Tuesday, 4 December 2012


Posted by the Slog

The new Samaras deal is Greece’s life sentence in a high security prison
Last week in a blogpost here, I mentioned that it had taken me 2-3 days of almost solid concentration to work out what Stage 59 aka Samaras Deal of the Greek Tragedy was really about. In that same week, both the WSJ and Bloomberg admitted to similar struggles, and even Reuters resorted to other specialist sources rather than strike out with a view on its own.
The main thing I took out of the deal in the end is that it was a can kicked so far down the road, the hope was that it would hold good at least until the German elections next Autumn, if not beyond.
Now I sense it may have been far more cunning in its construction – beyond the time-buying element. I am indebted to Credit Suisse and Sober Look for pointing out to me that – and I quote –
‘Following the buyback, more than 80% of Greece’s debt will be held by the official sector and seems to be in the process of being – for all practical purposes – transformed into a “zero-coupon perpetual bond”. The average maturity on the EU/EFSF loans (which will soon represent 65% of Greek debt) is increased to 30 years, while there is a ten-year grace period. At the same time, the interest rate on the bilateral loans is below 1%, while interest payments on EFSF loans have been deferred by ten years.’
Sometimes even clever buggers like me miss the obvious: the payback has been made easy forever, but the imprisonment inside the capital sum also remains forever.
Only the European Union could devise a plan to give a partner State vassal status in perpetuity, cheat the European taxpayer, and piss off the creditors all at the same time.
Incompetent in policy but fiendish in recovery, I’m now beginning to see why the EU is still so acceptable to the British Establishment: they both operate in precisely the same way.

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