The deadlines for the Greeks to repay debts make a deliberate and unhelpful crisis

The air of crisis over Greece relates to that country’s inability to repay money owing to the IMF and the European Central Bank. Greece is already in default with the IMF anyway. As it will be the Euro area, ECB and IMF who lend new money to Greece, why is there still this air of crisis over the old money the IMF and ECB are owed? Greece cannot repay it unless they are lent it back again by the self same creditors! Greece remains a pawn in the hands of the IMF and the Euro area. Their economy continues to be damaged by the attitude of their creditors, who are helping undermine Greece’s ability to pay in the future.


  1. Douglas Carter
    July 16, 2015

    At the heart of all this is the strange case of a dog which isn’t barking. It’s no longer exasperating, nor bewildering. It’s downright sinister.

    No matter how many times people might speculate that ‘Greece should never have been permitted to join the Euro in the first instance’, it remains a fact that they did so, and there was no shortage of commentary in the lead up, and at the time that Greece was openly unqualified for Eurozone membership. They didn’t join inadvertently, it was no accident. The custodians of the Eurozone project were complicit in the event.

    To follow this disaster upstream should lead to the source – and it remains an event to which no Government wishes to give consideration. I’m advised that figures close to those events have circled the wagons and have legal protections from investigation of the matter. So, now our own Taxpayers are on the hook for the consequences of this mistake. Well, under the ‘No taxation without representation’ principle, I would really appreciate how the funding this electorate is apparently entitled to donate (or, throw away) is to be represented? Will our Government seek proper answers to how Greece was permitted original membership? Compel identification and proper scrutiny of their decisions of the time, with contemporary records which had been used to justify the decisions?

    More or less rhetorical, of course, because over the years, people learn that there’s absolutely no chance whatsoever of being given accurate, pertinent and accountable replies to important questions, where they pertain to the conduct of the EU. Nor similarly is there any chance a UK Government would do such an impolite thing as to make the demand.

    Perhaps this would be a good juncture for the Select Committee to make the appropriate enquiries? The taxpayer is once again providing generous funding for misplaced ‘pragmatism’ to provide a fig-leaf for incompetent historic decisions. At least on this occasion, the taxpayer might be entitled to value for money for its lucrative gift to ceaseless corruption abroad?

    1. Denis Cooper
      July 16, 2015

      “The documents prove what was only assumed until now: Italy should never have been accepted into the common currency zone. The decision to invite Rome to join was based almost exclusively on political considerations at the expense of economic criteria. It also created a precedent for a much bigger mistake two years later, namely Greece’s acceptance into the euro zone.”

  2. Frank salmon
    July 16, 2015

    Better to have an organised default whilst Greece benefits from a lower exchange rate, lower debt repayment and more grants and subsidies from EU.. Greece could then repair its economy and addiction to public sector abuses. At the moment The EU are robbing Peter to pay Paul to pay Peter.. There is no net gain for Greece as it is borrowing to repay debt rather than restructure, selling the family silver along the way.

  3. bluedog
    July 16, 2015

    Perhaps it is time, Dr JR, for you to repay the hospitality of your German interlocutors. This time, instead of being on the receiving end of their lectures, you could give them some pointed advice.

  4. Timaction
    July 16, 2015

    I note that your Government have capitulated once again to allow British taxpayers money be used in the crisis. Just when will your leadership show some courage? They are weak and roll over to EU demands every time. I’m sick of their lack of gumption. They are simply not up to the job. They need removing. We have a rudderless ship with Cameron and Osborne in charge.

    1. Cliff. Wokingham.
      July 16, 2015

      Indeed and I see this morning that they are helping the EU to fulfil it’s plan to regionalise England by giving devolution to Cornwall. Have no lessons been learned; once you give a “region” an inch, they push for a mile.

      1. Peter A
        July 16, 2015

        Is it a coincidence that Cornwall is a huge recipient of EU money (redistributed English taxes) and as you drive around it is very common to see signs saying paid for/sponsored by the EU?

      2. Hope
        July 16, 2015

        I think it is clear the public were lied to when Cameron claimed the UK would not be involved in Eurozone bail outs directly or indirectly. Loan to Ireland and involvement of IMF could not have escaped his attention. This last episode shows he is still doing helping the bail outs both through the IMF and now with the EU as well!

