The 53.5 Billion Euro Question

News reports this morning via the German press indicate the magic number of the Greek loan to keep them afloat.....is 53.5 billion Euro.  In exchange for the loan.....Greece would bring up pension changes, cut spending, and push forward more sales taxes.

Where did the 53.5 billion Euro number come from?  No one says much.  Behind this....has to be some spreadsheet with some idea of the funds necessary to get them by for a period of three years (at least that's the other magic number they talk about).  All of this would keep them in the EU, still able to use the Euro, and lay out some path to a new currency deal (Drachma).  Some journalists aren't sure that the Greeks will really carry out the Drachma idea.

I was reading an oddball story late yesterday.  Over the past week, there's been a big upswing on passport applications....especially for Greek kids.  Some people believe that this is mostly for people admitting it's all a failure and no reason to stay.....so they are planning on an exit and taking their kids with them.  Typically for a Greek......this is a permanent exit and they don't intend to move back.

I watched a German news piece last night.  They sent a reporter on a plane down to Kos.....one of the major vacation resort islands in Greece.  The plane?  It was your typical 200-passenger plane and the majority of seats were empty.  Normally in July.....every single seat would be full.  The reporter went out to the beaches and interviewed Germans who were somewhat happy with their vacation but were a little apprehensive.  The reporter went to the ATM to get cash and found the 100-Euro limit in place.  If you were a tourist.....you'd best bring all your cash with you.....before flying into Kos.

The problem with the 53.5 billion Euro deal....at least within Germany.....no one believes the Greeks are capable of change.  No department of the Greek government will downsize.  No rich folks will be brought in for tax audits.  No one with foreign bank accounts will be audited.  Nothing much is expected the change.  Personally, I would even have doubts that the 53.5 billion Euro would last to the end of the third year.  With fake promised changes.....I'd give them twelve months at best.

My suggestion would be to agree to some fifteen billion Euro 'gift' (not a loan), and just say that's the end of the connection to the EU in terms of the Euro and Greece.

Let's be realistic....this three-year game-plan here?  This current government will likely not be around to see it.....nor will it's replacement govenrnment.  Whoever comes in....will have no connection to the agreement and say it wasn't done on their participation (the typical Greek stance to take).  So cooperating and giving them the 53.5 billion Euro really doesn't matter.  Neither does the 3-year deal.

The curious thing would be the data used to dream up the magic number of 53.5 billion Euro.  Who knows.....maybe it was just a 16-year old kid working on some class project and he suggested the number to his dad who works in the finance ministry.