“Greece Looks to Turn a Corner After Years of Economic Pain” (nytimes) is interesting for what it tells us about how modern humans think about economic success:
The proposed bond sale, the details of which were released on Monday, offered hope…
Dimitri B. Papadimitriou, the economy minister, said his country was “getting out of a rut,” adding: “There’s an opportunity for Greece to become a normal country.”
The bond offering does not mean that Greece is out of the woods. It is just the first of several steps that Athens must take to test whether it can raise money in international markets to support its economy and government operations when the latest bailout, worth €86 billion, expires in August 2018.
Greece continues to stagger under a mountain of debt, which is now worth €314 billion. [As is typical for American media, the journalists can’t be bothered to put information into context. With a population of 10.75 million, this works out to about $29,200 per resident of Greece. Compared to GDP of $195 billion, this is just shy of 2 years of GDP.]
Quick summary of the article: “This country has been so successful lately that it will be borrowing money in order to pay its bills.”
(Maybe in fact the money is going to be borrowed to redeem old bonds that are coming due? But the article makes it sound as though simply borrowing is a sign of robust economic health!)
In the age of quantitative easing, borrowing has a whole new meaning. It is no longer feared like it was 30 years ago.
Greece is an amusing case. According to the IMF and other acronyms, its current debt is “unsustainable”, and yet given the willingness of the future bondholders to lend, the country does not mind borrowing some more. The country could not possibly have changed its folkways and mores in the mere three years, it takes generations if not longer, to eradicate corruption, nepotism, improve tax collection, develop its economy, whatever it means, could it ?
The rational future bondholders most likely are betting on the willingness of the Eurozone taxpayers, or rather willingness of the Eurozone “elites” to shepherd their sheep into providing yet another bailout package. I think it’s a pretty safe bet for a multitude of practical and semi-religious reasons.
Greece is too bailed to fail.
The rational future bondholders most likely are betting on the willingness of the Eurozone taxpayers, or rather willingness of the Eurozone “elites” to shepherd their sheep into providing yet another bailout package
That’s because powerful institutions in other Eurozone countries own much of Greece’s debt.
Holy cow, their GDP is like $18K per person. USA=$58K, UK=$40K, France = $37K, Germany = $42K. That’s not very good.