LF: IMF stuns Europe with call for massive Greek debt relief

Title: IMF stuns Europe with call for massive Greek debt relief
Source: UK Telegraph
URL Source: http://www.telegraph.co.uk/finance/ ... massive-Greek-debt-relief.html
Published: Jul 14, 2015
Author: Ambrose Evans-Pritchard
Post Date: 2015-07-14 19:18:54 by cranky
Keywords: None
Views: 1987
Comments: 32

The International Monetary Fund has set off a political earthquake in Europe, warning that Greece may need a full moratorium on debt payments for 30 years and perhaps even long-term subsidies to claw its way out of depression.

The creditors were aware of the IMF’s report as early as Sunday, yet choose to sweep it under rug. Extracts were leaked to Reuters on Tuesday, forcing the matter into the open.

^{IMF managing director Christine Lagarde}

The EMU summit statement vaguely mentions “possible longer grace and payment periods”, but only at later date, and only if Greece is deemed to have complied with all the demands. Germany has ruled out a debt “haircut” altogether, claiming that it would violate Article 125 of the Lisbon Treaty.

The IMF said there is no conceivable chance that Greece will be able to tap private capital markets in the foreseeable future, leaving the country entirely dependent on rescue funding.

It claimed that capital controls and the shutdown of the Greek banking system had entirely changed the picture for debt dynamics, an implicit criticism of both the Greek government and the eurozone authorities for letting the political dispute get out of hand.

The decision by the European Central Bank to force the closure of the Greek banks two weeks ago by freezing emergency liquidity assistance (ELA), appears to have cost European taxpayers very large sums of money..

The IMF said the Europeans will either have to offer a “deep upfront haircut” or slash the debt burden by stretching maturities and presumably by lowering interest costs.

“There would have to be a very dramatic extension with grace periods of, say, 30 years on the entire stock of European debt,” it said.

Debt forgiveness alone would not be enough. There would also have to be “new assistance”, and perhaps “explicit annual transfers to the Greek budget”.

This is the worst nightmare of the northern creditor states. The term "Transfer Union" has been dirty in the German political debate ever since the debt crisis erupted in 2010.

The underlying message of the report is that Greece is in such deep trouble that it cannot withstand further austerity cuts. This is hard to square with the latest demands by EMU creditors for pension cuts, tax rises, and fiscal tighting equal to 2pc of GDP by next year.

Nobel economist Paul Krugman said the cuts are macro-economic "madness" in these circumstances.

Yanis Varoufakis, the former Greek finance minister, told the New Statesman that whenever he tried to discuss the economic rationale for the policies enforced upon Greece, he was met with blank stares. "It is as if you haven’t spoken. You might as well have sung the Swedish national anthem – you’d have got the same reply.”

Unless there is a change of course, Greece's debt ratio will still be 170pc of GDP by the time the current framework expires in 2022. Even this assumes that there is no global downturn, and that everything goes to plan. The figure is up from 142pc two weeks ago.

The IMF’s report raises as many questions as it answers. Almost no economist would accept that two weeks of capital controls could alone raise the debt ratio by 28 percentage points of GDP a full seven years later.

The backdrop to this sudden shift in position is almost certainly political. It follows an intense push for debt relief over recent days by the US Treasury, the dominant voice on the IMF Board in Washington.

The IMF’s report issued in early July was savaged by one bail-out veteran. Ashoka Mody, the former chief of Ireland’s IMF rescue, said the original findings were “fictitious” and failed to recognize the full gravity of the debt-deflation crisis in Greece.

It appears that powerful voices in global capitals and on the IMF board have since demanded that the Fund go back to the drawing board.

Its conclusions validate what Greece’s Syriza government has been saying all along. The debt cannot be repaid. Any formula that fails to recognize this merely stores up an even bigger crisis down the road. `

I need some massive debt relief, too. Maybe the IMF can help a wee, small US taxpayer from the dark clutches & shackles of the IRS?

Why is democracy held in such high esteem when itâ€™s the enemy of the minority and makes all rights relative to the dictates of the majority? (Ron Paul,2012)

Well there you go, asswipe, you now have a solid reason for your philosophy that justifies Greece having a good reason not to repay its debt and to even be given more of OPM that it will not be able to repay. This must warm the cockles of your huge, compassionate progressive heart. After all it's only just.

