Showing posts with label rescue. Show all posts
Showing posts with label rescue. Show all posts
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?)
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