Tuesday, November 13, 2012

Recognizing the de facto bankruptcy of Greece

The troika (EU, ECB, IMF) was scheduled to decide on Monday (yesterday) on releasing the next tranche of aid committed to Greece. The Greek government last week got through a drastic new austerity budget on a narrow parliamentary vote to meet the troika's demands.

But the troika punted, postponing the decision until next week. (The formal decision-making body here was a meeting of foreign ministers from the eurozone countries; see Eurogroup approves extension, no decision on loan tranche Athens News 11/13/2012)Yanis Varoufakis writes in Dial Greece for Swindle: How disunity within the troika is straining their denial of Greece’s bankruptcy 11/13/2012:

You may have heard that Greece is facing official bankruptcy as a result of Europe’s failure to deliver the funds that would allow the Greek government to carry on pretending that it is not insolvent – by redeeming a bond which is about to mature while in the possession of the European Central Bank. The truth of the matter is that Greece has been insolvent for 3 years now. Since then, the Eurozone has been lending huge amounts to the Greek government to keep up the pretense that a (second) default is preventable. Europe shifts money from one of its pockets to another and, while doing so, it claims to have averted Greece’s bankruptcy. Alas, they are now in danger of running out of pockets as the three parties making up the troika of Greece’s lenders (the IMF, the EU and the ECB) have fallen out with one another over what to do with Greece ...
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