The Greek debt
There is almost no talk of Greece and when it is almost always done it is about the refugees. The debt has gone into the background. Now the important thing is Venezuela ; that is where the Spanish elections will be decided.
But today I remembered Greece. And of your debt .
It turns out that Greece’s debt, in absolute terms, is approximately one third of that of Spain and about six times less than that of Germany! It turns out that in the last two years the Greek debt has decreased . Little, with the help of the European institutions and everything you want. But it has decreased.
Even so, the Greek risk premium exceeds 700 basis points. That is, it is subject to conditions (more than 8% interest for a debt that almost doubles its GDP) that make it almost impossible to pay . And all that because the Greeks are bad and they chose a stinking party like Syriza. It does not matter that the debt was generated when good parties governed.
Spain is almost the opposite case . Here in 2011 we chose well . Since then the debt has increased almost 50% and already exceeds 100% of GDP. But although in the first half of 2012 the risk premium shot up to over 600 basis points, the markets soon understood that we were going to be good and they placed us at a very reasonable one hundred and a few points. We can maintain an uncontrolled deficit and continue to borrow. Moreover, those fines that are foreseen if the deficit is breached are postponed until after the June elections .
If the Spaniards happen to vote badly , vote for one of the plagued parties, there will be a fine, the risk premium will skyrocket and there will be no way to pay that debt that was generated in times when good parties governed. And the winner, if he manages to form a government, will have to be docile. May he learn from Tsipras!
It’s what low interest rates have . It seems that it does not matter to get into debt. But they are only low while governing who has to govern .
Or had we believed that the markets are stupid ?
The debt and the risk premium are excellent control mechanisms .
So let’s see who we vote for! Let’s vote well. In another case, the threat is clear .