        Remember Wednesday this week when he claimed he got us out of the bail out of the Eurozone in parliament, ie yesterday! He also stated quite clearly that people should give their money with free will, when talking about Union practices, this applies to this situation as well. The UK allegedly had an agreement. I have said it before, you really cannot believe a word he says, let alone one of his false/ broken promises. Does he still think and accept, after 180 degree change to his first position that treaty change was required, he does not treaty change to any alleged renegotiation?

        After his disparaging remarks about Gordon Brown again in parliament, he might stop and think that a lot of us out here in the real world think he makes Gordon Brown look positively good! Especially as he still follows Brown’s policies on energy and the like. He even committed it to the Tory manifesto!

  5. DaveM
    July 16, 2015

    Quite. How long will it take them to realise that the more money they “lend” Greece, the more will be written off in the medium term?

    Are they expecting Greece to invest the “loan” in a magic money tree?

    They don’t have any money. And if they did they’re just going to spend it on repayments. Might as well write it off and cut the losses. It’s people like PvL who will pay for it through taxes and low interest on savings, and he clearly loves the EU and the Eurozone enough that he’ll be happy with that, surely? And he regularly informs us that continental Europe is full of people like him who want the Euro-project to stay on track no matter what, so what’s the issue?

  6. zorro
    July 16, 2015

    One does begin to wonder if this is complete incompetence or a concerted campaign to implode Greece and profit from a fire sale of its assets and blow the human cost…..


  7. a-tracy
    July 16, 2015

    What did they borrow the money from the IMF for? What did Greece use the money they borrowed from the Euro Zone to do?
    When the UK crashed out of the ERM businesses failed, houses were taken off people, it cost the UK billions and caused a recession – who came to our aid and bailed us out? Euroland? the IMF what was the deal? Because if I remember my mortgage went up to 15% interest rates, business suffered and we seemed to pay the enormous cost within the UK. I thought we were still in austerity ourselves as a Country because of this recession.

    1. Hope
      July 16, 2015

      £1.7 billion extra demanded and given to the EU last October for nothing in return, the same in the budget last week, now an extra billion to help Greece plus the billion or so to the IMF. This is in addition to the club fees of £14 billion and another £2 billion from the oversea aid for the EU to spend! About seven and half billion extra to the EU on top of the club fees. Willingly given away by Cameron while hiking our taxes and cutting our public services. He derided his opponents of more debt and more taxes, he needs to look in the mirror!

      JR, Yesterday Cameron again falsely claimed he halved the deficit. This is untrue. His original long term economic plan made no mention of GDP and claimed the structural deficit would be eliminated by 2015. Alternatively, could you explain/ provide the facts how he reached this conclusion? Presumably the extra £7.5 billion demanded by the EU has to come from somewhere.

  8. formula57
    July 16, 2015

    Indeed so but an air of crisis helps ensure urgent compliance, including when facilitating improper resurrection of the ESM.

    Sufficient unto the day is the evil thereof!

  9. acorn
    July 16, 2015

    This would make an excellent series of “Yes Minister”. You can imagine Sir Humphrey Appleby explaining the EU financial system, to the Right Honorable James Hacker MP. The script would practically write itself.

    So, the guys at the EFSM are going to issue a Bond, probably by private placement to save time, for €7 billion Euro. Greece gets the cash; pays off its outstanding dues to the IMF, and uses the rest to redeem its Bonds at the ECB, due this month. The ESM guys meanwhile, are going to issue another Bond(s) for big bucks and Greece will use some of that to pay back the EFSM €7 billion, to the guys in the office next door.

    Why the hell they didn’t just tell the ECB, to tap a few numbers on its keyboard and send it to the Bank of Greece; will have every other sovereign fiat currency issuing Treasury on the planet, mistified. Sorry, I forgot, the EZ ain’t got a (federal) Treasury.

    Would someone please tell the Germans that the EZ issues its own currency, which it will never run out of. It doesn’t need to borrow sweet f*** all from the IMF; ever. The ECB can pay / redeem any bill / Bond; pay any interest payment; presented to it in Euro, from now till the end of time.

    Unfortunately, the one good idea that Wolfgang Schaeuble has ever had, got tossed, temporary Grexit.

