeho evropským partnerům čas sjednotit své rozdílné názory na růst a rozpočtové vyhlídky této země sužované krizí. Elegantní kompromis fondu přesto nechává Řecko ve stínu obrovského dluhového převisu. Jeho snížení bude vyžadovat, aby Evropa našla způsob, jak odložit národní politiky stranou a jednat na základě ekonomické logiky a nutnosti.

Evropa a MMF zatím nedokázaly nalézt kompromis mezi dvěma pohledy na trvalou udržitelnost řeckého dluhu, přičemž odlišné názory obou stran se přelévají do veřejné sféry. Evropské orgány zohledňující převážně analýzu cash-flow tvrdí, že řecký dluh je díky nízkým úrokovým sazbám a dlouhé lhůtě splatnosti udržitelný. Fond naopak uvádí, že dluh, který dosahuje téměř 200% řeckého HDP, odrazuje investice a příliv kapitálu. Pro MMF je smysluplné snížení dluhu klíčovým předpokladem vytvoření důvěry a důvěryhodnosti, jež jsou zapotřebí k tomu, aby se Řecko vymanilo z vleklého období finanční vyčerpanosti.

Není to jediná oblast, v níž se dva hlavní věřitelé Řecka neshodnou. Jejich názory se rozcházejí i v otázce reálnosti některých klíčových ekonomických prognóz, mimo jiné i důležitého vztahu mezi růstem a státním rozpočtem, kde Evropa zastává mnohem optimističtější postoj.

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Mohamed A. El-Erian

Writing for PS since 2010
161 Commentaries

Mohamed A. El-Erian, President of Queens’ College at the University of Cambridge, is a professor at the Wharton School of the University of Pennsylvania and the author of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse (Random House, 2016) and a co-author (with Gordon Brown, Michael Spence, and Reid Lidow) of Permacrisis: A Plan to Fix a Fractured World (Simon & Schuster, 2023).

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0 Comments on this paragraph, 21 Comments on this article

Mauricio Duran-Loriga Aug 1, 2017

Most LatAm countries were super rich in commodities. And by the grand commodities supercycle, most went out of debt.

But Greece...has literally nothing of economic value! That is why for centuries they had to adjust unit labor costs through outright currency devaluation.

The best economic plan so far I have read for Greece was from Schauble. Minimum of 5 year sabbatical from Euro, and huge foreign investments a.k.a. Marshall Plan.

But since any sabbatical from Euro is considered pure blasphemy, Greek tragedy might be in its infancy. Watch out.

Make sure you are not induced into total error by misunderstanding what the recent Greek bond sale means. Same as Argentina, Greece has rejoined the bond sales, and the book was several times oversubscribed. Who cares, really !

These are yield seeking vampires allocating tiny fractions of their huge portfolios to yield enhancing bond sales. Irrespective of credit rating and duration. Totally misleading.

The corrupt European elite silenced Schauble and crushed Tsipras and the Greeks. In reality, the IMF is a very distant player here. Europe has not committed a single Euro (from gross national savings) to Greece. No further comment required.
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Chris Spowe Jun 25, 2017

I find it quite remarkable that so many "experts" commenting this article fail to acknowledge that Eurozone member states have contributed exactly ZERO euros of "taxpayer's money" to finance the "Greek" bailout of (primarily) European banks and repayments to the EU instutitions.

EVERY SINGLE EURO has been raised/funded through the financial markets and has allowed the very same players who got bailed out in 2010/2012 to (once again) invest in debt that is now "secured" by EU (and non-EU, like ESM) institutions.

In short, the very same players that got bailed out is now, along with the IMF and every single EZ member state, profiting handsomely from this "extend and pretend" charade.

The credibility of the IMF, the EU (and non-EU) institutions, the Eurogroup and its 19 finance ministers have lost every last ounce of credibility they may have had, their vile and willful ignorance should be exposed and the "Greek" debt should be written off.

