Wall Street Journal
May 9, 2011
Is Greece making a drachma out of a crisis?
Some puns are just too hard to resist. Those who don’t like them can blame the one in the headline on a commentator on the Macro Man blog.
But the point is relevant. Last week’s rumors about Greece and the European Union making plans for the country’s withdrawal from the single currency were given credibility by the very fact that alternative measures to revive the Greek economy lack it.
Greece has no way of paying back its load of public debt under current bailout plans. These plans are having to be reconsidered. But the measures likely to be (marginally) palatable to Greece’s northern European creditors won’t do much for Greece. Extending the maturities and reducing the interest rates of Greece’s existing debt will only work if the maturities are pushed so far into the future and the interest rates taken down to such a low level that it halves—or more—the present value of Greek obligations.
More
No comments:
Post a Comment