I’m not an economist and truth be told, I was never good in math— ever. Math classes gave me hives in high school.
And following the news these past few weeks about Greece and trying to balance all of the opinions coming out about the financial crisis has been challenging for someone like me with little or no understanding of international finance.
Stieglitz and Krugman said this… Schauble said that… Debt relief, bridge loans— throw Goldman Sachs into the mix and the accusations that were (once again) thrown at them by Robert Reich and all of this was enough to confuse me to the point of my mind thinking this: @#$%!*$#@.
Today, however, I had a eureka moment after I saw a news report about Greece paying back its 2 billion euro debt to the IMF. “Great,” I said to myself— Greece is no longer on that list of third world countries that are in default.”
I read into the matter further and realized that this payment, as well as other debt payments, were made possible by the “generous and humanitarian” officials in the European Union and the European Central Bank, when they offered an emergency bridge loan to Greece last Friday for about €7.2 billion.
Like many, I figured the money would help give Greece some breathing room… pay some pharmaceutical bills so hospitals can get basic supplies they need to function,
The news went viral last week as the European saviors stepped up to save Greece from falling over the cliff. It was seen by many (who only read headlines) as Europe coming to Greece’s rescue to avert catastrophe, following difficult negotiations in Brussels and the Greek parliament accepting the harsh terms imposed by their European warlords.
But not so fast.
It seems now that the only reason they LOANED that €7.2 billion to Greece was to enable the country to turn right around and wire it back to those same institutions, to pay back previous loans— plus interest, of course.
So in other, more simpler words…
FRIDAY: The Europeans just gave Greece a €7.2 billion “emergency bridge loan”.
The markets reacted… Yay! Everyone’s happy now, the crisis is over… Europe is bailing out Greece! Catastrophe averted! Europe is not that bad after all.
MONDAY: Greece dishes out almost ALL of the €7.2 billion it received from the Europeans, right back to the Europeans, to pay back old debts— including 700 million in interest.
Who’s making money off of Greece here?
Is this all a big game to keep the “money merry-go-round” spinning while European bankers get off the horse called Greece, even fatter than they were when they got on?
And the merry-go-round just keeps spinning, and spinning— and spinning, while average Greeks commit suicide in record numbers, while diabetics can’t get insulin because the government hospitals are out of cash… while Greek society crumbles— and the European Central Bank makes €700 million in interest off this basket case of a country that is stuck between a rock and a hard place.
This former math dummy is starting to finally see the vicious cycle that the likes of Mr. Draghi, Mr. Schauble, Mr. Dijsselbloem and Ms. Merkel are perpetuating.