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The French Deception
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This editorial deserves an award for best editorial on international economic matters in 2011. The editorial, goes right to the point, when it says the French, the Germans, and the European Central Bank are deluding themselves if they call this weeks resolution of the Greece debt crisis a realistic solution. It is anything but a solution. The Journal calls it a French deception. It is unworkable because the main problem, the high ratio of Greek debt to GDP -which is now 155% and is expected to reach 170% by the end of 2011- is sure to get worse under the arrrangement designed in the interest of French and German banks. Under the arrangement French and German banks and other creditors will get to double their return from 4-5% today to an effective interest rate of 10% if Greece grows by 2% a year, on 49% of the bonds they hold. These bonds will be converted into 30 year bonds. This effectively doubles the interest cost for Greece in servicing this debt. On the other approximately 51% of the bonds the French and German banks would redeem the bonds for cash and a triple A, sovereign zero coupon bond. The Journal asks what is the point of making Greece's debt problem worse than it is now and calling it a solution. The austerity cuts are already expected to lead to a deep recession, something that is also happening in Portugal, leading to a worsening of the debt situation. Creditors are not sharing in the losses under this arrangement, as Germany and the Netherlands have insisted. As the Journal points out they are instead taking out half of their investment and doubling their return on the remainder. And the fears of contagion for Spain are not lessened, as financial markets can clearly see through this for what it is- unworkable and unrealistic.
Richard Portes of the London Business School and other experts on the failures inherent in the EU's June 2011 Greece debt plan
06/22/2011
The EU's decision to adopt the French Banking Federation's plan that would double the cost of servicing Greece's debt will only make matters worse. This means increasing interest rates from 4-6% currently to 10% under 2% Greek economic growth, and makes debt servicing untenable. The adoption of similiar plans in the case of Mexico and Argentina in 2001, ended in failure a year after they were adopted, with private creditors taking losses. Financial markets see this with interest rates on Greek debt at 26%. Contagion might turn out to be worse as the situation deteriorates further.
Grouped Articles
EU Dismisses IMF's Criticism On Greek Bailout
Wall Street Journal 06/07/2013
What Greece Faces if It Defaults
New York Times 04/29/2015
If Greece Defaults, Imagine Argentina, but Much Worse
New York Times 06/25/2015
Move Buys Time for Greece, But Growing Debt Looms
Wall Street Journal 07/01/2011
Greece Approves Tough Measures on Economy
New York Times 06/29/2011
Wall Street Journal 06/30/2011
Charles Dallara of the Institute of International Finance's assessment of the Greece and eurozone debt restructuring of July 2011 and the Greece bailout in 2015
06/30/2011
Grouped Articles
Personalities Clashing Over How to Handle New Greek Bailout
New York Times 07/23/2015
Greek Bailout Negotiator Sees Benefits for Banks
New York Times 07/24/2011
Some Bailout Providers May One Day Need Help Too
New York Times 07/24/2011
Plan for Greece Favors Creditors
New York Times 07/25/2011
In Greek Debt Deal, Clear Benefits for the Banks
New York Times 07/25/2011
The Euro Crisis: Big Rescue, Big Doubts
BusinessWeek 07/28/2011
Greece and the illusory nature of the troika's (ECB, IMF, EU) target for debt to GDP of 120% in 2020
06/30/2011
The artificial nature of the target especially considering all the unpredictables invoved.
Grouped Articles
A Warning Light to Alert the I.M.F.
New York Times 09/21/2011
EU Dismisses IMF's Criticism On Greek Bailout
Wall Street Journal 06/07/2013
Policy âTroikaâ for Europe Financial Woes at Odds
New York Times 06/07/2013
Past Rifts Over Greece Cloud Talks on Rescue
Wall Street Journal 10/07/2013
Personalities Clashing Over How to Handle New Greek Bailout
New York Times 07/23/2015
The Greek Debt Deal’s Missing Piece
New York Times 08/15/2015
Greece: prospect of default on debt.
12/29/2009
Grouped Articles
Greece Defaults on IMF Loan Despite New Push for Bailout Aid
Wall Street Journal 07/01/2015
Greece, Missing I.M.F. Payment, Is Called Effectively in Default
New York Times 06/30/2015
Unknown 12/29/2009
Unknown 12/29/2009
The Worst May Not Be Over for Europe
New York Times 12/31/2009
New York Times 02/15/2010
The European Union agreement for the eurozone debt crisis in Greece and other countries in July 2011
06/30/2011
The first really workable agreement was finally reached in Brussels after a year of sharp differences between the ECB, EU leaders, Greece government and opposition parties, and leaders of France, Germany and other EU countries. Fears of contagion for Italy and Spain and a sense of the dangers to the EU and the Euro currency itself led to the agreement, with the EU governments coming up with the financial support which will be channelled through the European Financial Stability Facility. The debt ceiling crisis in the U.S. may have added to the urgency to reduce nervousness in the markets about a breakdown in EU governance along with that in the U.S.
