IMF: Let Greece Completely Off The Debt Hook

by JASmius



In a sane world, the International Monetary Fund would be saying something like, "Too bad, Athens, you spent and communized yourselves into this hole, you'll have to austere and capitalize your way out of it.  Then maybe you'll learn your lesson."  But then, in a sane world the Greeks wouldn't have committed economic and fiscal suicide in the first place:

Greece will need far bigger debt relief than euro zone partners have been prepared to envisage so far due to the devastation of its economy and banks in the last two weeks, a confidential study by the International Monetary Fund seen by Reuters shows....

Devastation that was self-inflicted, and which will be again if the Greeks don't have to pay some sort of price for their fiscal folly.

"The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date - and what has been proposed by the ESM," the IMF said, referring to the European Stability Mechanism bailout fund....

And that would probably economically destabilize Greece's E.U. creditors in the process, leading to Brussels coming, tin cup in hand, to Uncle Barry for an even bigger bailout.  And remember, some Democrats have already called for a U.S. bailout of Greece, so it wouldn't exactly be far-fetched.

A senior IMF official said late on Tuesday that the debt relief would give Greece a chance to recover and would be needed if the fund was to stay involved with any new Greek program.

Greece can recover by eschewing leftwing extremism and embracing capitalism - which is the only way they'll ever be able to actually pay off their massive debt.  Remember the dramatic economic renaissance that swept across former Warsaw Pact countries in eastern Europe in the early '90s after the fall of the Berlin Wall and collapse of the old Soviet Union?  Obviously neither the Greeks nor the E.U. do, to say nothing of the IMF.

"I don't think this is a gimmick or kicking the can down the road," said the official, who spoke on condition of anonymity. "This is a dramatic measure to take the entire European stock (of debt) and reprofile it," so the country has a chance of "getting some growth back."

They've been kicking that can down the road for years by keeping Greece on the dole.  The only way Greece can recover is by cutting them off from it.

Seriously, think about the perverse incentives this would create and magnify.  Small European country follows the statist example of its larger European neighbors with far fewer resources, quickly spends itself into bankruptcy, blackmails its larger European neighbors into coughing up to keep them in the Euro Zone and out of the Russian orbit at the cost of being coerced toward fiscal responsibility, against which they childishly rebel, and NOW the IMF wants to forgive them ALL their debt repayment obligations?  Essentially REWARD all their fiscal and economic mistakes?

Yep:

European countries would have to give Greece a thirty-year grace period on servicing all its European debt, including new loans, and a very dramatic maturity extension, or else make explicit annual fiscal transfers to the Greek budget or accept "deep upfront haircuts" on their loans to Athens, the report said. [emphases added]

Athens wouldn't have to pay a thin dime, one red cent, until almost mid-century.  Or, in other words, their entire twelve-figure debt would be instantly forgiven, because in the "Polaroid culture" of the early twenty-first century, by 2045 nobody would remember that Greece ever had to repay its debts.

It's complete, utter, and total madness.

And remember, if this "deal" was given to the Greeks, it would have to be given to every other country on Earth that spent themselves down the same greed-and-envy-drenched road.

And guess who would have to bail out all of them:



I think it's time the International Monetary Fund found a new location abroad, don't you?