This chart of Greece and Germany's debt shows how utterly abnormal both countries are

In Europe, the average country carries debt worth about 95% of GDP. That national debt must be paid off over time, whereas GDP is just one year's worth of economic activity. So a 95% debt ratio isn't that onerous. It's completely normal, in fact. France and Spain both have about that level of debt. But there are two countries in the euro zone that are completely abnormal: Greece and Germany. As this chart from Barclays shows, the two countries are at opposite ends of the spectrum when it comes to debt and GDP. Germany's debt is only 75% of its GDP, but Greece's debt is nearly 180% of GDP: The problem here is that the current Greek debt crisis — and the EU refinancing of that debt — is being negotiated by the two countries that have the least-normal view of what an economy can reasonably expect in terms of debt. The Germans pay their debts easily and cannot understand why the lazy Greeks shouldn't do the same. The Greeks believe their debt is crippling the country's ability to generate the economic activity that might lead to normal debt repayments, and cannot understand why the Germans can't see that too. Interestingly, Germany is becoming more isolated in its view that the Greeks must pay their debts in full, no matter how impossible the numbers suggest that is. The National Institute of Economic and Social Research (NIESR) just said Greece should get 95 billion euros in debt relief (not just extra credit on new terms). The IMF, which previously supplied Greece with credit, says it will not offer further debt to Greece unless some of the debt is forgiven. That leaves the Germans, who until now have insisted that no debt can be written off, even though — without the IMF on board — more of Germany's own money is at risk on a country with a demonstrated history of defaulting. Good luck with that, chancellor Merkel.Join the conversation about this story »

READ THE ORIGINAL POST AT uk.businessinsider.com

IMF should offer Greece debt relief: Ex-director

As bailout talks between Greece and its creditors get underway, one thorny topic is likely to dominate discussions: that of debt relief for Greece.

READ THE ORIGINAL POST AT www.cnbc.com

Everyone now agrees on what Greece needs next — except Germany

It may have felt like Greece's bailout deal was done, following the announcement of an agreement from the summit of European leaders on Monday morning. But it's anything but finished. Not only is there still much legislation for and implementation of the required reforms to go, there's the colossal question of Greek debt relief left to tackle. One of the reasons the talks lasted for so long and became so difficult was the issue of Greece's debt burden. Athens made a major concession by getting no up-front guarantees on debt in its agreement (among the dozens of concessions it made). German negotiators seemed to be particularly against a discussion of debt relief before another bailout and austerity programme was in place. But before the negotiations with Greece had concluded, EU Council chief Donald Tusk was suggesting publicly that debt relief would be necessary. Since then, support for cutting the country's repayment burden has snowballed, leaving Berlin increasingly isolated. On Wednesday, the International Monetary Fund (IMF) released its own update on Greece's debt situation, calling the burden of repayments "unsustainable," moving from "highly vulnerable" at its previous review. Greek repayments would now exceed 15% of its economic output annually and its debt would peak at over 200% of GDP in total. Michel Sapin, the French finance minister, also joined in to say the French government was on the same page as the IMF. On Thursday, it was European Central Bank chief Mario Draghi's turn. He said that the fact Greece needed debt relief was "uncontroversial," and that the only question was how to do it. And on Friday, the IMF's Christine Lagarde said that the whole bailout programme is "quite categorically not" sustainable without debt relief. Here's what the negotiation actually says about debt relief: The Eurogroup stands ready to consider, if necessary, possible additional measures (possible longer grace and payment periods) aiming at ensuring that gross financing needs remain at a sustainable level. These measures will be conditional upon full implementation of the measures to be agreed in a possible new programme and will be considered after the first positive completion of a review. As is pretty typical of a European summit, there's a lot of wriggle room here on all sides. The "if necessary" statement could allow some countries to argue that it isn't necessary, for example. More importantly, the "full implementation of the measures" in a new programme may be borderline impossible. For example, the privatisation programme that Greece just signed up to is more than twice as optimistic on the revenue it can raise as the previous one was. And the previous one was already probably too optimistic. German finance minister Wolfgang Schaeuble doesn't exactly disagree with the fact that Greece needs debt relief — during the negotiations he proposed a "temporary Grexit," which was partly so that Greece could write down its debts and then rejoin the currency union. It was pretty disingenuous, since it's extremely hard to believe that Greece would ever leave the euro, restructure its debts and then re-enter, but it was part of the argument. Schaeuble's option has been completely pushed off the table by enough of the other participants, so now the only option is debt relief within the eurozone. At the moment, he's sticking to his line that cutting Greece's debt burden is illegal under European treaties. German courts pored over the whole idea of having a European bailout fund at all, and it was only deemed legal in 2014, two years after its establishment.  He may be right about a direct debt haircut — in which Greece's nominal debts are cut. But the 2012 debt haircut for Greece proves that it is possible. There are other ways of cutting the debt burden (particularly the annual repayments required) without cutting the nominal level of debt. Those include maturity extensions, which give Greece longer to pay the debts back, and cuts to the interest rates being levied on them. Interestingly, Schaeuble and Chancellor Angela Merkel haven't actually ruled out those sort of methods. Back in 2012, Schaeuble hinted at "conditional debt relief" and quickly backtracked. There's a reason for that — Germany's population, more than any large eurozone country, is opposed to debt relief. In a recent YouGov poll, 61% of Germans think Greece should be made to stick to to existing terms of repayment, against just 26% who favour renegotiation. In comparison, 41% of French respondents want the existing terms upheld, and 38% are up for renegotiation.  Merkel and Schaeuble's own centre-right party's lawmakers are similarly skeptical of offering an easier ride to Athens. The Chancellor and her finance minister could try to lead the country in a different direction, but they'd likely have an extremely difficult time doing so. It's clear that Greece's debt is currently a major economic problem for the country, and the German public's dogged insistence on full repayment doesn't change that. But there's something of a point to Schaeuble's position — if Greece doesn't want to leave the euro and doesn't reform, debt haircuts could be an irrelevance in the long term. If Greece doesn't become more competitive, it will return to the pattern seen in the early years of the eurozone, becoming too indebted. Without good growth, we'll be back here again one day.  At the moment it looks like Greece is going to get some form of debt relief and the German people will just have to accept that. But that could make the national tensions already present in Europe more and more obvious.Join the conversation about this story » NOW WATCH: The cheapest new Ferrari money can buy is absolutely gorgeous

