Just as Prime Minister Antonis Samaras said he has ended talk of Greece leaving the Eurozone once and for all, a so-called “Grexit,” is still in the books – at least according to one analyst.
Writing in The Financial Times about a grand coalition of rivals in Germany, the biggest contributor to $325 billion in two bailouts to Greece on condition of harsh austerity measures, Wolfgang Munchau said the numbers are still against Greece and they aren’t good.
He noted that the Paris-based Organisation for Economic Co-operation and Development (OECD) forecast that the Greek sovereign debt ratio will stabilize at 160 percent of Gross Domestic Product (GDP) in 2020.
He noted that is 36 percent higher than the 124 percent that the country’s international lenders have been using to base their estimates of whether Greece’s economy can recover.
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) has miscalculated the ability of Greece to repay he said.
“In the next four years, Greece will either default or exit the euro – or both,” he wrote. He added: “The EU’s “pretend-and-extend” strategy of revolving loans at longer maturities and lower interest rates is approaching a natural limit.
Other analysts have been almost as pessimistic, also believing the rotating bailouts are a pyramid scheme or House of Cards that will come tumbling down and that the premise of taking out loans to repay previous loans without generating any growth and in the depths of a harsh recession is doomed to fail, if not just yet.