Calamos Supports Greece
GreekReporter.comGreek NewsCyprusGreek Bailouts Cost Some, Gain Others

Greek Bailouts Cost Some, Gain Others

While Greece’s crushing economic crisis has hurt many people – those suffering pay cuts, tax hikes, slashed pensions and who have lost their savings by investing in Greece – it’s made a lot of money for some speculators, the European Central Bank, as well as German banks.

According to a report in Der Spiegel, Germany has actually made a profit of 400 million euros ($519 million) so far on the money it has lent the country as the major contributor to bailouts from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB.) Germany borrows cheaply, and passes the loans on to the Greeks at a higher rate.
Greece and the other struggling Eurozone economies – Portugal, Ireland, Spain, and soon Cyprus – will have been propped up with loans an guarantees, all of which eventually come back to taxpayers one way or another.The situation in Greece has gone from bad to worse as the country nears the end of its fifth year of recession, worsened by austerity measures, with at least another year of a shrinking economy and financial pain looming in 2013. The country’s debt-to-Gross Domestic Product (GDP) ratio is now almost 180 percent and there seems almost no chance it can be reduced to 120 percent by 2020, the Troika’s target.After barely getting a $17.45 billion spending cut and tax hike plan through Parliament on the Troika’s demand, Prime Minister Antonis Samaras expected that would be enough for them to unlock a long-delayed $38.8 billion loan installment that is the first in a second bailout of $173 billion that has been on hold since before the June 17 elections his New Democracy party barely won. Greece was surviving on a first series of $152 billion in rescue monies and is running out of cash fast.
Eurozone finance ministers, who didn’t sign off on the loan at a meeting earlier in the week are set to convene again in Brussels on Nov. 26 to decide whether to authorize disbursement as Samaras prods them to act. But that could require yet another scheme to extend the repayment period and meet fiscal targets which could require a bridge loan of up to $40 billion to cover a financial gap.
Germany, for example, has lent Athens 35 billion euros ($45.4 billion) but that hasn’t slowed Greece’s slide and the lenders may have to write down their investments as much as 50 percent, similar to the losses imposed on private investors by a previous administration in Greece, although IMF chief Christine Lagarde isn’t keen on doing the same.
Through the IMF, developed countries are pouring money into the EU bailouts, forcing the agency to raise an extra $400 million in capital earlier this year. British Prime Minister David Cameron promised there would be profits on the contributions, on the grounds the IMF had made a return on past rescue programs, but this time that could turn into losses.
At that point, leaders in Germany and France, and indeed in the U.K., the United States as well as other countries, such as South Korea and Australia, will have to explain that taxpayer’s money is keeping Greece afloat, and keeping it in the Eurozone and find some way to justify the decision, such as keeping the euro intact to prevent ramifications to world markets.
 

See all the latest news from Greece and the world at Greekreporter.com. Contact our newsroom to report an update or send your story, photos and videos. Follow GR on Google News and subscribe here to our daily email!



Related Posts