Grouped Articles
Wall Street Journal 07/13/2011
Europe Must Choose Currency or Financial Union
New York Times 07/21/2011
Greece Gets New Bailout as U.S. Nears Brink
Wall Street Journal 07/22/2011
A Guide to the New Deal in Athens: How a 'Selective Default' Works
Wall Street Journal 07/22/2011
Wall Street Journal 07/22/2011
Euro Zone's Imperfect Path to Union
Wall Street Journal 07/22/2011
Lawyers Buchheit and Gulati who advised Greece's government on the bond restructuring deal in March 2012
06/30/2011
Buchheit and Gulati helped Greece achieve the bondholder write-off deal through the legal mechanism of writing a collective action clause. This was possible because Greece's bonds to private investors were issued under Greek law. Collective action clauses make it possible to ensure a deal is made even if some private investors reject it. A haircut for private investors with a bond swap was designed to reduce Greece's debt to a sustainable level.
Grouped Articles
Greek Bonds Soar After Fitch Upgrade
Wall Street Journal 05/15/2013
EU Dismisses IMF's Criticism On Greek Bailout
Wall Street Journal 06/07/2013
Policy âTroikaâ for Europe Financial Woes at Odds
New York Times 06/07/2013
Greek Government Bonds Pay Off Big for Fund Managers
Wall Street Journal 10/28/2013
Wall Street Journal 03/12/2012
A Bold Proposal to Offer Greece Some Financial Relief
New York Times 07/10/2015
Why most of the bailout loans to Greece actually go back to creditors as interest on debt
06/30/2011
Two thirds of the $177 billion in bailout loans to Greece since May 2010 from the IMF, ECB and EC actually went back to these creditors. The money route was setup in circular fashion with escrow accounts in Athens so that the money went right back as interest payments on debt.
Grouped Articles
A Warning Light to Alert the I.M.F.
New York Times 09/21/2011
EU Dismisses IMF's Criticism On Greek Bailout
Wall Street Journal 06/07/2013
Policy âTroikaâ for Europe Financial Woes at Odds
New York Times 06/07/2013
Past Rifts Over Greece Cloud Talks on Rescue
Wall Street Journal 10/07/2013
IMF Warns Eurozone That Greece Needs Far More Debt Relief
Wall Street Journal 07/15/2015
Personalities Clashing Over How to Handle New Greek Bailout
New York Times 07/23/2015
Actions taken by EU leaders in 2011-2012 to resolve the debt crisis in member countries.
02/26/2011
Actions taken for Ireland, Greece, Portugal and other countries facing debt problems.
Grouped Articles
Policy âTroikaâ for Europe Financial Woes at Odds
New York Times 06/07/2013
Ireland Shows How to Ski Down the Debt Mountain
Wall Street Journal 09/28/2015
European Debt Deal Has Flaws - News Analysis
New York Times 03/14/2011
Portugal Pays Higher Yield at Bond Sale
Wall Street Journal 03/16/2011
Europe Needs to Apportion Pain
Wall Street Journal 03/17/2011
Portugal under siege: The winter of living dangerously
Economist 02/26/2011
Debt Restructuring for Greece- 2010-2012
04/18/2011
Grouped Articles
Policy âTroikaâ for Europe Financial Woes at Odds
New York Times 06/07/2013
Watch Athens, Not Paris, This Weekend
Wall Street Journal 05/04/2012
Expectations Grow for Greek Debt Restructuring
New York Times 04/18/2011
Wall Street Journal 04/20/2011
Investors Doubt Orthodoxy on Greek Debt
Wall Street Journal 05/02/2011
Greek Debt Talks Widen Divisions in the Euro Zone
Wall Street Journal 05/05/2011
Francois Hollande, Socialist party candidate for president in France, on the EU's handling of the debt crisis in Greece
06/30/2011
Francois Hollande says the EU mishandled the Greece crisis. Greece should have been handled as an extraordinary situation with earlier debt restructuring from public and private creditors to bring Greece's debt down to 60% of GDP. The current coordinated plan of the EU, ECB and the IMF only brings debt down to 120% of GDP in 2020. Hollande said he understands the need to reduce the budget deficit with cuts but without growth it can't work.
