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Greece’s debt ‘unsustainable’ says IMF, warns of coming crisis, calls for debt relief

Confidential IMF report warns current bailout ‘unsustainable’, with Greece public debt spiralling out of control, and no amount of reform capable of fixing the situation.

Alexander Mercouris

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The Financial Times is reporting that a confidential IMF report is saying that Greece’s public debt is ‘unsustainable’ and is set to spiral to three times the size of Greece’s annual economic output, and that Greece’s economy cannot be expected to grow out of its debt problem.

Anyone genuinely familiar with the situation in Greece, and who is able to look objectively at the situation there, can see that this is so.  I recently wrote for The Duran my impressions of the state of the country after a short visit there in November.  I made the point that despite claims that the economy was growing, all the indications on the contrary were that the situation is actually deteriorating.

Here is how the Financial Times summarises the IMF report

Greece faces what is likely to be an “explosive” surge in its public debt levels that within decades will mean it will owe almost three times the country’s annual economic output unless given significant debt relief, the International Monetary Fund has warned in a confidential report.  The new report was prepared by IMF staff ahead of a February 6 board meeting to discuss the fund’s participation in an EU-led €86bn bailout of Greece and signals the continuing hard line the IMF is taking on debt relief for Athens. It offers a bleaker view of Greece’s economic dilemmas than an analysis prepared last year, warning that the debt load is “highly unsustainable” and would not improve even if it implemented further reforms recommended by the fund.

The origins of the Greek debt crisis unquestionably lie in the gross economic mismanagement of successive Greek governments stretching back to the Papandreou era of the 1980s, but growing to baroque proportions during the Karamanlis era from 2004 to 2009.  It is also obviously true that Greece was wrong to join the eurozone when it did, and that it was – to put it mildly – ‘economical with the truth’ in describing its economic situation to the European authorities in Brussels and Frankfurt.
Repeatedly saying this has however become something of an alibi for the European authorities, and for Angela Merkel’s government in particular, in explaining away their own responsibility for the economic catastrophe that has been wreaked on the country.
Not only did they prefer to believe in the rosy economic picture Greek governments were giving them – disregarding the warnings which I know for a fact they were repeatedly given in private both by their own officials and by some Greek officials, and also by numerous private individuals – but once the debt crisis in Greece rose to the surface in the aftermath of the world financial crisis of 2008, they refused to acknowledge the obvious reality that Greece was bankrupt, and acted instead as if Greece was facing nothing more than a short term crisis of liquidity, which could be fixed by further lending.
The result was that instead of Greece being left alone to restructure its debt in IMF brokered negotiations with its creditors – as it both could and should have done – it instead took on even more debt, with its existing debt however transformed from debt it owed private banks into debt it owed other European governments.
Since the debt is now owed to governments who are accountable for their lending to Greece to their electorates, it is politically speaking almost impossible for Greece to be forgiven it, a fact that became only too obvious during the negotiations staged by Tsipras’s hapless government over the course of 2015.
The Financial Times is making the point that as the IMF is now close to recognising that Greece’s debt is unsustainable it is reaching the point where its own rules prohibit it from participating in the current bailout
That assessment would, under the fund’s own rules, prohibit the IMF from taking part financially in the current bailout, something countries such as Germany have made a condition of their own support.  “Even with these ambitious polices in place, Greece cannot grow out of its debt problem,” IMF staff warned in the report, seen by the Financial Times and drafted as part of the fund’s annual review of member economies. “Greece requires substantial debt relief from its European partners to restore debt sustainability.”
The problem is that “agreeing the substantial debt relief from European partners to restore debt sustainability” is politically almost impossible in the light of the German, France and Dutch elections which are due this year.
Angela Merkel – the European politician most responsible for the present disastrous policy – would surely balk at presenting the German electorate with such an admission of her own failure, whilst in France Marine Le Pen – who has contested the sense of the Greek bailouts all along – would rightly say her stance has been vindicated, whilst in The Netherlands – where the anti-European movement led by Geert Wilders is currently leading in the polls – such a move would be if possible politically even more toxic.
Logically, if European governments cannot agree the debt relief the IMF says is needed, then the IMF should pull out of the current bailout, leaving Greece in default, at which point the bailout would finally unravel.
That would actually be an advance over the present ‘unsustainable’ position we have now.
Greece would presumably have to leave the euro, but that is anyway essential if Greece’s economy is to regain competitiveness.  Whilst the short term disruption – and the suffering it would cause – would no doubt be immense, ways exist to deal with it and over time Greece would finally have the space it needs for its economy to recover.
Unfortunately the consistent story of the Greek debt crisis is that instead of the necessary decisions being taken botched compromises are instead at the last moment cobbled together to safeguard the integrity of the euro project and the reputations of European policy makers – of Angela Merkel’s above all – who are in the end responsible for the disaster.  The result is that the crisis continues and just goes on getting worse.
The latest IMF memorandum looks like a bid to try to force the hands of European politicians before whatever window there is for debt relief closes because of the pending German and Dutch elections.
Unfortunately on past experience it is unlikely to work.  European politicians – too frightened of their electorates to do otherwise – will almost certainly resist giving Greece the amount of debt relief the IMF’s experts consider sufficient to make a real difference, whilst the IMF’s Board has consistently shown itself unwilling to call the Europeans’ bluff by pulling out of the bailout, even though that is what its own rules requires.
The most likely result therefore is that the present ‘unsustainable’ situation will continue – with the crisis again sugarcoated for a few more by some unsatisfactory compromise – until the final breakdown eventually occurs, by which time I seriously wonder how much of Greece will be left.

