Greece Requires 4th Bailout Already?!?!?!$@%*&

This pie chart has not been updated to reflect the additional capital needs of the Greek banks following the bond exchange.

This pie chart has not been updated to reflect the additional capital needs of the Greek banks following the bond exchange.

Happy New Year Germany: Greece Needs A New Bailout | ZeroHedge.

On December 6th, I naively wrote that Greece would require a 4th bailout prior to German elections in the fall due to falling tax revenues in the face of an ongoing depression:

https://dareconomics.wordpress.com/2012/12/06/greece-will-require-a-4th-bailout-before-german-elections/

ZeroHedge has pointed out that insolvent Greek banks will necessitate a fourth bailout before then. Bad loans in the Greek banking system are an obscene €55bn. Additionally, the forced bond exchange to bring Greece’s debt down to “sustainable” levels cost the Greek banks €37bn in capital. Then, Greek banks must add €92bn in capital to become solvent, and only €50bn has been allocated for bank recapitalizations.

Add in a €500mm to €1bn in monthly revenue shortfalls for government spending, and you can see that Greece will be asking for another bailout sooner rather than later. I do not believe that the Merkel makes it through elections without the Greek problem rematerializing.

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2 thoughts on “Greece Requires 4th Bailout Already?!?!?!$@%*&

    • I agree with you in that the ECB will not cease intervention, but the Greek economy will need solvent banks capable of lending to fund an economic expansion. Currently, the Greeks have plenty of idle workers and capital but no money with which to make investments.

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