The choice is simple - either do this peacefully, to prevent a further disintegration of the Eurozone - or face the consequences of a disorderly (and very likely violent) disintegration.
- Paul Friesen Jun 26, 2017
  
  I agree.
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- George J. Georganas Jun 25, 2017
  
  You are assuming that the borrowing capacity of Eurozone member-states is infinite. Greece owes significant amounts of money to Spain, Italy, Portugal etc. It is hard to believe that Greece defaulting on such debts will benefit those creditors.
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George J. Georganas Jun 25, 2017

What if Greece is actually a beggar-state ? What if it actually manages to extract resources from other countries by means of borrowing and not paying ?
The country has gone into default, covert or overt, ten (10) times in its 196 years as an independent state. Although, "independent" cannot mean much for a country that has spent more than half of those 196 years under foreign international financial (and, necessarily, political) supervision ...
Medical doctor and author, Andreas Karkavitsas, wrote up precisely such a diagnosis back in 1897, in his allegorical novella "The Beggar". The eponymous hero of the novella has huge physical strength, but chooses, quite rationally, to beg and defraud, precisely because naive folk choose to transfer to him some of their productive surplus and, even, at times, resources they badly need themselves. Much like Slovak pensioners that have to retire later because Greece has chosen to have 2.67 million of its 11 million population receive pensions (on average higher than in Slovakia).
If the 120-year-old beggar-state hypothesis is correct, all the flagellation of the IMF and the European Union is, quite clearly, pointless.
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Bernhard Kopp Jun 24, 2017

No bridge and no money in the world can substitute for a reasonably functioning impersonal state organisation and a non-clientelistic democratic system. Building a modern state apparatus is an elite endeavor. There is no elite in Greece that is willing and able to do just that. It has not happened since 1975.
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Steve Hurst Jun 22, 2017

GR should be renamed Purgatory. The Northern EZ strategy is of containment, a desire to Freeze hell over, effectively the Greeks are treated like a financial disease. At 3% of EZ GDP and edging down GR is a tail trying to wag a dog. The Northern EZ will have difficulty when the disease spreads to Italy and France. You can dock a dog's tail even though the practice is frowned on but the dog will have trouble fetching the ball if you amputate limbs
- M M Jun 24, 2017
  
  Henk, the euro which is shared and utilised by al EZ memberr states is governed by rules. These rules were not only broken by Greece but by all 19 EZ member states.mHistory has been written, there is no point explaining it times over. The Nordic countries and Germany are not the only ones that lent money indirectly t to Grecee, you need to add to them all member states who are contributors into the IMF. The net is very wide. Greece is not an advancedeconomy and to accuse the Greek people for buying tanks or weaponeries is misrepresentation and incorrect. The Greek leadership who were bribed and some of them were jailed bought the armaments,b but notthe Greek people. The policy of asphyxiation is a criminal policy and is punishable by law., whether one uses an arm as aweapon illegally or useses fnance as weapon , it is the same, the ultimate aim is the intent to inflict harm or possibly death. If one wipes out the total Greek population, who will then pay the debt? Incidentally theperceived GGreek debt is so large that everyone is too scared to admit it. More information can be found on the IMF web site and of course in the various communiques that were issued by theIMF around the time of the January 2015 Greek GE.
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- Henk Crop Jun 24, 2017
  
  Steve. You point out that Greece is only a small share of the Eurozone GDP. The bigger issue here is the matter of Trust in the Eurozone. An EZ member not repaying its loans. What is going to happen with the loans to Italy, Portugal and others ? It is money provided by the people in Northern Europe. They were forced by Brussels to provide the loans. Can Brussels be trusted ? Can all these politicians ensuring the money would definitely be repaid be trusted ? The question becomes, can the EURO sustain ? But I agree that some other solutions have to befound than just the financial ones.
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M M Jun 22, 2017

The IMF, and of their own admission, made many mistakes in Greece, actually they made quite a big mess out of it. Greece needs many reforms and not just fiscal reforms but these are hard to implement when one does not control ones destiny and ones currency. The Greek people are very aware that their leadership from the right, left and centre are bunch of traitors, they needed the EU to save them and to save their country and economy. Unfortunately, as they were seeking refuge in the EU to escape the traitors, they ended up in the hands of the vultures.
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jorma saloniemi Jun 22, 2017

How much Eurozone has loaned for Greece?
Trough EFSF 130,9 billion €, through ESM 86 billion € and trough ECB support for Greece' banks 85 billion €. That is 300 billion €. To compare Greece' GDP is about 225 billion €. There is capability to take care for loans.