The Icelandic path might be preferable. The debt would be written off. For Greece it would mean a problematic shift back to the drachma. As it is, the preferred EU path would have Greek assets owned by the EU. The EU big fish eating the little fish is the predictable result of the little fish handing over control of their currency.

Jesus Christ, our Lord and Saviour, already told us the usury of debt is a grave sin.

the illegal action or practice of lending money at unreasonably high rates of interest.

Second, the Bible only states that you may not collect interest on loans that you make to the POOR. It says nothing about lending to a country and it says nothing about not collecting the principal of the loan made to the poor or any other entity.

Every religion I can think of declares interest on loans a sin (Hindus, Pagans, Buddhists, Abrahamic religions).

Psalm 15:5—He that putteth not out his money on interest, nor taketh a bribe against the innocent. He that doeth these things shall never be moved.

Exodus 22:24 (25)—If thou lend money to any of My people, even to the poor with thee, thou shalt not be to him as a creditor; neither shall ye lay upon him interest.

"…Out of thine own mouth will I judge thee, thou wicked servant. Thou knewest that I was an austere man, taking up that I laid not down, and reaping that I did not sow. Wherefore then gavest not thou my money into the bank, that at my coming I might have required mine own with usury?"

"Give to the one who asks you, and do not turn away from the one who wants to borrow from you."

I seem to remember Denmark, for old times sake, lending Iceland a couple of billion krones to tide them over. Something about common ancestry or some such thing.

There are three kinds of people in the world: those that can add and those that can't

Yet you still obfuscate about the repayment of principal. That doesn't count in your world?

No, I did not. You are having arguments with spiders in your head. I stated Greece, per God's law is only responsible for the principal - I wrote a whole thing on it here. Vicomte chimed in and said principal going back only 6 years. The 7th sabbath year allows for the forgiveness of debt and I did not go that far.

People like you, SOSO are why I distance myself from the online American so called conservative movement.

God permitted the charging of interest on loans by Hebrews only when made to non-Hebrews. (Of course, if a Hebrew had money to lend at interest, he would have to lend it without interest to a needy Hebrew who asked instead.

God made it clear that all money and property was his, and that the possessor was merely God's steward. So, when God made these commandments, God was the owner of the money issuing directives to men who are never more than mere stewards of God's money. When men disregard God's directives regarding money, men steal from God.

Jesus modified the kosher food laws, and the Apostles modified the law of circumcision, but Jesus never amended the debt law.

In fact, Jesus said to lend without expectation of being repaid, and to not store up wealth.

All Greek debt - all Christian debt period - older than 6 years should be forgiven. No interest should be charged on Greek debt (or any other Christian debt). As the years roll forward, each 7th year behind's debt should be retired.

Nothing would be more stimulative of economic growth and security than to clear away old debt by forgiveness, exactly as God ordained.

In fact, Jesus said to lend without expectation of being repaid, and to not store up wealth.

It is the word of God. Also, this idea that "usury" means HIGH INTEREST RATE needs to end. Usury always mean "interest" be it 1% or 100% interest. I always get that comeback from so called conservatives that think they are defending capitalism or some such. I guess so called Evangelicals trying to square away the word of God on usury vs them defending some sort of capitalism (in their head) need to re-define interest/usury.

It is not a six year PERIOD. In the seventh calendar year, all debts are cancelled. There is no "rolling six year window".

The Jubilee and Sabbatical years are fixed years. They hit, and all debt is wiped out. There is no "contracting around it" to evade the will of God.

God's will is to completely wipe out human money obligations every six years, to give a full restart, and to even return the farmland itself (in Israel) once a generation.

The POINT of it all is what God said: Obey these commandments and you will have no poverty and no sickness.

God also forbade piling up money stores. Those money stores are to be mobilized, lent to the faithful, with their debts wiped out.

The POINT is for every faithful person to be FREE of debt, and not have to ever INCUR debt in order to have shelter and food, to live.

The money all belongs to God. All of it. God forbade lending at interest. Categorically forbade it. It is a sin to charge interest to the faithful, and a sin to deny them loans.

It's God's money, and God does not intend for some stewards to be able to pile up money while others of the faithful do not have housing or food or medicine.

God's intent is a full wealth redistribution among the faithful until there is no poverty - HE SAID THAT.

God's intent ALSO is to make being part of the faithful immensely more advantageous than being outside of the faith. The faithful - starting with ancient Israel - were meant to be the ENVY of their neighbors BECAUSE each faithful has a house, food, clothes, medicine, care, family - and God. This is intended to be a manifestation of God's glory.

