Greece’s Prime Minister Lucas Papademos said on Friday the country was making every effort to avoid a third bailout package but said he could not rule out the need for one. “Some form of financial assistance might be necessary but we have to work intensely to avoid such an event,” Papademos said in an interview in Italy’s Il Sole 24 Ore.
He said Greece might find itself in a position of not being able to access markets even if all the measures agreed upon are fully implemented.
“It is difficult to foresee market conditions and expectations in 2015,” he said.
Papademos said Greece leaving the euro would have devastating consequences.
“The return of the drachma would trigger high inflation, exchange instability and a fall in the real value of bank deposits,” he said.
Right after the €130-billion bailout in March, some reports on international media claimed a third bailout package could amount 50 billion euro.
I read an interesting article earlier which pointed out that for Greece the fact that she has had inflation combined with falls in wages meant that her problems were being made worse.As it was put by the economist Shaun Richards on his blog.
“2. Yesterday I pointed out that debt in Greece was in effect being kicked into the future and it would be harder to repay it rather than easier on current trends. Well today I wish to take this further and apply the analysis I used on the 24th of February.
Take a Greek citizen seeing falling wages and rising prices. They will see more and more of their money going on essentials such as food,housing and fuel. Accordingly less and less would be available to pay off any debt unless your plan is to cut back on the three items I have mentioned….”
On that basis no wonder we might need yet another bailout!
or enforce a renegotiations of the bailout terms 🙂 Baliout over bailout is not the solution under the circumstances of deep recession.