Robert Peston has come up with the least surprising opening paragraph of the year.
As the Financial Times writes that the write down on Greek debt may need to be as high as 60%, Peston quotes from a report by international lenders:
The current European Union and International Monetary Fund plan to revive the Greek economy and its finances has failed.Well I never. Who would have thought it?
As the Financial Times writes that the write down on Greek debt may need to be as high as 60%, Peston quotes from a report by international lenders:
The situation in Greece has taken a turn for the worse, with the economy increasingly adjusting through recession and related wage-price channels, rather than through structural reform-driven increases in productivity.Thankfully, Peston provides a translation:
Greece's austerity programme is succeeding in impoverishing Greek people with little in the way of discernible benefits to the Greek private sector and the capacity of Greece to start earning its way in the world.Or as Larry Elliott puts it:
The insistence that the remedy for a depression caused by austerity is yet more austerity explains why people are taking to the streets. In Athens, if not in Brussels, Frankfurt or Berlin, they understand that this is the economics of the madhouse.
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Here's a recent FT article with a comparison you may enjoy, in a bitter sort of way:
Some big US banks reported year-on-year increases in third-quarter profits. But the results appear a lot poorer when we peer under the hood of the headline numbers. In most cases, banks have booked the unrealised profits from marking to market the value of their own debt to their creditors. In other words, growing market fears about banks’ solvency – which are driving down the price of their bonds and raising their cost of doing business – are turned to advantage in the profit and loss statements. This is to combine the black magic of leverage with the alchemy of mark-to-market accounting. If Eurostat, the European Union’s statistics arm, allowed Greece to use the same trick, Athens would now be flaunting a public sector surplus bigger than Norway’s. There are two different lessons here – one for pessimists and one for sceptics.
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