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New York Times hit piece on Trump and NATO exposes alliance as outdated and obsolete (Video)

The Duran Quick Take: Episode 61.

Alex Christoforou

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RT CrossTalk host Peter Lavelle and The Duran’s Alex Christoforou take a quick look at the New York Times hit piece citing anonymous sources, with information that the U.S. President dared to question NATO’s viability.

Propaganda rag, the NYT, launched its latest presidential smear aimed at discrediting Trump and provoking the establishment, warmonger left into more impeachment – Twenty-fifth Amendment talking points.

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Via The American Conservative


The New York Times scored a serious scoop when it revealed on Monday that President Trump had questioned in governmental conversations—on more than one occasion, apparently—America’s membership in NATO. Unfortunately the paper then slipped into its typical mode of nostrum journalism. My Webster’s New World Dictionary defines “nostrum” as “quack medicine” entailing “exaggerated claims.” Here we had quack journalism executed in behalf of quack diplomacy.

The central exaggerated claim is contained in the first sentence, in which it is averred that NATO had “deterred Soviet and Russian aggression for 70 years.” This is wrong, as can be seen through just a spare amount of history.

True, NATO saved Europe from the menace of Russian Bolshevism. But it did so not over 70 years but over 40 years—from 1949 to 1989. That’s when the Soviet Union had 1.3 million Soviet and client-state troops poised on Western Europe’s doorstep, positioned for an invasion of Europe through the lowlands of Germany’s Fulda Gap.

How was this possible? It was possible because Joseph Stalin had pushed his armies farther and farther into the West as the German Wehrmacht collapsed at the end of World War II. In doing so, and in the process capturing nearly all of Eastern Europe, he ensured that the Soviets had no Western enemies within a thousand miles of Leningrad or within 1,200 miles of Moscow. This vast territory represented not only security for the Russian motherland (which enjoys no natural geographical barriers to deter invasion from the West) but also a potent staging area for an invasion of Western Europe.

The first deterrent against such an invasion, which Stalin would have promulgated had he thought he could get away with it, was America’s nuclear monopoly. By the time that was lost, NATO had emerged as a powerful and very necessary deterrent. The Soviets, concluding that the cost of an invasion was too high, defaulted to a strategy of undermining Western interests anywhere around the world where that was possible. The result was global tensions stirred up at various global trouble spots, most notably Korea and Vietnam.

But Europe was saved, and NATO was the key. It deserves our respect and even reverence for its profound success as a military alliance during a time of serious threat to the West.

But then the threat went away. Gone were the 1.3 million Soviet and client-state troops. Gone was Soviet domination of Eastern Europe. Indeed, gone, by 1991, was the Soviet Union itself, an artificial regime of brutal ideology superimposed upon the cultural entity of Mother Russia. It was a time for celebration.

But it was also a time to contemplate the precise nature of the change that had washed over the world and to ponder what that might mean for old institutions—including NATO, a defensive military alliance created to deter aggression from a menacing enemy to the east. Here’s where Western thinking went awry. Rather than accepting as a great benefit the favorable developments enhancing Western security—the Soviet military retreat, the territorial reversal, the Soviet demise—the West turned NATO into a territorial aggressor of its own, absorbing nations that had been part of the Soviet sphere of control and pushing right up to the Russian border. Now Leningrad (renamed St. Petersburg after the obliteration of the menace of Soviet communism) resides within a hundred miles of NATO military forces, while Moscow is merely 200 miles from Western troops.