    1. formula57
      July 16, 2015

      Not so fast with “..the one good idea that Wolfgang Schaeuble has ever had, got tossed, temporary Grexit” for it is back on, per numerous reports today of Schäuble’s interview this morning with Deutschlandfunk radio and hence the ECB’s decision to withhold doing anything more for Greece for now. One can only look on aghast.

  10. David
    July 16, 2015

    Why do Governments borrow in this year paying only interest but not capital, so they have to roll over loans. Surely it is a long term risk?

  11. Lifelogic
    July 16, 2015

    Indeed the EU/creditors are shooting themselves in the foot, but then that, so very often is what governments do.

    We see it with expensive energy religion, the huge over taxation, the ERM, the over regulation, the damaging employment laws. the forced “equality” religion, and endless other lefty insanities that governments like to push or waste money on.

    1. Lifelogic
      July 16, 2015

      On Cameron’s moronic gender pay gap, Kate Andrews at the Adam Smith Institute has it spot on, unlike the ex Mrs Huhne..

      1. Hope
        July 16, 2015

        Good to read Merkel does not support or believe in same sex marriage. She supports the elimination of discrimination and equal rights in law for same sex couples but marriage a step too far. Good to read she has respect for the majority rights as well as the minority rights. I understand same sex marriage couple not allowed to adopt in Germany. A shame Cameron has no value on the rights of the majority.

    July 16, 2015

    Deadlines to pay off debt have been the norm in personal and business lending in the UK. Creditors planned and hoped for default. With failure to pay,- interest and fees were added. With failure came debt restructure,more fees and more. Oh and the glorious “Consolidation of all loans into one ” . And the unpaid loans were penciled-in on their balance sheets as assets. It is the UK story of raucously laughing banks/ financial institutions and a people in day-to-day debt slavery. They, the banks, made the Marxist hyperbolic “wage slave” into litotic British-speak.
    They made Greeks of us.

  13. formula57
    July 16, 2015

    As for fostering an air of crisis, the UK government can do that and contribute to undermining the Evil Empire by demanding that the funds held by the ECB (arising from its SMP profits on Greek bonds) that are now reserved to meet any guarantee calls by the UK lest Greece defaults on the new ESM lending should be transferred to a separate account administered by the UK. That is only reasonable since as we learned yesterday, the EU cannot be trusted.

  14. Roy Grainger
    July 16, 2015

    It is purely a political manoeuvre, the IMF and ECB have to pretend to get paid back, even if it’s with their own money, so that the governments who supplied that money in the first place don’t have to explain to their voters that it has been lost. I saw one proposal that the Greeks should suspend payments on their debts for 30 years (just like they did on their last sovereign debt default), this would not only meet that political goal but also ensure that the current crop of political leaders would be drawing their own generous index-linked pensions before the chickens came home to roost. I still think a military coup in Greece is a likely outcome of all this nonsense.

  15. Richard
    July 16, 2015

    Mrs. Merkel, unlike the IMF, has no doubts that Greece will be paying back all outstanding and future loans.

    Greece will be selling its islands, ports, marinas, beaches etc. (etc ed).

    Only by leaving the Euro can this be avoided.

  16. agricola
    July 16, 2015

    Loans to repay debts from previous loans. The only thing which is different at the moment is that the interest rates are infinitely lower than your average pay day loan company.

    There is no discernible benefit to the Greek population who are bearing the pain, and there is no achievable end goal. Rather than have the EU dictate their slow death I think the time has come for Greece to leave the Euro.

    As the EU has no viable solution, it would be helpful to Greece if fellow members of NATO ,of which Greece is an important member, to come to her aid. With the Drachma in place, the USA, UK, Canada, and possibly France could lend suitable teams to sit alongside their Greek allies with advice and support to get the economy moving again and lift the burden from the Greek people. This is what allies are for, not to enslave people in a regime with no visible recovery.

  17. Atlas
    July 16, 2015

    I think Cameron is one of the big losers here. All those claims of ‘having stopped us paying for the Eurzone problems’ have been shown to be false. So why should we trust any of his claims in the so-called renegotiations? Osborne made similar grandiose claims and also has been shown to be deluded.

