For 24 hours a number of comments circulating in the press and on the net both in Europe and the U.S., arguing that one can not solve a debt problem through debt. That sounds good, but it is a shortcut misleading. Without an exhaustive analysis, point out some aspects of the decision this weekend end.
The European definition is by borrowing, and thus debt. A key change, however: If Europe ready for Greece, it will repay the debt more expensive. That should mitigate the risk of “snowball effect.” Greece will pay less interest in since it will benefit from better conditions than those it obtains on the marketplace. This will reduce its budget deficit.
In addition, it will seek capital markets for smaller amounts. Some loans will be under the signature of Europe (TBD). The total amount of bonds issued on the Greek Eurobond market decline. The weight of debt Greek is found distributed between Europe and the markets.
Finally, risk-taking will be made by Europe, and the Greek risk allocation will become more balanced. Somewhere in Europe, “improving” the rating of Greece. This should enable it to restructure its finances and the effects reforms helping, getting faster at a level of debt such as loans Europeans will no longer be necessary.There is a risk allocation that reduces the interest burden and the burden of debt.
All this presupposes that the European loans will be used to gradually reduce the outstanding bonds.At the macro level, the impression of a “zero-sum game.” But not at this level that things pass: we must add a credit analysis.