Monday, February 16, 2015

Greece, Ireland and Portugal: Three little piggies

February 16, 2015

On February 16th the Eurogroup, consisting of the euro-area's 19 finance ministers, met to discuss whether they should change the conditions of Greece's bail-out. Unsurprisingly, given that neither the German nor Greek governments were showing any sign of compromise over the weekend, the talks collapsed by the end of the afternoon. Wolfgang Schäuble, Germany's finance minister, is strongly opposed to any modifications. So, ironically, are the governments of Ireland and Portugal. Like Greece, the latter two binged on cheap debt before the crisis, suffered banking meltdowns and were forced to endure the austerity that came as a condition of bail-outs of their own. But instead of standing in solidarity with Greece, they are mimicking the stance of its creditors.

It is easy for Ireland and Portugal to be fastidious: their economies have recently started to hum again (see chart). Over the past two years, economic growth has got going, unemployment has being falling and bond yields on their public debt are now lower than before the financial crisis. Indeed, at today's meeting, Portugal's finance minister attempted to repay some of its bail-out loans ahead of schedule.


No comments: