Latest EU Proposal: Let's Pretend for Another 50 Years! Why Now?

What cannot be paid back won't, but that never stops officials from pretending it will. Please consider EU Said to Weigh Extending Greek Loans to 50 Years.

The next handout to Greece may include extending the maturity on rescue loans to 50 years and cutting the interest rate on some previous aid by 50 basis points, according to two officials with knowledge of discussions being held by European authorities.

The plan, which will be considered by policy makers by May or June, may also include a loan for a package worth between 13 billion euros ($17.6 billion) and 15 billion euros, another official said. Greece, which got 240 billion euros in two bailouts, has previously had its terms eased by the euro zone and International Monetary Fund amid a six-year recession.

New money would help Greece fill a financing gap that has vexed European Union and IMF authorities working to make sure the rescue programs stay on schedule. European Union President Herman Van Rompuy said last month that Greece must continue to tighten its belt even as “the people of Greece are still suffering from the consequences of the painful but nevertheless needed reforms that are taking place.”

Under the eased terms, all the bailout-loan repayments would be extended from about 30 years and rates would be cut by 50 basis points on funds from the 80 billion-euro Greek Loan Facility, which was created for Greece’s first bailout in 2010, said the officials, who requested anonymity because talks are still in preliminary stages.  

Why Now?

Inquiring minds might be wondering why these concessions come now. Here is the answer: Greek leftist seeks negotiated debt write-off.

Greece would seek to negotiate an international write-off of about one-third of its debt if the leftist Syriza opposition party won a general election, its leader said on Tuesday.

Alexis Tsipras, who is leading a Communist-backed pan-European leftist list in European Parliament elections in May, said his country's problems could not be solved by more loans, which just went to service past debts and shore up the banks.

"The solution isn't more loans. The solution is fewer loans and less debt," Tsipras, whose party leads Prime Minister Antonis Samaras' conservative New Democracy in opinion polls, told the Europresse association on a visit to Paris.

Greece, which has already been bailed out twice with 240 billion euros ($324.44 billion) in euro zone and IMF funds, is due to hold its next general election in 2016, but voting may be brought forward if Samaras' fragile right-left coalition were to lose its narrow parliamentary majority.

The Debt-Slave Masters in Brussels are very fearful of a collapse in Antonis Samaras' conservative New Democracy which would lead to new Greek elections which undoubtedly Syriza would win. The New Democracy coalition hangs by a thread with a 2-seat majority in Greek parliament.

Hoping to stave off a parliamentary collapse, the EU is prepared to let Greece pay back 30-year commitments in 50 years. That in and of itself is nothing more than a form of default. It is also willing to commit another 15 billion euros to the debacle.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com