Attention George Papaconstantinou — the more you insist upon something, the no likelier it is actually to be true. Although your credibility will collapse even further when the opposite happens.
As the Greek finance minister said on Wednesday, via the FT:
“Restructuring is not going to happen. There are much broader implications for the eurozone should Greece have to restructure its debt,” he said.
“People fail to see the costs to both Greece and the eurozone of a restructuring: the cost to its citizens, the cost to its access to markets. If Greece restructures, why on earth would people invest in other peripheral economies? It would be a fundamental break to the unity of the eurozone.”
Now, Gary Jenkins of Evolution Securities has already teased out the real political implication of the Greek government’s argument (link added):
Greek officials have ruled out the possibility of default according to the FT. Here I am tempted to quote Mandy Rice-Davies but instead will focus on the [eurozone stability] reason why they believe they will not have to restructure their debt… Basically Greece can hold the rest of the eurozone to ransom. That a union does not make. It is no wonder that there are many people (a fair proportion of them being German) who want to introduce a mechanism for a eurozone member to default.
‘I’m not going down, because if I did, I’d take you all with me’ — it’s not a comprehensively persuasive signal of commitment, to be sure, even if it’s got a certain game-theoretic, coercive charm.
What’s even weirder is that the minister has linked Greece with the other peripherals at a time when they really don’t need the association.
Certainly not Ireland with its potential liabilities over Anglo Irish; but not Spain either, which is edging back to credibility, one bond auction at a time.
Related links:
Athens admits it has a long way to go – FT
Beware of Greeks Bearing Bonds – Michael Lewis in Vanity fair
Grim Greek austerity arithmetic - FT Alphaville
Fitch on Greece’s Sisyphean task – FT Alphaville