Courtesy of Mish.
The torture of Greece continues unabated. The country has absolutely no chance of getting out of the economic hellhole it is in as long as it remains on the euro.
Although Germany has signaled it is fed up with can-kicking exercises, such delays are the only thing Brussels and the ECB can conjure up, even though Greece’s deficit problems are always greater than expected.
No one should be surprised to learn Greek Shortfall Growing Ever Larger
Athens has not been having an easy time coming up with the €11.5 billion in cost cutting measures over the next two years it has promised Europe. Indeed, Greek Prime Minister Antonis Samaras is reportedly set to request an additional two years to make those cuts during meetings later this week with German Chancellor Angela Merkel on Friday and French President François Hollande on Saturday.
But according to information obtained by SPIEGEL, the financing gap his country faces could be even greater. During its recent fact-finding trip to Athens, the so-called troika — made up of representatives from the European Central Bank, the European Commission and the International Monetary Fund — found that Greece will have to come up with as much as €14 billion to meet the terms for international aid.
According to a preliminary troika report, the additional shortfalls are the result of lower than expected tax revenues due to the country’s ongoing recession as well as a privatization program which has not lived up to expectations. The troika plans to calculate the exact size of the shortfall when it returns to Athens at the beginning of next month.
Many in Europe, particularly in Germany, are losing their patience and there has been increased talk of the country leaving the common currency zone. Over the weekend, German Finance Minister Wolfgang Schäuble reiterated his skepticism of additional aid to Greece. “We can’t put together yet another program,” he said on Saturday, adding that it was irresponsible to “throw money into a bottomless pit.”
In order to prevent the need for an unpopular third bailout plan, SPIEGEL has learned that euro-zone governments are considering other measures. Under discussion is a reduction — or the complete elimination — of the interest rates Greece must pay for its emergency aid loans.
So, Greece has to come up with another €14 billion, revenues will collapse further, and the already monstrous unemployment rate of 23.1% will rise again.
Since none of this will help Greece pay back debts, a discussion is now underway to charge Greece zero percent for emergency loans. Lovely.
Mike “Mish” Shedlock
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