John Rubino writes, “Tuesday’s markets really liked hearing that Greece’s new “radical-left” leaders had, once in office, backpedalled on their demand for debt restructuring. Now they apparently just want the country’s unmanageable debt to be rescheduled. See: Hopes for Greek Debt Deal Rise After Athens Softens Tone.
This, of course, is just semantics. Either a big chunk of Greece’s debt somehow goes away or its economy implodes, so whatever they call the deal it will have to amount to a massive haircut if it’s to prevent a default in 2015.
Meanwhile, Syriza’s other policies include reversing electricity and oil privatizations, re-hiring of laid-off public sector workers, scrapping recently-streamlined labor laws, raising the minimum wage and restoring the practice of paying an extra month’s benefits to pensioners. In other words, if given free rein they’ll do exactly the things that always produce a bloated public sector that leads to excessive borrowing that in turn guarantees a currency crisis.”
Sign up (on the right side) for the instant free Financial Survival Toolkit and free weekly newsletter.