Grouped Articles
EU Dismisses IMF's Criticism On Greek Bailout
Wall Street Journal 06/07/2013
Policy âTroikaâ for Europe Financial Woes at Odds
New York Times 06/07/2013
French Candidate Hollande Assails European Policy on Greece
New York Times 02/13/2012
Athens Shaken by Riots After Vote for Greek Austerity Plan
New York Times 02/13/2012
Austerity Debate a Matter of Degree
Wall Street Journal 02/17/2012
Wall Street Journal 02/22/2012
Greece's debt crisis in 2012 after the agreement with private creditors to take 50% of the losses on Greek bonds is not enough to reduce debt to sustainable levels
06/30/2011
Bondholders accepting 50% of losses- as agreed with EU leaders in Nov-Dec 2011 -will not be enough for Greece to meet its debt obligations, because of a fast deteriorating economy. By March 20, 2012, 14.5 billion euros of bonds come up for repayment or refinancing. More money will be needed from the EU. The voluntary exchange by private creditors of existing bonds for new bonds with 50% face value and maturing over a longer period will be made under an agreement using English law. This will be harder to change in the future, putting the burden on any future financing shortfall on EU countries unwilling to make further commitments to Greece.
Grouped Articles
Greek Bonds Soar After Fitch Upgrade
Wall Street Journal 05/15/2013
EU Dismisses IMF's Criticism On Greek Bailout
Wall Street Journal 06/07/2013
Policy âTroikaâ for Europe Financial Woes at Odds
New York Times 06/07/2013
Greek Government Bonds Pay Off Big for Fund Managers
Wall Street Journal 10/28/2013
Europe Fears Rising Greek Cost
Wall Street Journal 01/11/2012
Wall Street Journal 01/14/2012
Greece's Debt Buyback Plan in Dec. 2012
06/30/2011
Efforts to reduce Greek debt by 18 billion euros by retiring bonds with a face vaue of 28 billion euros. The buyback plan is at 32-34% of face value.
Grouped Articles
Greek Bonds Soar After Fitch Upgrade
Wall Street Journal 05/15/2013
Fitch Raises Greece's Credit Rating
Wall Street Journal 05/15/2013
Greece Gets Rating Recognition
Wall Street Journal 05/14/2013
Greece Bulls Charge Into Corporate Bonds
Wall Street Journal 05/15/2013
Greek Government Bonds Pay Off Big for Fund Managers
Wall Street Journal 10/28/2013
Greek Debt Buyback Looks Attractive
Wall Street Journal 12/04/2012
Why the March 2012 Greece bailout protects the EU, but is bad for Greece and for democracy
06/30/2011
Nothing to be proud of, says the Journal in its editorial on Feb. 29, 2012. For Greece the terms leave no hope for a return to growth, and that the two political parties in Greece were required to pledge their support for austerity measures against overwhelming public opposition in Athens says little for democracy. It would have been better for Greece to go into a planned default 2 years ago with steeper haircuts for European banks and reducing Greece's debt to a manageable level lower than the over 120% of GDP in 2020 of the March 2012 bailout plan, says the Journal.
Grouped Articles
EU Dismisses IMF's Criticism On Greek Bailout
Wall Street Journal 06/07/2013
Policy âTroikaâ for Europe Financial Woes at Odds
New York Times 06/07/2013
New York Times 11/03/2013
Wall Street Journal 03/12/2012
Greece’s new prime minister wants Germany to pay for Nazi war crimes - The Washington Post
Washington Post 01/26/2015
Mirage of Economic Turnaround Masked New Greek Crisis in the Making
Wall Street Journal 07/05/2015
The final terms of the Greek debt swap in March 2012
06/30/2011
The final terms of the swap of new bonds with longer maturities and lower interest rates for old bonds, at a fraction of the face value (estimated at 53.5%), become clear on March 9, 2012. Greece's government writes new collective action clauses to complete the deal with private bondholders.
Grouped Articles
Greek Bonds Soar After Fitch Upgrade
Wall Street Journal 05/15/2013
Fitch Raises Greece's Credit Rating
Wall Street Journal 05/15/2013
Greece Gets Rating Recognition
Wall Street Journal 05/14/2013
Greece Bulls Charge Into Corporate Bonds
Wall Street Journal 05/15/2013
EU Dismisses IMF's Criticism On Greek Bailout
Wall Street Journal 06/07/2013
Greek Government Bonds Pay Off Big for Fund Managers
Wall Street Journal 10/28/2013
The Wall Street Journal calls the June 2011 E.U. plan for Greece "the French deception," and the Economist says it is doomed to failure
06/30/2011
Doubling the interest rate on loans owed by Greece to French and German banks is called "the French deception" by the Journal . The Economist sees the sharp spending cuts and tax increases having enough detrimental impact on economic growth to make the debt load larger than before.
Linked Articles
Greece and the euro: The abuses of austerity
Economist 07/02/2011
Wall Street Journal 06/30/2011
Greece, Europe and the Austerity Measures- "The French Deception" and "The Tragic Sideshow" (2)
06/30/2011
Two WSJ editorials tell the story for what it is in 2010-2012.
Linked Articles
Wall Street Journal 02/22/2012
Wall Street Journal 06/30/2011
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