As most everyone knows, Greece has been struggling with a crippling debt crisis that has threatened the financial stability of the euro zone. In an attempt to address this issue, euro zone countries held an emergency “crisis summit” earlier this week to try to ease the financial burden.
According to Business Day, “The euro zone countries and the International Monetary Fund (IMF) decided that they will give Greece a second bailout worth 109 billion euros ($145 billion), on top of the 110 billion euros ($146 billion) already granted a year ago.”
Additionally, banks and other private investors will contribute upwards of 37 billion euros ($50 billion) to the second stimulus package by either rolling over Greek debt, changing it for newer bonds with lower interest rates and/or selling the bonds back to Greece at a low price.
Good news, right?
Probably not. If anything else, this desperate second attempt at bailing at Greece is nothing more than just prolonging the inevitable.
Below is a portion of Seeking Alpha's humorous but honest critique of the official statement released after the conclusion of the crisis summit.
“Translation of the Communique
We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole and its Member States. We also reaffirm our determination to reinforce convergence, competitiveness and governance in the euro area.
We will keep throwing good money after bad as long as our electorates let us. The socialist Super-state project is not quite dead yet.
Since the beginning of the sovereign debt crisis, important measures have been taken to stabilize the euro area, reform the rules and develop new stabilization tools. The recovery in the euro area is well on track and the euro is based on sound economic fundamentals. But the challenges at hand have shown the need for more far reaching measures.
The patchwork of ad-hoc measures implemented thus far, while costing an arm and a leg, has gotten us exactly nowhere. Instead of admitting defeat, there will now be even more of what hasn't worked thus far. Although everybody knows that the recovery is actually going down the drain as we speak, we shall keep pretending that everything is fine. We will refer to that unholy mess as 'sound fundamentals' until we draw our last breath.
Today, we agreed on the following measures:
1.We welcome the measures undertaken by the Greek government to stabilize public finances and reform the economyas well as the new package of measures including privatisation recently adopted by the Greek Parliament. These are unprecedented, but necessary, efforts to bring the Greek economy back on a sustainable growth path. We are conscious of the efforts that the adjustment measures entail for the Greek citizens, and are convinced that these sacrifices are indispensable for economic recovery and will contribute to the future stability and welfare of the country.
Here are the next portions of our patchwork quilt.
1. We will continue to pretend that whatever the Greek government tells us is actually credible (please don't laugh). The ongoing molestation of Greek citizens and tax payers for the benefit of creditors who have taken unconscionable risks continues to meet with our approval. Sorry chaps, for you, it's sacrifice time. Rest assured that the eurocracy will remain completely untouched by your being ground into the dirt. Someday, you'll thank us for it.
2. We agree to support a new programme for Greece and, together with the IMF and the voluntary contribution of the private sector, to fully cover the financing gap. The total official financing will amount to an estimated 109 billion euro. This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece. We call on the IMF to continue to contribute to the financing of the new Greek programme. We intend to use the EFSF as the financing vehicle for the next disbursement. We will monitor very closely the strict implementation of the programme based on the regular assessment by the Commission in liaison with the ECB and the IMF.
2. This is where we throw more good money after bad, an estimated € 109 billion of it this time. Creditors will actually have to drop a tiny bit of their claims, but not to worry, most of those have already been offloaded to the public sector anyway. This would be a good opportunity to apologize to the tax cows for this affront, which we shall let pass unheeded. Additional measures that will help us to keep pretending that the Greek government's debt mountain can actually be repaid one day have been implemented. We call on those other bureaucrats across the pond to keep throwing money at the problem as well. We shall keep a close eye on what's happening, just as last time (fat lot of good as that did)."