Debt Rattle 10 2014: They Snuck In Eurobonds Through The Backdoor

Courtesy of The Automatic Earth.

The headlines are great, but then so is the headfake. “Greece makes ‘triumphant’ return to the markets in €3 billion bond sale”, says the Guardian. CNBC speaks of a “voracious appetite” for Greek bonds, but does question whether it’s justified. Still, at first glance it certainly looks like the Greeks have been welcomed back into the fold of civilized people:

Greece, the country once held responsible for sparking the sovereign debt crisis, managed to attract €20 billion ($27.7 billion) of offers for a new five-year bond and is set to sell €3 billion at a yield of 4.95%.

The bonds were all snapped up by big investors. Like your pension fund perhaps. And if you feel inclined to ask why, you’re not the only one. Of course they pay a much higher yield than most. Bonds of European countries like Germany pay hardly anything (the yield for Germany 5-year bonds is 0.6%). These Greek 5-years pay almost 5%. Plus, the troika restructurings of the past few years mean that Greece doesn’t have huge debt payments to make for another 10 years. Then again, Greek economy looks to have zero probability of returning to growth for as many years as well.

Greek 2013 GDP may have fallen as much as 7%, though the IMF/EC/ECB troika claims a small gain. It also claims a €500 million primary surplus for 2014 , whereas Eurostat shows a primary deficit of €17 billion for the first 3 quarters of 2013. Greek government debt is at 177% of GDP, which is far worse than before the crisis. Unemployment is 28%, and youth unemployment about 65%. Salaries have been cut by 50%. Unemployment benefits have been shattered. 3 million Greeks, or 30% of the population, lost their insurance and have no access to health care.

Why is the troika embellishing the numbers? It seems to fit their agenda. Which mentions European elections next month. And after all, who are the troika members accountable to? The IMF to the whole planet and therefore no-one. The European Commission (EC) to its parliament, but with Barroso at its head for over 10 years, that doesn’t have much meaning. The ECB is accountable to all 28 EU members, but of course…