However Greece has neglected reforms urgently needed to recover. IMF:s approach to Greece' problems is too conservative one. It should noted that there were already about 50% cuts of loans from private sector, banks etc
- Henk Crop Jun 24, 2017
  
  Paul. "Greece has suffered long enough" can only be a message to the Greek leadership. However it is true the common Greek people are having a hard time.
  When the Euro was introduced it was agreed that every member state would take care of its own debt. Just the opposite has since happened, with Greece as the ulimate example. They have been receiving huge amounts of loans. Now you blame the creditors, despite the fact that they hardly recieve any interest. If the leadership in Greece does not grab the opportunities offered by the loans they should reconsider their position. It is good to remember who these creditors are. They are taxpayers in Northern Europe, who have been forced by Brussels to help to resolve the mess created by France and Brussels with their Euro project.
  Furthermore I have doubts about the effectivenes the Greeks spent the money they loaned.
  Example: A few years back the Dutch Army had some tanks for sale, because of the austerity, the Greeks were happy to buy them.
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- Paul Friesen Jun 22, 2017
  
  Greece has suffered enough. The people you are punishing so severely are not even those who caused the problem - they are probably all in very comfortable retirement by now, while the Greek youth, who were not even able to vote when the bad decisions were made, bear the burden.
  
  What is being done to Greece is just like the old debtor's prisons. You demand that the loans be paid. But then you make it impossible to pay them by forcing massive government cutbacks, causing huge unemployment. How do you expect them to pay when you are forcing a 25% unemployment rate on them?
  
  A realistic solution would be to forgive most of the loans. But in return, Greece would need to accept outside management. Demand that tax collection be managed by an agency controlled by the E.U. Such an imaginative solution could end the cruelty of unfair collective punishment.
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Henk Crop Jun 22, 2017

Greece should not never have joined the Eurozone.
It did not meet the requirements at all for such a close financial relation with other EU countries.
On top of that they joined on the basis of fraudulent figures they had filed.
After default threatened officials declared repeatedly there was no reason to worry as the EU would save them.
It also became apparant that in paticular German and French banks had heavily invested in Greece.
So the banks as well as the Greek economy had to be supported.
The banks were made to pay part of the damage, but the rest had to be provided by loans from other Eurozone members.
Germany, Holland and others. While Chechia had a living standard lower than Greece they still had to sign for loans.
The people were repeatedly told by the politician that the loans would surely be repaid.
It had never before happened in Europe that a Government did not repay its loans.
The current situation cannot continue forever.
It is bad for the Greek people, it is a drag on the Eurozone as it feeds mistrust. It speads insecurity among other Southern Eurozone members.
As a Dutchman, who also loaned to Greece, I have some ideas.
- a business plan for Greece should be made that enables it to develop a viable economy.
- If it cannot be made, and supported by the people, Greece should leave the Eurozone.
- Write off of parts of the loans is then unavoidable.
- Greece will need delopment assistance by the EU.
- Greece will offer facilties to the EU
- Since this all has been caused by the reckless way the Eurozone was implemented. An EURO which has done, and stilll does, great harm to many EU countries. There must be polical consequences. Like: a stop on the ever closer union, improved supervision over and streamining of the EU Commission, limitations on the free movement of people, no Eurobonds, no pooling of debt, no EU minister of Finance. The sovereignity of the memberstates will be respected.
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Peter Schneider Jun 21, 2017

The Greek financing burden most certainly does not belong to Europe as fiscal transfers between member states of the currency union are forbidden by law (art. 125 TFEU). And this is not about "technical differences" or "national politics" but about the basic principle of democracy itself that there shall be no taxation without representation. Breaking the rule of law most certainly does not provide a signal of unity but a signal of political instability.
- Peter Schneider Jun 22, 2017
  
  By definition, democracy is connected to one (and only one) nation (demos=natio) and the nation state is the instrument for the people forming a particular nation to govern themselves. This nation is formed by people of similar ethnic and cultural background, people who speak the same language, who share a common history with each other, who have similiar ideas, similar mentality etc. - and most naturally, different nations follow different interests. The democratic state that represents the sovereign will of the people manifests itself in its institutions (parliaments, governments, courts but also universities, press or). In a democratic political system, these institutions are bound by the rule of law and by the constitution that the people forming the nation decided on.
  