Since the end of the Cold War, NATO has absorbed 13 nations, some on the Russian border, others bordering lands that had been part of Russia’s sphere of interest for centuries. This constitutes a policy of encirclement, which no nation can accept without protest or pushback. And if NATO were to absorb those lands of traditional Russian influence—particularly Ukraine and Georgia—that would constitute a major threat to Russian security, as Russian President Vladimir Putin has sought to emphasize to Western leaders for years.

So, no, NATO has not deterred Russian aggression for 70 years. It did so for 40 and has maintained a destabilizing posture toward Russia ever since. The problem here is the West’s inability to perceive how changed geopolitical circumstances might require a changed geopolitical strategy. The encirclement strategy has had plenty of critics—George Kennan before he died; academics John Mearsheimer, Stephen Walt, and Robert David English; former diplomat Jack Matlock; the editors of The Nation. But their voices have tended to get drowned out by the nostrum diplomacy and the nostrum journalism that supports it at every turn.

You can’t drown out Donald Trump because he’s president of the United States. And so he has to be traduced, ridiculed, dismissed, and marginalized. That’s what the Times story, by Julian Barnes and Helene Cooper, sought to do. Consider the lead, designed to emphasize just how outlandish Trump’s musings are before the reader even has a chance to absorb what he may have been thinking: “There are few things that President Vladimir V. Putin of Russia desires more than the weakening of NATO, the military alliance among the United States, Europe and Canada that has deterred Soviet and Russian aggression for 70 years.” Translation: “Take that, Mr. President! You’re an idiot.”

Henry Kissinger had something interesting to say about Trump in a recent interview with the Financial Times. “I think Trump may be one of those figures in history,” said the former secretary of state, “who appears from time to time to mark the end of an era and to force it to give up its old pretenses.” One Western pretense about Russia, so ardently enforced by the likes of Julian Barnes and Helene Cooper (who, it may be safe to say, know less about world affairs and their history than Henry Kissinger), is that nothing really changed with the Soviet collapse and NATO had to turn aggressive in order to keep that menacing nation in its place.

Trump clearly doesn’t buy that pretense. He said during the campaign that NATO was obsolete. Then he backtracked, saying he only wanted other NATO members to pay their fair share of the cost of deterrence. He even confessed, after Hillary Clinton identified NATO as “the strongest military alliance in the history of the world,” that he only said NATO was obsolete because he didn’t know much about it. But he was learning—enough, it appears, to support as president Montenegro’s entry into NATO in 2017. Is Montenegro, with 5,332 square miles and some 620,000 citizens, really a crucial element in Europe’s desperate project to protect itself against Putin’s Russia?

We all know that Trump is a crude figure—not just in his disgusting discourse but in his fumbling efforts to execute political decisions. As a politician, he often seems like a doctor attempting to perform open-heart surgery while wearing mittens. His idle musings about leaving NATO are a case in point—an example of a politician who lacks the skill and finesse to nudge the country in necessary new directions.

But Kissinger has a point about the man. America and the world have changed, while the old ways of thinking have not kept pace. The pretenses of the old have blinded the status quo defenders into thinking nothing has changed. Trump, almost alone among contemporary American politicians, is asking questions to which the world needs new answers. NATO, in its current configuration and outlook, is a danger to peace, not a guarantor of it.


Robert W. Merry, longtime Washington journalist and publishing executive, is the author most recently of President McKinley: Architect of the American Century

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Nigel Farage To Back Another “Vote Leave” Campaign If UK Holds Second Brexit Referendum

Nigel Farage said Friday that he would be willing to wage another “Vote Leave” campaign, even if he needed to use another party as the “vehicle” for his opposition.

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Via Zerohedge


Pro-European MPs from various political parties are pushing back against claims made by Prime Minister Theresa May’s government that a second Brexit referendum – which supporters have branded as a “People’s Vote” on May’s deal – would take roughly 14 months to organize, according to RT.

But while support for a second vote grows, one of the most notorious proponents of the original “Vote Leave” campaign is hinting at a possible return to politics to try and fight the effort.

After abandoning UKIP, the party he helped create, late last year, Nigel Farage said Friday that he would be willing to wage another “Vote Leave” campaign, even if he needed to use another party as the “vehicle” for his opposition. Farage also pointed out that a delay of Brexit Day would likely put it after the European Parliament elections in May.

“I think, I fear that the House of Commons is going to effectively overturn that Brexit. To me, the most likely outcome of all of this is an extension of Article 50. There could be another referendum,” he told Sky News.

According to official government guidance shown to lawmakers on Wednesday, which was subsequently leaked to the Telegraph, as May tries to head off a push by ministers who see a second referendum as the best viable alternative to May’s deal – a position that’s becoming increasingly popular with Labour Party MPs.

