Rescue plan viability

Thursday, March 27, 2014

Rescue plan viability

The masks are off when one processes the viability of the so-called "rescue plan". Skepticism is crawling back in international press about whether itll achieve anything, and, this time, rightfully so.

This plan will:

Increase debt as an absolute number (perhaps debt will climb to over 360 bn euro in 2-3 years from 320 bn today).
Decrease GDP by ~10% (3 year period)
Increase debt to GDP ratio up to 150% (from 115-120% right now).
Increase budgetary payments for interest rates, while revenues will be reduced due to lower GDP - thus stretching the economy and taxpaying citizens/companies
Maintain high taxes in order to repay the debts - thus making comeback very difficult

All in all its a plan for the lenders to get their money back, with no growth policies embedded in it. On the contrary its a destructive program (growth-wise) which means that on the long-run, Greece will have even bigger problems borrowing (if it cant borrow with 115% debt-to-GDP, will it borrow with 150% debt-to-GDP?)