Sunday, February 15, 2015

March 1st Deadline for Greece Deal

by Bill McBride on 2/15/2015 08:06:00 PM

From the WSJ: Deadline for Greek Bailout Agreement Looms

Any changes to the content or expiration date of Greece’s existing €240 billion ($273 billion) bailout have to be decided by Friday, to give national parliaments in Germany, Finland and the Netherlands enough time to approve them before the end of the month. Without such a deal, Greece will be on its own on March 1, cut loose from the rescue loans from the eurozone and the International Monetary Fund that have sustained it for almost five years.
Although Greece mostly lived up to the terms of the bailout, the promised growth never materialized (see tables below). As Greek Prime Minister recently said: "We are not negotiating the bailout; it was cancelled by its own failure.”

 The only choices are to allow Greece to run a smaller primary surplus or for Greece to leave the Eurozone and default on all their debt. The first choice seems likely, but not without some drama.

Note: Greece would have left the Eurozone in 2010 if the actual numbers below had been the plan.  No politician would have signed up for that economic devastation!

Greece: Annual GDP, Forecast and Actual1
YearPromisedActual
2009-2-4.4
2010-4-5.4
2011-2.6-8.9
20121.1-6.6
20132.1-3.9
20142.1 
20152.7 
1IMF Forecasts and Eurostat Actual

Greece: Annual Unemployment Rate,
Forecast and Actual1
YearPromisedActual
20099.49.6
201011.812.7
201114.617.9
201214.824.5
201314.327.5
201414.126.82
201513.4 
1IMF Forecasts and Eurostat Actual
22014 is Q1, Q2, Q3 average