    1. Denis Cooper
      July 16, 2015

      To counter those saying that it will impossible to repatriate powers from the EU Cameron started to falsely claim that he had already repatriated the “bailout power”, when no such power existed for him to get back and to the contrary on a plain reading the EU treaties expressly forbid any bailouts, a prohibition first written into Maastricht Treaty as a condition for a single currency.

      Or so we were repeatedly reassured for two decades, and so many EU figures including Merkel publicly emphasised before the first bailout of Greece, until she decided that there was no alternative to bailing out Greece if the eurozone was to be preserved intact so that it could continue its expansion and eventually achieve her stated goal of encompassing all of the EU member states, with no exception being made for the UK and Denmark despite their treaty opt-outs.

      That happened at an extraordinary meeting of EU finance ministers held on May 9th/10th 2010, the conclusions of which may be read here:

      That was after the UK general election on May 6th but before Cameron became Prime Minister on May 11th, so the meeting was attended by Alistair Darling, but it is known that he consulted George Osborne on how he should proceed.

      However neither of those gentlemen saw fit to publicly announce that what was being proposed was clearly contrary to the EU treaties as approved by Acts of the UK Parliament, so contrary to our national law as well as EU law, and therefore it would be their duty to refuse to have anything to do with it.

      This was how the UK got sucked into participating in an illegal bailout of Greece through the EFSM, although not also through the equally illegal EFSF. Shortly afterwards the French Minister for Europe told the FT that at that meeting the EU finance ministers had made “de facto” changes to the EU treaties, even though they had no legal power to make any such changes to the treaties without the authorisation of their national parliaments, which they did not have at the time, and then some months later after the Irish bailout Lagarde cheerfully admitted to the Wall Street Journal that the bailouts had been “major transgressions” of the EU treaties, saying that “The Treaty of Lisbon was very straightforward. No bailing out.””

      Yet even then Cameron could not quite bring himself to admit that the bailouts had been illegal from the start, and that it was no great deal that it had now been graciously agreed that the UK would not be expected to participate in future illegal bailouts, choosing instead to dress it up as the reclamation of a legal power which did not in fact exist, it was a mere fiction, and moreover skating over the reality that he had only secured a political agreement on that rather than a binding treaty change so that the UK would once again be able to veto any abuse of the Article 122(2) TFEU which had been falsely cited as the legal basis for the EFSM.

      Now we are told that the UK will once again participate in the EFSM to provide bridging finance for Greece, despite futile protests from the UK government, but the UK government will be insured against any losses through another cunning scheme which is itself a clear breach of Article 125 TFEU, with other EU member states and the ECB potentially assuming the liability for a commitment made by the UK contrary to that article.

      Just as the over-subscription by the participants in the EFSF, designed to secure a high credit rating for the bonds it issued, was in breach of that article, as argued in a comment here on January 14th 2012:

      The EU has been justifiably accused of “pretend and extend” with regard to the disastrous economic and financial position of Greece, but so too Cameron has been indulging in political “pretend and extend” ever since Darling agreed to the UK being sucked into the first bailout of Greece, and Osborne failed to warn Darling that he would have a duty to revoke any illegal agreement once he had become Chancellor.

  18. Denis Cooper
    July 16, 2015

    I’m inclined to say that the crisis has now passed for the time being; and as I predicted over six years ago the eurofanatics have strained every sinew to preserve the eurozone intact, and they have succeeded; the Greeks are a conquered people, and most of them know in their hearts that there is no longer anything effective they can do to resist; so they have to try to make the best of their servitude, which many will succeed in doing by various wiles learned in the past over long periods of gross misgovernment by their own politicians, as well as centuries under foreign domination, from the ancient Romans through to the Ottomans; and in the process the eurofederalists have successfully pushed forward the process of “ever closer union”, even with the support of our own politicians, and by teaching the Greeks such a hard lesson they have shown what could happen to any other troublesome peoples who might dare to step out of line. And they have done this without even needing to deploy the European Gendarmerie in Greece, as far as we know, let alone deploying that EU army which is said not to exist, but simply by the ECB in Frankfurt turning off the money supply to Greek banks.

    1. Hope
      July 16, 2015

      Excellent post and very true. Although depressing that our politicians lack the back bone or morality to intervene to save a sovereign democratic nation.

