Eurozone members have delayed approval of more than half of the €130bn bail-out for Greece after deeming that Athens has yet to meet all the terms set as the price of a second rescue.There is not much new information here actually. Greece was supposed to have met conditions at the end of October, then November, then January, then February.
However, finance ministers from the 17-country currency bloc meeting in Brussels signed off on funds to underpin a €206bn debt swap to cut the value of the Greek bonds held by private investors.
Jean-Claude Juncker, the Luxembourg prime minister who chairs the eurogroup, said Greece’s official creditors would “finalise in the next few days” an assessment of Greece’s steps to enshrine the bail-out conditions into law.
But he added that the full bail-out would only be completed on a successful completion of the debt swap with private bondholders.
The ministers decided that Athens had yet to meet all the conditions to secure the €71.5bn portion of the bail-out destined for the Greek government. The balance of the rescue funds – which, when combined with other incentives and instruments to be used in the debt swap comes to some €93bn – was agreed.
Every time Greece failed and it did not matter. The EMU granted extension after extension.
However, with the debt swap and protection of the ECB, and with a bond payment due on March 20, time has run out for extensions. The sane thing to do would be for the EMU, IMF, and ECB to accept the very simple fact that Greece is bankrupt and there is no point in giving Greece another nickel, thereby forcing Greece out of the Eurozone.
All parties should have recognized that years ago actually, but stubborn ideology got in the way.
Mike "Mish" Shedlock
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