[bagosm]

What isn't addressed in this letter and most people don't realize is that the Greek debt as an absolute number isn't that big.

The real problem is that Greece needs more money to continue operation than it produces, and this fact hasn't changed nor will in the near future. Effectively this makes Greece a black hole for incoming money where incoming money have no actual benefit for anyone other than just keep a near-corpse alive for a little more.

If there was a surplus generated every year, the debt amount wouldn't matter as it would be paid off eventually.

The whole point is to get to the state where the economy is healthy as a yearly in/out amount. If that's done there is no reason to get any bigger loans...

Edit: Forgot to add: it's in the greater interest of the eurozone to keep Greece from bankruptcy though, and it's twofold: one is the interconnection of markets, ie Greece IS a buyer, and the second is the geography as Greece is a central node for shipments from the east, has natural gas reserves etc..

[tobias3]

Actually greece has a primary budget surplus, so at this point they are paying back the "loans", the problem is that they are miserable while doing so.

If people are unemployed you are squandering resources.

[dandare]

While being miserable they are better of than let's say Slovaks who paid 660 mil Euro to bail out Greece. Think about it, they are not really living in poverty, they just lost the luxury standard they were used to.

[StavrosK]

If by "luxury standard" you mean "being able to afford rent and have youth unemployment be less than 50%", then I agree.

[gaius]

Oh come on, have you been to Athens? Everyone drives a Porsche and wears a Rolex, but all the buildings are unfinished, because if they were they'd be taxed. Greece is a poor country weirdly full of rich people.

[stavros]

Everyone? Really? Because half of my friends are unemployed, and every single one has a university degree. And who starts building and then doesn't finish it because they don't want it to be taxed?

[jongraehl]

That's how it is in Mexico, too. They leave some unfinished faux-second-story attached to their building and never pay full property tax on the value of property-with-one-completed-story. Re: "who starts ..." why don't you search before you post?

[guelo]

Greece's GDP per capita has dropped below Slovenia's.

[repsilat]

Slovaks are from Slovakia. (Greece also has a lower GDP/PPP per capita than Slovakia, though Greece's GDP is much higher in nominal terms.)

[bagosm]

That's actually not true, you are referring to a very bad "cooking" that Samaras presented to Merkel at the fall of '14 which was proved to be too stupid to talk about ever again...

[JamesBarney]

Actually that is true. He was referring to Greece having a budget surplus, not a plan. They missed their target surplus but still had a budget surplus for 2014 of near 2 billion euros.

http://www.wsj.com/articles/greece-misses-target-on-budget-s...

[bobcostas55]

The current finance minister says they cooked the books: yanisvaroufakis.eu/2014/04/24/greek-statistics-are-back-primary-deficit-presented-as-surplus-with-eurostats-seal-of-approval/

[JamesBarney]

Your link is about a 2013 budget surplus and not 2014. The reason eurostat did those adjustment was too eliminate one off expenditures that would not continue. And they didn't continue in 2014.

[at-fates-hands]

As I understand it, they converted their currency to the Euro, which means unlike the US who can simply print more money to get out of a bad economic situation, the Greeks can't.

[dandare]

The real problem is that Greece - especially under it's new leadership - will very soon generate new astronomical debt if the current one is forgiven (paid by someone else). Lenders would be silly not to lend if they know the debtor will be certainly bailed out and actually Tsipras would be silly too not to finance his communist utopia from debt if he too knows Greece will be bailed out no matter what.

[cwyers]

It doesn't seem like Tsipras is trying to get debt forgiveness paid for by the Germans, though. He wants to use the threat of default to force Greek's creditors to give them a haircut -- reduce principal or interest or both. That will reduce the amount of Greek debt repayment but it wouldn't increase the ability of Greece to incur more debtedness.

[dandare]

Are you sure? I thought the private creditors were already "haircutted", most of the Greek debts is to EU states and IMF.

[antman]

Here is how the trick worked: Private creditors were haircutted and the CDS (credit default swaps) were activated for the largerst organizations that could afford having them in the first place.

Smaller creditors were stiffed. Foreign Goverment entities were exempt and foreign institutions (pension funds etc) could buy at 30-40% percent the defaulted bonds. Said foreign Governments had ofcourse the inside information that they would give the Greeks the money to repay in full price their debt. That was hidden from the other investors during the start of the program.

[cwyers]

I will preface this by saying that I am totally not sure, but my impression was that the EU and IMF loans were to enable Greece to repay creditors in full or close to.

[bibabo]

Greece got a debt cut around 140B already.

[imarg]

Well sort of. Because after the haircut Greece owed more money than before.

[dpark]

Forgiven debt is not "paid by someone else". It's a write-off by the creditor. Creditors would likely not write off a bunch of debt and then lend Greece more money.

Now, if the bailout actually paid off the creditors and Greece now only owes money to, e.g., Germany (the IMF, etc), then sure, the original creditors might extend new loans to Greece if Germany forgives the Greek debt. But then, that could happen anyway, because the bailout already happened.

[tomp]

Well, the creditors are mainly other EU countries, so it would arguable be "paid by someone else" - the countries' taxpayers.

[lllllll]

Related relevant image: https://pbs.twimg.com/media/B8Qf65ACYAAH3BR.jpg

[tormeh]

It's enough that old loans are repaid faster than new ones are taken up. Given that the surplus would otherwise have to be enormous, this is standard procedure for most indebted countries.

The Greek state is such a mess that bankruptcy would be a good thing, in some ways. Greece needs to keep their budget balanced, and it's unclear whether the government is able to implement the necessary changes even if they wanted to and shame or embarrassment has shown itself a poor motivator for the shadow state. In fact, in my opinion default should have happened sooner, while there was still some private debt to default on. Now it's a bit too late, as 80% of Greek debt is held by governments/IMF/ECB.