When stewards alter the word of God to permit themselves to deny loans to the faithful, or to charge interest, or to pretend that the money is THEIRS, not God's, they steal God's money and they alter God's word, and the bring disaster upon themselves and all the rest of us.

Christians should be looking to help each other. Christians should be looking to their own lives, shedding excesses and sins, living modestly, and supporting other Christians, with interest-free loans so that other Christians are not pouring out their wages to usurers. And then, once the other Christian is free, he and the first Christian, together, should be turning to free a third, a fourth, a fifth.

Christians are supposed to trust that God will provide, and not pretend that they will find security by committing a series of sins: (1) Piling money aside, to be (2) Lent at interest, so that (3) The Christian can live at security off of sin, and (4) Build businesses based upon this principle.

All of that is sin, and it leads to the disaster that destroyed the East before Islam, the West before nationalism, and America before slavery, genocide and infanticide.

The same perverse nature of man asserts itself again and again. The only antidote is God, and God must be taken straight, exactly as he said. And not in the cess of lies and alterations that idolators of money, power and other organizations such as the nation state make of God.

Are you an alcoholic, a smoker, a drug addict? Stop. Do what you need to do to stop. The cost of these things is high, and you destroy the Temple of God that is your body, and you open the door to demons (through drugs and excess alcohol).

Are you obese? Become continent. Eat more sparingly, and righteously. Fast and pray. Do not be overly fond of flesh. The antediluvians lived 900 years on fruit, vegetable, dairy and bread. God does not constrain you to that, but if you are pouring excess resources into your body, the result of your profligacy is visible upon your frame. So stop it and eat right. This will save money, as will ceasing with the drugs, smokes and excess liquor. We do this not for Judas' sake, to fatten the purse, but to preserve the Temple and live in the health God has willed us, and to master the flesh, and to abuse the animals less also. The fatter purse is merely a result.

And that fattened purse, use to free yourself of debt. God gave each Israelite a farm for free, without taxes, and without the fear of eminent domain. Thus, he always had housing security and food security, as long as he worked.

And he commanded children to honor their parents, thereby giving men and women security in their old age: the land remained, and could be worked by the young.

We live more as those Israelites of the cities, whose houses COULD be alienated. We do not have the farm. Our pagan system is not set up for that (though we can dream of one day going to the system).

Objectively, we are not -most of us - in the status of the free farmer of Israel. We are, rather, indentured servants of harsh masters. Until we own our houses free of debt and are clear of other debt, we are not free. We are indentured. Indentured men were not owners. The tithe was upon the fruits of the owners. The servant had only his skin, his clothes and his personalty, and there was no tithe on those.

God permits us no license to excess when we are servants. We should be earnestly seeking our freedom through work, to pay all debt and to not incur new debt.

To the Christian, this means either owning our property free of mortgage, or renting it. We must not use this as an excuse, if we are free of debt, to vastly extend our appetites so that we devour all that we earn in greater luxuries, for this is God's money, not ours.

We need not live in a cess of crime or dirt, but there is no place for any Christian to ever live in a palace, unless he be a King, and even then the palace is for reasons of state, not personal luxury.

No Christian should be building himself a mansion unless he fills the rooms of that mansion with people under his care.

Once the Christian is free, he has further obligation. A Christian's child is never "emancipated", in the sense that there never comes a time when a Christian's child is not the responsibility of his parents, just as there never comes a time when an adult Christian child is not responsible FOR his parents.

Housing and freedom from debt - what the Christian must acquire for himself, the Christian must also provide to his Christian children, to maintain their freedom. And the Christian child owes his parent the parallel debt of assistance in old age and difficulty.

Christian parents and children having been provided for, up and down the line, excess then must be turned to provide freedom and security also to brothers and sisters.

Recall well that in Christ we are begotten anew, in water and Spirit, and obtain a new Father, The Father, who is our God. Each of us who is a child of God is a brother and sister to one another by the Spirit, through God, our common Father. Jesus is our elder brother. He has shown us the way.

Natural brothers and sisters by the flesh who are not chidren of The Father are not our charge, but brothers and sisters in Christ are.

Just as he freed first himself, then his children and parents, from need, through gifts and obligations, now next the Christian of means must turn to his brother in Christ, the head of another household with children, and he must seek to free him from his chains.

