The Greek economy shrank over the past twelve months by 5.5%.
Among 15 to 24-year-old Greeks the unemployment rate is 42%.
If the Greek government were to seek to borrow on the international markets now they would expect to pay 25.08% interest for two-year funds.
The German government, whose commercial banks are highly exposed to Greek debt (perhaps even ‘existentially’ exposed, as we seem to use the adjective now), but much of whose electorate is intensely hostile to any further loans to the Greeks, has proposed a ‘restructuring’ of Greek debt whereby some losses would be imposed on bond holders – votes at present being a little more valued than banks.
The European Central Bank, which, as I understand it, now holds much recycled debt from Greece and other ‘peripheral’ EU countries. Has warned that compulsory restructuring is ‘unacceptable’ (interesting how some people’s or organisations’ ‘acceptance’ becomes essential whilst others’ becomes eminently ignorable). The ECB has also signalled its intention to raise European interest rates again in the near future.
Other European countries, and the US, are said to worry that any compulsory Greek debt restructuring could ‘alarm’ markets and place other, not quite so peripheral countries in jeopardy, such as Spain – whose economy is too large to be ‘bailed out’.
Is there any realistic prospect of a ‘safe landing’?