“Greek debt rallies to 2014 highs after key budget target hits 4.2% surplus” (Financial Times) says “Greece’s primary budget surplus – which measures the country’s public finances when excluding debt repayments – hit 4.2 per cent last year, swinging dramatically from a deficit and far outperforming a creditor target of 0.5 per cent for 2016.”
So the Greeks are actually spending a little less than they collect in taxes? And the creditors are demanding that they keep this up? But if they keep this up they will never need to borrow again, right? So why wouldn’t they default on the old debt and just keep the surplus for themselves?
What do folks think? Is it time to invest in Greek assets (other than the bonds on which it would seem to make sense for them to default)?
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Depends how stable their real estate market is at this point. If it’s fairly stable, then it would be a great move to test-drive with small investments.
My understanding is that Greece tried to default from the beginning (the famous “No” vote), but Germany threatened economic war if they opt to not pay creditors. I assume the rest of Europe could have implemented economic sanctions, blocked Greek assets abroad, blocked Greek banks from doing business in Europe. The reporting on the crisis has been highly muddled, so it’s hard to say.
Before deciding to invest (or not), you may want to read Yannis Varoufakis’ book on his brief tenure as the Greek finance minister, negotiating with Greek’s creditors: https://www.yanisvaroufakis.eu/category/books/adults-in-the-room/. After reading it, my first thoughts on the 4.2% primary budget surplus is that it’s too good to be true.