    2. formula57
      July 16, 2015

      As for ” …simply by the ECB in Frankfurt turning off the money supply to Greek banks” Alexander Pope would not have been surprised: –

      Blest paper-credit! last and best supply!
      That lends Corruption lighter wings to fly!
      Gold imp’d by thee, can compass hardest things,
      Can pocket states, can fetch or carry kings;
      A single leaf shall waft an army o’er,
      Or ship off senates to some distant shore;
      A leaf, like Sibyl’s, scatter to and fro
      Our fates and fortunes as the winds shall blow;
      Pregnant with thousands flits the scrap unseen,
      And silent sells a King or buys a Queen.

  19. Margaret Brandreth-J
    July 16, 2015

    It seems to be a financial war rather than a cooperative

  20. Peter A
    July 16, 2015

    Slightly bizarre watching SNP MPs taking part in NHS England reform debate..

  21. Peter A
    July 16, 2015

    I often read, with a sense of dismay and weariness, the output of all these quangos and beurocracies regarding how to save our town centres. Millions paid out to consultants and ‘experts’ the whole agenda hijacked by the High Priests of the Greencrap religion.

    Is the answer really this simple?

    Before the Thought Police lynch me, I’m not advocating criminal damage..

  22. Peter van Leeuwen
    July 16, 2015

    When Greece comes with its bucket full of gaping holes and for the 3rd time asks for a refill, while it has never kept its promise to fix the holes, it is not sensible just to open the tap once again. Hard conditionality has to apply.

    1. Lindsay McDougall
      July 17, 2015

      “There’s a hole in my bucket, dear Lisa, dear Lisa ……………..”

      The song goes on to ask how the hole is to be mended.

      “With straw, my dear Henry, dear Henry …………………”

      “With what shall I cut it, dear Lisa, dear Lisa?”

      “With an AXE, dear Henry, dear Henry ………”

      The song goes on to highlight that the axe must be sharpened which needs the sharpening tool to be wet ………………………

      “But there’s a hole in my bucket, dear Lisa, dear Lisa ……………..

      I’ll leave you to substitute suitable names for Lisa and Henry; shouldn’t be too difficult.

  23. Terry
    July 16, 2015

    Is it any wonder that the EU is now the poorest performing continent on Earth? As Prof Einstein declared, repeating the mistakes of the past and expecting a different result, is the definition of insanity. How true, especially in the cases of the EU and the Euro currency.

  24. PaulDirac
    July 16, 2015

    The relevant bit for the UK is the current issue of the EFSF, the UK signed a deal with the EU members that the EU will no longer USE the EFSF (as in: it is scrapped) as it is a fund of ALL EU members and shouldn’t be used for the rescue of EZ members.

    However now it seems that since the first idea for Greek support was a non starter (bilateral loans, most countries refused), Junker has decided that the agreement with the UK is not legally binding and they are free to use the EFSF anyway.

    The UK share in the proposed Greek EFSF loan to Greece is 850 million (or so), “Brussels” now suggests that the UK money be “ring fenced” as a compromise.

    This is a real outrage, it shows once more that any agreement with EU, short of a treaty change, has no value.

    Anyway, what does “ring fencing” mean?
    If Greece doesn’t repay this in the next 100 years, our money will still be where exactly?

    Reply I think you mean the EFSM. The EFSF is Euro only and has been superseded by the ESM

  25. turbo terrier
    July 16, 2015

    If as the reports coming out of Europe suggest that this crisis is all but done and dusted there is only one question left.

    What country will be next?

    As sure as night follows day the whole Euro project is well and truely dead in the water.

    How can this country be liable to pay into a system that we are not party to?

    We have enough debt of our own (£1.5 trillion and rising) “created and managed” by our government. We do not need the EU loading us with more. CMD and his Chancellor should be stating clearly NO and mean and do what they say.

    No wonder the EU wants the UK to stay in.

    As for the once proud but very deluded people of Greece they should leave the table and run. The EU and euro zone are not the panacea to all their ills.

    Away from the EU they will at least be the masters of their own destiny.

  26. Petrov
    July 20, 2015

    Greece has met the deadline for repaying part of its loan from the International Monetary Fund, a senior finance ministry official said, as the country’s cash reserves continue to dry up.

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