There’s an old story of a man who asks a merchant banker for a loan of £1 million. The banker says ‘No, but I’ll do something even better for you. We’ll walk down the street together with my hand on your shoulder, chatting happily so everyone can see.’
I’m rather beginning to think that this is the story of the Greek bail out, with Mrs Merkel in the place of the banker.
It looks as if there never were any bailout monies, just some soothing talk. Otherwise why aren’t they available yet? They’ve had plenty of time.
But this would in turn mean a couple of interesting things. Mr. Papandreou, the Prime Minister, would have been told that there was no actual money to help him, just the hand on the shoulder, and therefore his publicly asking to draw down the first tranche, which came as a surprise to everyone, means he was calling their bluff. Bold.
But it also means that things are worse than we were led to believe. Angela Merkel certainly wouldn’t have wanted even to be seen talking about it until after the elections in North Rhine-Westphalia on 9th May. Papandreou obviously couldn’t wait that long (it is less than a fortnight away).
There is also some interesting talk in the financial press to the effect that the amount required is €80 billion, not the €45 billion promised by the IMF and the Eurozone; that any aid from Europe would only be for one year (which means the crisis is merely staved off for a bit); and that the Germans might offer something (now their bluff has been called) but it would only be if it ranked above all other creditors (ie was repaid first), which means all the holders of ordinary Greek Government debt would have to agree to subordinate their claims.
Which they will only do with a gun pointing at their head.
Very messy indeed
I’m rather beginning to think that this is the story of the Greek bail out, with Mrs Merkel in the place of the banker.
It looks as if there never were any bailout monies, just some soothing talk. Otherwise why aren’t they available yet? They’ve had plenty of time.
But this would in turn mean a couple of interesting things. Mr. Papandreou, the Prime Minister, would have been told that there was no actual money to help him, just the hand on the shoulder, and therefore his publicly asking to draw down the first tranche, which came as a surprise to everyone, means he was calling their bluff. Bold.
But it also means that things are worse than we were led to believe. Angela Merkel certainly wouldn’t have wanted even to be seen talking about it until after the elections in North Rhine-Westphalia on 9th May. Papandreou obviously couldn’t wait that long (it is less than a fortnight away).
There is also some interesting talk in the financial press to the effect that the amount required is €80 billion, not the €45 billion promised by the IMF and the Eurozone; that any aid from Europe would only be for one year (which means the crisis is merely staved off for a bit); and that the Germans might offer something (now their bluff has been called) but it would only be if it ranked above all other creditors (ie was repaid first), which means all the holders of ordinary Greek Government debt would have to agree to subordinate their claims.
Which they will only do with a gun pointing at their head.
Very messy indeed
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