Greek debt

VideoEagle · February 20, 2015

Found this graphic on the WSJ this morning. Since it's being shared on Facebook, I don't think its behind the pay wall. Greece was a HUGE payment due in the next few weeks.

Any thoughts? Tasty?

http://graphics.wsj.com/greece-debt-timeline/

oldguystudent · February 20, 2015

Maybe they should sell their couches and BBQs and come in to the game with their free tickets every once in a while.

FirefightnRick · February 20, 2015

Found this graphic on the WSJ this morning. Since it's being shared on Facebook, I don't think its behind the pay wall. Greece was a HUGE payment due in the next few weeks.
Any thoughts? Tasty?
http://graphics.wsj.com/greece-debt-timeline/

No way this could ever happen to the U.S...."sarcasm"

Rick

TheTastyGreek · February 20, 2015

Found this graphic on the WSJ this morning. Since it's being shared on Facebook, I don't think its behind the pay wall. Greece was a HUGE payment due in the next few weeks.
Any thoughts? Tasty?
http://graphics.wsj.com/greece-debt-timeline/

I'm no expert, either in non-personal finance generally or the Greece situation specifically.

But, at a glance... That chart is a lot less of a March 2015 catastrophe than it first appears.

It looks like 30 billion euros due next month. But look at the nature of that debt, and most of it is cleared or reallocated through some basic balance-of-payments adjustments into the future.

15 billion is in short-term treasury notes at a rate of 1.8% or 2%. Either Greece decides to pay every short-term private creditor RIGHT NOW (for no good reason), or they issue new short-term debt with a payment date in the future. Considering that almost all major short-term European notes are actually NEGATIVE interest rates right now, this could actually be an opportune time to move those obligations into the future at an even smaller interest rate than the 1.8-2% they offered last time around. One sentence synopsis: It's likely both cheaper AND easier to pay short-term treasury debt if they reissue new notes, and institutional investors are desperate for something like that offering right now, too.

Another 8 billion euros due next month is to an IMF loan. The IMF exists to EASE the sorts of problems Greece is facing right now, not bring them to a crisis point. The IMF will certainly adjust the payment terms into the future, because avoiding a crisis like this is exactly why they loaned the money to Greece in the first place.

So, the actual worst-case immediate debt due is 7 billion euros. That's not nothing (it's just under 40% of Greece's monthly GDP right now), but it's also important to look at who it's owed to: the European Central Bank, on bonds and debt exempted (by order of the European Union) from the 2012 default.

Since the whole rise-to-power of the current ruling party was achieved through a platform of (and I'm reducing/generalizing A LOT here):

"We are sick of being handcuffed by the rest of Europe in addressing our problems (which exist in no small part due to obligations and problems imposed upon us by the very people/nations who are now standing on our throats wringing the life out of us to service the debt undertaken at their requirement). If they want us to remain a part of the unified European economic structure, changes must be made to what we're obligated to do and how we're expected to do it. And if they'd rather kick us out of the system... That sucks, but so be it. We'll have to rebuild from a nightmare scenario either way, and at least this way we can plot our own future."

Hashing out how and if some of that 7 billion euros (and the future debt in the same category) gets repaid is exactly what the current standoff is trying to resolve.

Left unsaid in that brinksmanship game is, if the rest of debt-holding Europe won't or can't address that debt in a manageable way... What happens when the countries in even worse financial shape (Portugal, Spain, Italy) start wobbling, too?

Anyway... Not sure how valuable any of that semi-literate "analysis" is worth. But, that's my two drachmas on the link.