READ THE ORIGINAL POST AT feedproxy.google.com

Beyond A Bailout: Greece Needs Debt Relief, IMF Says

Greece is so saddled with debt it probably can't turn its economy around for years, the International Monetary Fund says. But writing down debt would require an OK from Germany, which has opposed it.

READ THE ORIGINAL POST AT www.npr.org

IMF lures Gov’t: “Greece’s Debt not viable, needs Relief, longer repayment, lower interest

What did the International Monetary Fund do first thing in the morning, Washington time, on Thursday? The IMF published a debt sustainability analysis on Greece. Among others, the IMF says that Greece’s Debt is not viable and Greece needs a Debt Relief, €50billion in new finance from October 2015 until […]

READ THE ORIGINAL POST AT www.keeptalkinggreece.com

Greece asks IMF to delay debt payments to end-June: govt source

Greece's government asked the International Monetary Fund (IMF) permission Thursday to bundle four debt repayments due in June at the end of the month, a Greek government source told AFP.

READ THE ORIGINAL POST AT uk.news.yahoo.com

Global Debt Report: Massive Increase Since 2007; Greece Highest in Eurozone

The global debt of households, companies and countries amounts to the astronomical sum of 200 trillion dollars, the highest in 50 years, according to US-based multinational consulting firm McKinsey. In a report published earlier in February, the firm indicates that seven years after a burst of the global credit bubble resulted in the financial crisis, debt continues to grow. In fact, rather than reducing indebtedness, or deleveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. Global debt in these years has grown by 57 trillion dollars, raising the ratio of debt to GDP by 17%. That poses new risks to financial stability and may undermine global economic growth, McKinsey warned. A new McKinsey Global Institute (MGI) report, entitled “Debt and (not much) deleveraging,” examines the evolution of debt across 47 countries, among which 22 advanced (including Greece) and 25 developing, and assesses the implications of higher leverage in the global economy and in specific sectors and countries. According to the report, the debt-to-GDP ratio has risen in all advanced economies. In many cases the rise exceeded 50%. Government debt is unsustainably high in some countries. Since 2007, government debt has grown by 25 trillion dollars. Similarly, household debt is reaching new peaks, while only in the core crisis countries (Ireland, Spain, the United Kingdom and the United States) have households deleveraged. At the same time, China’s debt has quadrupled since 2007, fueled by real estate and shadow banking, rising to $28 trillion by mid-2014, from 7 trillion in 2007. “These challenges need to be addressed. Yet if, as it appears, economies need ever-larger amounts of debt to grow, and deleveraging is rare and increasingly difficult. They may also need to learn to live more safely with high debt. That will require new approaches to manage and monitor it, to reduce the risk of crises and efficiently resolve private-sector defaults. Policy makers will need to consider more ways to reduce government debt and it may be time to reevaluate how incentives in the tax system encourage the amassing of debt. When there are signs of credit bubbles, regulators can seek to cool markets with countercyclical measures, such as tighter loan-to-value rules and higher capital requirements for banks. Debt undoubtedly remains an essential tool for financing economic growth. But how it is created, used, monitored, and (when necessary) discharged still needs improvement,” the report concluded. Eurozone debt In terms of debt in the Eurozone, according to Deutsche Bank, total state debt in the euro area is 9.473 trillion euros, or 94% of GDP. Greece has the highest percentage of debt, at 176% of GDP, translating into 300 billion euros, whereas the same figure in 2007 was 107.2%. Italy comes second with 131.8%, followed by Portugal at 127%. Estonia sports the lowest debt to GDP ratio at 10.5%. An Olympus-sized mountain of debt for Greece According to figures tabled by Greece’s Public Debt Management Agency in Parliament during 2014, between 2021 and 2030, the Greek state’s debt will reach 201.05 billion euros, out of a total of 291 billion euros in overall obligations between 2015 and 2030. The interest payments alone will amount to 114.45 billion euros.

READ THE ORIGINAL POST AT greece.greekreporter.com

Three myths about Greece's enormous debt mountain

Over 175pc of national output. That's the eyewatering debt mountain that faces the new Greek government and the question over which the country is set to collide with its northern European paymasters. As it stands, Greece's debt-to-GDP ratio is the highest ...

READ THE ORIGINAL POST AT www.telegraph.co.uk