The WSJ is reporting on a draft table that shows the effects of different measures to reduce Greek debt. The wonky projections that put debt a 115% of GDP in 10 years aren’t unusual but the methods are creative.
The cite three options:
- Debt buybacks
- Loan interest cuts
- Return of SMP profits
All three options have been on the table for awhile. Yesterday’s reports suggested loan rates could be cut to 0.25%, saving 44 billion euros.
I prefer a system where the profits of official loans (not just SMP buys) are placed in a fund that can slowly be distributed to Greece, rather than cutting rates. That would result in a lower liability for the rest of the eurozone if/when Greece defaults.
