Let’s consider the facts.
The current disagreement is over whether Greece’s creditors will release another bailout installment to pay… Greece’s creditors.
From a strictly financial perspective, this is highly problematic. Were a bank take a similar approach, it would have to give explanations to the regulators. This is called ever-greening – give the client funds to pay you back, and that way you can pretend that the loan is on schedule. If the creditors fail to disburse the next “bailout” payment, Greece will default.
On its own, this is just an accounting event. In fact Greece is already in default, and the financial position of the creditors remains the same – they can’t get repaid, except with their own funds. But the resulting consequences of default would go far deeper….
With Greece out of the Eurozone, the creditors’ ability to recover the loans would be far worse than were it to stay in.
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