“In order to inform the discussions, a very short paper set out in factual detail the number of months that would be required, this was illustrative only and our position of course is that there will be no second referendum,,” May said. The statement comes as May has been meeting with ministers and leaders from all parties to try to find a consensus deal that could potentially pass in the House of Commons.

The 14 month estimate is how long May and her government expect it would take to pass the primary legislation calling for the referendum (seven months), conduct the question testing with the election committee (12 weeks), pass secondary legislation (six weeks) and conduct the campaigns (16 weeks).

May has repeatedly insisted that a second referendum wouldn’t be feasible because it would require a lengthy delay of Brexit Day, and because it would set a dangerous precedent that wouldn’t offer any more clarity (if some MPs are unhappy with the outcome, couldn’t they just push for a third referendum?). A spokesperson for No. 10 Downing Street said the guidance was produced purely for the purpose of “illustrative discussion” and that the government continued to oppose another vote.

Meanwhile, a vote on May’s “Plan B”, expected to include a few minor alterations from the deal’s previous iteration, has been called for Jan. 29, prompting some MPs to accuse May of trying to run out the clock. May is expected to present the new deal on Monday.

Former Tory Attorney General and pro-remainer MP Dominic Grieve blasted May’s timetable as wrong and said that the government “must be aware of it themselves,” while former Justice Minister Dr Phillip Lee, who resigned his cabinet seat in June over May’s Brexit policy, denounced her warning as “nonsense.”

As May pieces together her revised deal, more MPs are urging her to drop her infamous “red lines” (Labour in particular would like to see the UK remain part of the Customs Union), but with no clear alternative to May’s plan emerging, a delay of Brexit Day is looking like a virtual certainty.

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The National Security Agency Is A Criminal Organization

The National Security Agency values being able to blackmail citizens and members of government at home and abroad more than preventing terrorist attacks.

Paul Craig Roberts

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Via Paul Craig Roberts…


Years before Edward Snowden provided documented proof that the National Security Agency was really a national insecurity agency as it was violating law and the US Constitution and spying indiscriminately on American citizens, William Binney, who designed and developed the NSA spy program revealed the illegal and unconstitutional spying. Binney turned whistleblower, because NSA was using the program to spy on Americans. As Binney was well known to the US Congress, he did not think he needed any NSA document to make his case. But what he found out was “Congress would never hear me because then they’d lose plausible deniability. That was really their key. They needed to have plausible deniability so they can continue this massive spying program because it gave them power over everybody in the world. Even the members of Congress had power against others [in Congress]; they had power on judges on the Supreme Court, the federal judges, all of them. That’s why they’re so afraid. Everybody’s afraid because all this data that’s about them, the central agencies — the intelligence agencies — they have it. And that’s why Senator Schumer warned President Trump earlier, a few months ago, that he shouldn’t attack the intelligence community because they’ve got six ways to Sunday to come at you. That’s because it’s like J. Edgar Hoover on super steroids. . . . it’s leverage against every member of parliament and every government in the world.”

To prevent whistle-blowing, NSA has “a program now called ‘see something, say something’ about your fellow workers. That’s what the Stasi did. That’s why I call [NSA] the new New Stasi Agency. They’re picking up all the techniques from the Stasi and the KGB and the Gestapo and the SS. They just aren’t getting violent yet that we know of — internally in the US, outside is another story.”

As Binney had no documents to give to the media, blowing the whistle had no consequence for NSA. This is the reason that Snowden released the documents that proved NSA to be violating both law and the Constitution, but the corrupt US media focused blame on Snowden as a “traitor” and not on NSA for its violations.

Whistleblowers are protected by federal law. Regardless, the corrupt US government tried to prosecute Binney for speaking out, but as he had taken no classified document, a case could not be fabricated against him.

Binney blames the NSA’s law-breaking on Dick “Darth” Cheney. He says NSA’s violations of law and Constitution are so extreme that they would have to have been cleared at the top of the government.

Binney describes the spy network, explains that it was supposed to operate only against foreign enemies, and that using it for universal spying so overloads the system with data that the system fails to discover many terrorist activities. http://www.informationclearinghouse.info/50932.htm

Apparently, the National Security Agency values being able to blackmail citizens and members of government at home and abroad more than preventing terrorist attacks.

Unfortunately for Americans, there are many Americans who blindly trust the government and provide the means, the misuse of which is used to enslave us. A large percentage of the work in science and technology serves not to free people but to enslave them. By now there is no excuse for scientists and engineers not to know this. Yet they persist in their construction of the means to destroy liberty.

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