Greece has been dealt numerous blows during the six-year recession, including the world’s highest unemployment rate and recently anointed with the title of most corrupt country in the world given by Transparency International. The troubled nation is looking for a third handout, which the previous two consisted of €240 billion.
The third handout is looking to be comprised of bonds with a 50-year maturity and cutting previous loans by additional 50 bps. It is likely the next aid package will be issued sometime in the Spring. “What we can do is to ease debt, which is what we have done before through offering lower interest or extending the maturity of loans,” said Dutch Finance Minister Jeroen Dijsselbloem. A third handout is possible, according to Dijsselbloem, on grounds that Greece continues to meet expectations the European authorities have set forth.
“The people of Greece are still suffering from the consequences of the painful but nevertheless needed reforms that are taking place,” said the European Union President Herman Van Rompuy, and the new loans with help keep Greece on schedule. A budgetary surplus was a primary condition of the prior handouts, and the Greeks are waiting for the EU statistical agency to confirm their reported primary surplus.
Data will be reported by April that will help give a clearer picture of Greece’s strides forward. It has been a long, hard battle, but one needed to purge the nation of bad habits. Prior to the recession, Greece’s fiscal and monetary policies were lacking, there was little to no tax revenues, and the amount of borrowing was ludicrous.
The thought-provoking, although controversial, Peter Schiff (unrelated to this situation) is a strong supporter of recessions. He, as I, believes they the cure needed to rebuild for strong, prosperous recoveries. Recessions are the therapy process after the economy breaks its leg. It can be painful, but without it the economy’s support remains weak and susceptible of further damage. Greece will come out of this stronger as long as they do their fair share of therapy.