Courtesy of Mish.
Germany and the IMF, which in recent past seemed ambivalent at best to keeping Greece in the eurozone, are suddenly acting as if Greece is a life-or-death matter.
First Merkel flew to Greece pledging solidarity, now the IMF chief Christine Lagarde seeks Two More Years For Greece.
IMF chief Christine Lagarde’s declaration this morning that Greece should be given two more years to hit tough budget targets embedded in its €174bn bailout programme – coming fast on the heels of German chancellor Angela Merkel’s highly symbolic trip to Athens – are the clearest public signs yet of what EU officials have been acknowledging privately for weeks: Greece is going to get the extra time it wants.
But what is equally clear after this week’s pre-Tokyo meeting of EU finance ministers in Luxembourg is there is no agreement on how to pay for those two additional years, and eurozone leaders are beginning to worry that the politics of the Greek bailout are once again about to get very ugly.
The mantra from eurozone ministers has been that Greece will get more time but not more money.
Time is Still Money
Quite frankly it is impossible to give Greece more time but not more money. The time value of interest payments is proof enough.
Ever late to the party, the IMF recently changed its 2013 Greek GDP projection from flat to negative 4%.
In my estimation, more downward revisions are coming, including Germany and France.
Battle of Bailouts
With every down-tick in GDP assume lower tax revenues. Will Greece ever get to a sustainable debt to GDP numbers?
Once again the answer is no, and this was perfectly obvious years ago.
Yet the IMF and ECB have stated they will not take write-downs. Peter Tchir discussed this in detail in his T-Report on Greece….
