Chart Of The Day: The Greek Bailouts In Context... Or To Debt Reduction Via Debt Increase

Tyler Durden's picture

The simple Bloomberg chart below summarizes the running insanity that is the ongoing Greek bailout. To date, the existing bailouts - already completely wasted - amount to well over 100% of Greek GDP.

Keep in mind this is a simplistic, superficial read of the components involved in the three Greek bailouts to date. We show this to present the context for the Fourth Grek bailout which was a failure last night as virtually everyone knows that Greece, in its current iteration, is finished, and that with each passing day the economy collapses ever tighter into a singularity of its own, as nobody works, everyone is on strike, no taxes are collected, yet more government spending is curtailed, and the circle keeps on turning.

All of this is also quite well known to our regular readers. From April:

Two months ago many scoffed at us when we calculated that based on preliminary information, "The Cost Of The Combined Greek Bailout Just Rose To €320 Billion In Secured Debt, Or 136% Of Greek GDP." We clarified as follows: "Some of our German readers may be laboring under the impression that following the €110 billion first Greek bailout agreed upon and executed in May 2010, the second Greek bailout would cost a "mere" €130 billion. Alas we have news for you - as of this morning, the formal cost of rescuing Greece for the adjusted adjusted adjusted second time has just risen to €145 billion, €175 billion, a whopping €210 billion, bringing the total explicit cost of all Greek bailout funds to date (and many more in store) to €320 billion. Which incidentally is a little more than Greek GDP (which however is declining rapidly) at 310 billion, only in dollars. So as of today, merely the ratio of the Greek DIP loan (Debtor In Possession, because Greece is after all broke) has reached a whopping ratio of 136% Debt to GDP. This excludes any standing debt which is for all intents and purposes worthless. This is secured debt, which means that if every dollar in assets generating one dollar in GDP were to be liquidated and Greece sold off entirely in part or whole to Goldman Sachs et al, there would still be a 36% shortfall to the Troika, EFSF, ECB and whoever else funds the DIP loan (i.e., European and US taxpayers)! Another way of putting this disturbing fact is that global bankers now have a priming lien on 136% of Greek GDP - the entire country and then some now officially belongs to the world banking syndicate." Well, as it turns out, we were optimistic (which incidentally is always the case when we try to account for government stupidity and lies). To wit:


This is SECURED debt, or debt which foreigners have funded with a lien on all Greek assets. Including gold! Translated, the Greek Debtor in Possession loan has a 177% Loan to Value.


Recall that according to the IMF Greek Debt/GDP will somehow be 120% in 2020. This means that 57% of the incremental debt will somehow have to be paid down. Or, as is 100% more likely, liquidated, with even more super-senior DIP debt. In other words, the Troika itself admitted that the Troika itself will be haircut before all is said and done.

And yet another aspect of the ongoing Greek insanity. As per Bloomberg:

European governments tore open the hole last week, by giving Greece two extra years to cut its budget deficit. The required extra financing provoked a clash with the IMF, since it would add to Greece’s debt load instead of reducing it.

Or, as we predicted the day the first Greek bailout was announced in May 2010, "Greece Bailed Out To Get In Even More Debt."

The absolute idiocy continues.

In summary: to debt reduction, via debt increase comrades! Forward!