Thursday, February 23, 2012

When Greece Defaults

by Anthony Randazzo


February 22, 2012

The second round bailout of Greek debt is just delaying the inevitable—Greece is going to default.

As details have emerged on the European Central Bank, European Financial Stability Facility, and International Monetary Fund joint agreement with private creditors and the Greek government on providing money to make sure Greece pays a March debt bill, it is increasingly clear that this deal will not be enough.

In broad strokes, the agreement will provide a EU130 billion ($172 billion) loan to Greece from Eurozone nations so it has cash to pay its pending debt bill and money to complete a bond swap with private creditors that will help reduce Greece's overall debt by EU107 billion.

In exchange the Greeks will have to fire another 15,000 public employees (on top of the 30,000 they were forced to lay off with the first bailout), cut their budget by another EU3.3 billion, and reduce the nation's minimum wage of EU750 a month by 22 percent for those over 25 years old, and by 32 percent for those 25 and under.


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