In the way God described: lend without interest to your brother and sister in Christ. Thereby, set HIM free of the usurers and allow him to establish himself free, in adequate housing and condition. The debt term is six years, the interest is zero. The law requires a minimum interest, take it to fulfill the law, but give it back as a gift. In the event that disaster or defeat leaves the indebted brother unable to repay in full, all is forgiven in the 7th year.

In all likelihood, he will be free before that, and then he must do the same for his parents and children as you have.

And then, once he has established his line in proper order, he must join with you to turn to a third Christian brother, and a fourth, and a fifth, over time.

As Christian sets Christian free, the expanding circle of liberty is virtuous. The stress and uncertainty that cause such things as obesity and medical conditions will be automatically lessened among Christians. There will be no corporation acting as clearinghouse, which can abuse and steal and do what so many "charities" have done: pay their leaders luxuriously. The Christian may experience, in moderation, the good things of God's earth, but he may not rightly seek to live in luxury.

Healthy, happy and free, IN brotherhood and THROUGH brotherhood. THAT is what we are called to be. THAT is the economic structure of God's word.

Even in excess to what is reasonably required for shelter, food and to live? Are all persons of faith mandated by God to live on oceanfront property in a MacMansion and eat lobster and cavier at every meal and wear the most expensive clothing?

Yes, there is debt. There is value owed, and the moral obligation to repay, within 6 years.

No. In fact, Christians are not to do any of that, for that is stealing the master's property.

Since SOSO is not schooled in the classics - I want to clarify a point Vic made when he wrote "he money all belongs to God. All of it. God forbade lending at interest. Categorically forbade it. It is a sin to charge interest to the faithful, and a sin to deny them loans."

I understand what he is saying but the way I was educated on the manner is that the the ban on usury (interest) on money is for the same reason God is against homosexual unions - money can not really multiply money. It is barren and can not reproduce. The abomination of desolation.

If I loan you a cow or money to buy a cow the result is a living creation it is hoped - a cow or bull being born. The return on my loan would come from the birth of the animal or say, the yield of the crops. Usury is getting more money from money. God put a fixed amount of precious metals on earth. How can man magically make more gold to pay off gold? etc. Interest is sort of a homosexual union in how the Bible views the sin.

I know this is all new to many because when was the last time you heard a conservative argue like this in the states?

That's just arithmetic. Greece can't repay the loans, at least not under the terms of the loans. But if Greece or any sovereign nation goes bust, the debts are not repaid at all. It would be something like a $350B writeoff for European taxpayers. The banksters unloaded a significant majority of their liability under a previous deal a few years back. Ireland, Italy, and France are not in great shape either.

The whole debt should be voided. All debt in the Christian world should be voided. Jubilee. Start anew.

Trust in the client to faithfully discharge the debt determines how much collateral is requested and/or what rate of interest is charged, to a large degree.

As to whether or not Greece can repay the loan, I'd have to know how much tax revenue is lost because of tax evasion and how much waste and corruption there is in the Greek bureaucracies before I hazard a guess as to what Greece can and cannot afford.

There are three kinds of people in the world: those that can add and those that can't

This i sthe real dangerous idea - not because it loses the financiers money - but it proves were are not living at all anymore in a Christ centered world. This is something the most patriotic of Christians loathe to speculate on.

Sovreign debt is not under the same universe as a business contract. See the Knights Templar and the French monarchy.

Especially given that we don't have valid title in the land to begin with. Most of the land was taken by violent force or fraud from the original owners with the title to grant it. Their heirs live and could be revested with it, but for numbers. Also, it would not perforce be justice to take the land whose title is settled by tradition away. There would be cosmic justice in it, and perhaps divine (or perhaps the Indians were expropriated by God because of their own evils).

Still, the fact remains that where there are treaties, and those treaties' terms are unobserved (which is generally the case), we do not even have title to the land we buy and still. It is a matter of force, and that does not establish justice.

Now then, housing is a basic need, and careful medical studies have shown that one of the leading causes of obesity in the poor is insecurity, and the greatest single expense and cause of insecurity in children and women is unstable housing. So, we have a population of people getting fat through stress and depression, and a major cause of economic stress is fear of homelessness (even if unexpressed).

Note well that the same stress and depression over instability and hopelessness drives obesity and alcoholism among the Indians from whom the land was snatched.

