The WSJ reports that Angela Merkel is not happy, but she may agree as she needs the IMF to continue as a funding partner. Some are even saying that the debt relief could extend to the year 2080.
Are you fucking kidding me? All this will do is embolden the leftists and unions that drove Greece into the shitter in the first place. Nothing will change.
The IMF wants the loans to Greece to fall due gradually in the following decades, and as late as 2080, according to the IMF’s proposal—a demand that goes far beyond what Greece’s European creditors, particularly Germany, have said they are willing to do to help Greece regain its financial health.
Greece’s interest rate on eurozone loans would be fixed for 30 to 40 years at its current average level of 1.5%, with all interest payments postponed until loans start falling due, under the IMF proposal.
The IMF’s proposal, presented to eurozone governments late last week—and described by one European official as “hardcore, really”—would keep Greece’s annual debt-service needs below 15% of its gross domestic product, under the IMF’s relatively pessimistic forecast for Greece’s long-term economic trajectory.
Eurozone governments, led by Germany, are reluctant to make such major concessions on their loans to Greece, which currently total just over €200 billion ($226 billion) with around another €60 billion to come under the latest Greek bailout plan. Merkel is now between a rock and a hard place.
I wrote about this last week here.
The German Chancellery is pushing hard for a deal with the IMF, say people familiar with the talks. But the IMF has said it cannot rejoin the bailout unless the eurozone deeply restructures its Greek loans. Greece’s debt burden is “highly unsustainable,” IMF head Christine Lagarde said recently.
Between this and the unchecked immigration of undocumented 23-year old Syrian, Afghan and Pakistani men flooding Germany via Greece, do not be surprised, Dear Reader, if the extreme right-wing takes control of the Bundestag for the first time since 1945.
A major Greek-loan restructuring would require a contentious debate and vote in the Bundestag, with the potential for a rebellion among conservative lawmakers and a boost to the rising right-wing populist party AfD.
German officials thus want to make only limited adjustments to Greece’s loan terms now, and postpone major changes that would need a Bundestag vote until 2018—after Germany’s national elections in 2017.
There are larger reasons even than Greek bailouts behind the need for the Christian Demicrats to postpone debate until 2018. The AfD made enormous gains in the regional elections in March, surging in two of three states and making substantial inroads in Merkel’s own state of Baden-Wurttemberg. The largest base of support, unsurprisingly, is in the eastern half of the country, the former Soviet-satellite East Germany, where unemployment is highest and anti-Islamization sentiment is strongest.Comments »