• It’s been labelled the most expensive sticking plaster in the world.
Greece has been granted the biggest bail out in history. An eye watering €130 billion Euros will be put into a separate piggy bank for Greece to spend on debt repayment. But such an exorbitant gift comes at a high price.
The Eurogroup (Finance Ministers of member states of the single currency) announced that the second bail out would ensure debt sustainability and restore competitiveness. In short, the second bail out will pay for the loan repayment due on the first bail out. Come 20th March Greece is due to pay back €14.4billion on a bond repayment, so one would hope the recent rescue package will ensure that Greece does not submit to a disorderly default and drag the entire Euro area into disarray.
But in order to save the Euro, Greece cannot be seen to be saving themselves. Taking one for the team is probably not the attitude of the Greek people, who have already seen a 22% reduction in salary bringing the minimum monthly wage down to €751 (£630), 150,000 cuts in public sector jobs and the country’s constitution rewritten to ensure that the top Government spending priority would be on debt repayment, not public services.
Imagine those same conditions being imposed here and you can start to feel a bit of empathy for the Greeks.
All of this will in theory (although unlikely in practise) achieve rewriting Greek debt down to 120% of GDP by 2020. So essentially, they will still be spending a load more on debt repayment than they will ever have in their coffers.
There will also be permanent monitors from the Troika of the IMF, EU and ECB to make sure these spending cuts are implemented, with suggestions that the upcoming elections be suspended to ensure former Deputy President of the European Central Bank retains his role as Prime Minister after he usurped the throne from the democratically elected former leader last year.
However the Greek economy will remain in freefall. The 120,000 soon to be unemployed won't exactly be contributing much to the economy (bearing in mind the total population of Greece is 11 million it's a large number to throw out of work) and neither will the once relatively affluent workers who are now not even making enough money to pay rent and buy food.
The rescue package merely buys the Eurozone more time to get their ducks in a row, at the cost of throwing real lives into the dustbin of economic despair.
By Summer the EU are hoping to have shored up €700 billion in their bail out fund to potentially rescue the economies of Spain and Italy if required.
Meanwhile the people of Greece are being squeezed again and again which does not create growth, merely sends a signal to lenders that the euro will be saved at any cost, even if that cost is a very human one.
Of the total costs for this latest crisis-stalling measure (for that is all it is - in time Greece will be back on the precipice of collapse once more) we can be proud that every family in the UK has effectively contributed £500. But don’t fancy that this money will be buying a few thousand cans of soup for the now destitute. It is simply being pumped into the blackhole of debt and stockpiled reserves for paying off debt that simply ensure the single currency is kept afloat.
In essence, UK taxpayers money diverted to Greece via the IMF has been spent on saving the flagship single currency project which is the keystone of the European Supranational dream in which we decided long ago we were unwilling to take part.
It's about time we started sensibly looking at how to return Greece to its own currency, where it can control interest rates and stimulate growth and spend the €130billion on helping those most in need (it would work out as around €100,000 each) rather than throwing money at vacant ideology.
I would sooner support a charitable hand out from the UK to Greece rather than watch the government fund autocratic tyrannical rule in Athens by a group of Eurocrats with a penchant for continental domination while ordinary people suffer.