  Therefore if the political system that the particular nation has decided on is democratic there can be no court more supreme than the national supreme court. There cannot be two nations (or 28 nations) in the same democratic state. There cannot be a democratic parliament with deputies from different nations. There cannot be instability concerning the rule of law in a democratic state.
  
  The reason for the "EU" crisis is that "EU" institutions try to act like nation state institutions thereby assuming a European nation which is however inexistent.
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- jagjeet sinha Jun 22, 2017
  
  BRUSSELS IS UNELECTABLE
  Democracy in Greece wants an end to Austerity.
  Democracy in Germany wants Transfer Union to remain blocked forever.
  Democracy in Britain wants an end to Unlimited Migration.
  The Brussels Bureaucracy has no answers - yet it threatens Punishment without Providing solutions.
  The exits from The Europe - that people dream of - cannot be delivered by the Institutional Architecture that exists.
  The demolition of Democracy - that Brussels inadvertently perhaps causes - needs solutions not punishments.
  And if the current design does not deliver - design changes are needed without Meltdowns.
  And the only Meltdowns that can trigger the reforms required - when the heat torches Germany and France.
  The heat in Britain and Greece don't seem to matter.
  The European Economic Community resulted in a much safer Europe.
  Transforming that into The European Union is a nightmare without an end.
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- M M Jun 22, 2017
  
  So Peter, why do we have the ECJ, bring them all to justice, the Greek people shall be the first ones to celebrate if and when this ever happens.
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Alec Mally Jun 21, 2017

With all due respect to the author, there is a critical element not covered in his article, and that is Greece's stubborn refusal to reform in any meaningful way. Europe knows, and the author should as well, that debt relief for Greece is a waste of time until a modern reform-oriented government is in place and has downsized and modernized the public sector that Syriza is trying to revitalize every day it is in power. Why invest good EZ taxpayers money in a failed experiment?
- Alisdair Hamilton-Wilkes Jun 23, 2017
  
  I think you are missing the point; the 'investment' (really a bail out of mostly German, French and other EZ creditors) has happened. Although structural reforms are necessary there will be no recovery without investment and the Greek economy's fundamentals look so bad that it deters investment.
  
  The IMF and EU has created a chicken and egg scenario. The IMF cares (a bit) because it looks so bad but the EU (really Germany) legitimately worries they will have no leverage for reform if the fundamentals look better. In the meantime it is happy to crush or force to flight the remaining wealth of a nation for the sake of maintaining a lie.
  
  It's hard not to see the EU/EZ as a pretty sinister set of institutions at heart.
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M M Jun 21, 2017

What Merkel's Germany has done to Greece and to Cyprus, to the Greek and Cypriot people and to the EU project as a whole is not only criminal but bordering on genocide. It is chocking that the Pope would even consider meeting Merkel and her gang. The IMF is a Cartel, a political institution with borrowed (utilising other people's money) and second and sometimes third hands clothings. This latest Greek saga is nothing but theatrical to calm the markets. Everything we have been witnessing since BO, the lecturer in chief was elected, have only been theatrical acts of one chapter after another. The markets have become the one and only authority. Political leaders elected since 2008 were only cowards and slaves to the markets and the vested interests, they were / are just tools to utilise by / for the pleasure of the markets. Possibly the real causes of WWI, WWII and WWIII (in disguise) have not gone away and are very much active and this despite the exhorbitant number of casualties and sacrifices paid by the world population until today's date. The coming German elections shall change nothing, history regrettably is repeating itself.
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