#LetGreeceBreathe – Six Points about the Greek Debt

wind iconThe UK based Jubilee Debt Campaign has prepared an excellent/succinct background paper revealing the truth behind the debt – the problems were foretold, the lenders were in full knowledge and the need to find a reasoanble way out for Greece and so it doesnt happen to other countries.

see full paper http://jubileedebt.org.uk/wp-content/uploads/2015/01/Six-key-points-about-Greek-debt_01.15.pdf

Key points from the paper

1) European banks were bailed out, not the people of Greece

2) It was clear in 2010 that the Troika programme wouldn’t solve the problem of Greek debt

Leaked minutes of the IMF Board meeting in 2010 which decided on the bailout showed that many countries were opposed and thought debts should be cancelled instead. Most strikingly, drawing on their own experience of failed bailouts in the late 1990s and early 2000s, Argentina argued that a “debt restructuring should have been on the table”. Brazil said the IMF loans:
“may be seen not as a rescue of Greece, which will have to undergo a wrenching adjustment, but as a bailout of Greece’s private debt holders, mainly European financial institutions”.
Iran said it would have expected a debt restructure to be discussed, as did Egypt, which said the IMF’s growth projections were “optimistic”, a word repeated by China. The growth projections were extremely optimistic; Greece’s economy is now 19% smaller than the IMF said it would be, having shrunk by more than 20% since the start of 2010.
India warned that the scale of cuts would start a spiral of falling unemployment which would reduce government revenue, causing the debt to increase, and making a future debt restructuring inevitable. They did; unemployment in Greece is over 25%, with almost two-in-three young people out of work.
The combination of the crashing of the economy and the Troika debts means Greek government debt has grown from 133% of GDP in 2010 to 174% today.

3) Syriza’s proposals have a clear precedent

4) The 2012 private creditor write-down was a flawed solution 

When the IMF, European and ECB bailouts began in 2010, €310 billion had been lent to the Greek government by reckless banks and the wider European financial sector.Since then, the ‘Troika’ of the IMF, EU and European Central Bank have lent €252 billion to the Greek government.ii Of this, €34.5 billion of the bailout money was used to pay for various ‘sweeteners’ to get the private sector to accept the 2012 debt restructuring. €48.2 billion was used to bailout Greek banks following the restructuring, which did not discriminate between Greek and foreign private lenders.iii€149.2 billion has been spent on paying the original debts and interest from reckless lenders. This means less than 10% of the money has reached the people of Greece.

5) If Greece defaults, it will not have to leave the Euro 

6) The way the world deals with debt crises is not working
The Greece and European debt crisis is the latest in a long-line of debt crises which have affected all continents since bank lending was liberalised in the 1970s. The African and Latin American debt crises of the 1980s and 1990s were followed by the East Asian Financial Crisis of 1996-1998, Russian default in 1998 and Argentina default in 2001.

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