Housing, being a right from God (note what he did for Israel), on land he made - our Father knows what we need - should neither be in the hands of banks nor in the hands of landlords. Rather, there should be a government bank that issues interest free loans, payable over a lifetime from a percentage of income above a floor (in other words, the first tranche of taxes), payable from the estate if there is one, and otherwise, forgiven at death. Each adult on coming of age should be able to access this loan for his or her basic housing, with the size of the loan dependent on areas of residency and marital status. The loan amount can increase over time with life changes, but is constantly being paid down as a percentage of income. The objective is to get people into houses they can afford for each level of life, to allow them (as opposed to the banks) to capture the benefits of property value growth, and to provide the most fundamental level of security of all: housing security. Consider the dramatic cut in the cost of college, and in the need for welfare, if each adult owned his own lodging. Consider how that benefits savings. And consider how much more supple the economy would be.

Consider it all, and then realize that it is quite impossible with heathens and pagans to do any such thing. They will steal. They will cheat. The state, our state, cannot do this. A confessional state where people really believed could, but our secular and decaying state cannot.

But WE can. Christians can do this. Consider the money that the well-meaning Monaghan, of Domino's Pizza, spent building a whole new city, Ave Maria, Florida, with its own new college. He did what he thought best. But now imagine that, instead of that, such philanthropy and wealth were devoted to give Christians loans.

6 years was the standard for Israel, under God's law where the land was owned. We're not "under the law", but we're under the IDEA of the law. No usury, stability.

I can go into detail later, but let's consider the "New Model Christian" first, because all begins with each individual. That is where the nexus of thought and action is. That is what is saved. Entities and property rights are words, and words are wind. But men are real, and men endure, as spirits, to the end. It is the building of men, then, that is ultimately important.

Men cannot be rightly built, upon bedrock foundations, when idols like flags and nations, or excessive devotion to any tradition, is central. Of course the Christian tradition is central, but it is important to distinguish between the Christ part of it, and the tradition. The Catholics have a tradition which we say is Infallible of Papal Infallibility on matters of faith and doctrine. Christ was content to deal with very fallible Peter, Paul, James, John and Jude.

The traditions of Papal Supremacy have caused immense, seemingly unbridgeable divisions in Christianity. But Christ told the Apostles not to lord it over each other like pagans. This is not to say, therefore, that Catholicism is the Whore of Babylon. No. It is to say that there are traditions that come directly from Christ, and that have been preserved, and that work. And then there is the other stuff added on that is also tradition, and that sometimes works, and sometimes wreaks havoc. Catholics are not any better than Protestants or anybody else at distinguishing where that line is. There are nevertheless things on which Catholics and Orthodox agree, and since that right there is about 92% world Christianity, that's the place to start. Some Protestantism seems well-meant. Some of it (Phelps' Baptist Church) is evil. Apostolists (Catholics and Orthodox) need not spend precious time dwelling in the fever swamps of Protestant error. It is enough to cooperate with each other on what we agree on to move the world.

Maybe in the course of doing that, we'll move as Churches back towards each other even closer.

But it all starts with the individual. SOSO cannot understand this. Others there cannot. For them, it starts with the Constitutiuon, or the State, or the Bank, or the Economic System, or the ideology of "conservatism". On the secular left it is not different.

No purpose is served by spending time dwelling on the errors of unreachable others. The better path is to focus on what's right. And the place where that begins is with the individual analysis.

If Greece is not bailed out and goes bankrupt, its debts are null and void. It is a sovereign nation. That's just the way it works.

If they do not get a bailout, arithmetic says they will go bankrupt. Not only do debts go away, but government benefits and pensions are rendered unpayable, or payable only at a greatly reduced rate during recovery. Getting loans would be problematic for years.

The EU will not void the whole debt. The bankster financiers unloaded the large majority of their debt liability a few years ago. The EU organizations or the member governments will not volunteer to eat the loss without ejecting Greece.

But since you seem to now, how much revenue is lost to the Greek government due tax evasion, corruption and waste?

There are three kinds of people in the world: those that can add and those that can't

Of course, I do not have all the numbers. I have the observations of parties on both ends of the problem.

The Greek debt is in multiples of the GDP and the economy is bad. Absent a long-term suspension of payments, or a significant write-down, they cannot recover. Another loan is life support, not a solution.

Banks have been closed and the economy is a mess. The only financial solution is to drastically reduce spending. The cuts that will have to be made are political suicide. It would mean elimination or serious reductions in pensions and all social programs.