tag:blogger.com,1999:blog-660245739708697440.post2978604831692566221..comments2023-06-04T16:53:03.592+03:00Comments on Philip Atticus: German proposals for conditionality on a second Greek bail-outAnonymoushttp://www.blogger.com/profile/04706813821954088317noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-660245739708697440.post-11318003146710559142012-02-02T10:34:52.199+02:002012-02-02T10:34:52.199+02:00Under current Maastricht rules, Germany itself wou...Under current Maastricht rules, Germany itself would be under monitoring, since their debt to GDP is higher than 60%. The German proposal is totally unworkable, and was rightly abandoned. If you compare this approach with the private sector approach, you will very quickly understand why. There is no Holy Writ that says that all income has to be used for debt service. <br /><br />I've actually listed three better alternatives. And in case you didn't read the post, I repeat the alternatives here: <br /><br />a. The first and most logical method is to disburse the second bail-out package in tranches rather than in a single package. This implies that rather than a single bond exchange in 2012, the bail-out can be phased in according to the expiration dates of the current debt maturities. There is practically no difference in the annual interest rate: the pre-2010 average interest rate of all Greek government bonds was about 3.8%; the current rate currently being negotiated is between 3.5-4.0%.<br /><br />b. The second option is to place all future Greek income from European Union funding as a guarantee against a potential future Greek default. Given that Greece receives roughly EUR 2 billion in Common Agricultural Policy subsidies each year alone, it is clear that the potential withholding of these funds would provide a significant cash flow in the case of a future default. Moreover, their with-holding would create such asphyxiating political pressure among key political interest groups in Greece as to assure that any future government would think long and hard before contemplating a future default.<br /><br />c. The third option would be to indicate in no uncertain terms that any future Greek bail-out would be the sole purview of the private financial sector, and not the European taxpayer. This would automatically raise the quality of due diligence and risk analysis made by private financial institutions, and force the Greek state to budget accordingly. It would also set a practical limit on this bail-out exercise, after which there should be no further public support to Greece.Anonymoushttps://www.blogger.com/profile/04706813821954088317noreply@blogger.comtag:blogger.com,1999:blog-660245739708697440.post-23802410887994093072012-01-30T03:53:14.164+02:002012-01-30T03:53:14.164+02:00I don't see these proposals as being so unwork...I don't see these proposals as being so unworkable or so insulting the national identity of any EU member state. Perhaps it would be fairer to implement these changes across the board, on all the EU members simultaneously. That would include Germany, the Netherlands, the UK, Denmark, etc., whether inside or outside the Eurozone. It seems that Greece rankles at such slights very quickly, and treats them as patronizing and derogatory. What other alternative is there, if you are pro-Europe? Europe should stand or fall as a collective entity.Anonymousnoreply@blogger.com