greek finnish bilateral deal

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De-Ker
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greek finnish bilateral deal

Postby De-Ker » Wed Aug 24, 2011 9:33 am

I am curious how people think about this deal. Especially the Finns here.

I will kick off with my own idea about it.

First off all, its impressive what Jutta Urpilainen managed to achieve. But i don't understand how the greek could agree on such a deal. For sure if every county would want the same terms. I.e. cash for cash, the whole bail out system would collapse. they could and should have known this.

Finland should have known that eu countries wouldt agree on hard cash as collateral. You don't need to think for long to understand that greece is getting this cash from the bail out pack. So in essence, me, as dutch citizen together with the other eu countries guaranees that finland won't risk financial losses. Which in my opinion is unfair. And island as collateral should be much more better. Especially since eu agreed that finland was free to negotiate a bilateral deal.

What do you guys think and more important, what will happen if eu-countries wont agree on this deal?

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Re: greek finnish bilateral deal

Postby Dakkus » Thu Aug 25, 2011 8:40 pm

My undestanding of what's actually going on is this:
1) Finland lends a sum of money to Greece with a certain interest rate
then
2) Greece then lends the same sum back to Finland with 0% interest in order to make sure that Greece can later pay back the debt to Finland
3) Finland "invests" the money to non-Greek bonds that have a profit margin smaller than the inflation rate

Later one of these two will happen:
A) Greece pays back its debt to Finland, including the interest and Finland pays that same sum to Greece.
B) Greece can't pay back its debt and Finland cancels its debt to Greece and Greece's debt to Finland. Finland makes no profit with interest.

So, essentially Finland is giving Greece a :note-20: and Greece will give Finland back the same :note-20: .
Later Greece will give Finland a :note-20: and a coin of 5 cents and Finland will give Greece back its :note-20: .

I am unable to understand how this is supposed to help Greece at all, but I am also unable to understand what is meant when it is said that this money will be paid from the pockets of other Europeans (beside the fact that they will essentially pay Greece's interest).
This essentially means that Finland is giving money to Finland. I am astonished with all this weirdness.
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Re: greek finnish bilateral deal

Postby De-Ker » Wed Aug 31, 2011 10:10 am

Sorry for the late comment, didn't see you've reacted...

I pretty much agree with you. What i've meant with that we as other countries pay for the finnish-greek deal is quite simple. Greece has no money. In order to pay the finnish they have to withdraw the money from the stability pact that we (other countries) fill up with cash. So it goes like this: NL (and the others) ->GR->FI

hope that makes things clear now.

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Re: greek finnish bilateral deal

Postby Dakkus » Sun Sep 04, 2011 12:08 pm

De-Ker wrote:Sorry for the late comment, didn't see you've reacted...

I pretty much agree with you. What i've meant with that we as other countries pay for the finnish-greek deal is quite simple. Greece has no money. In order to pay the finnish they have to withdraw the money from the stability pact that we (other countries) fill up with cash. So it goes like this: NL (and the others) ->GR->FI

hope that makes things clear now.


The funny thing is, Finland is in the group "(and the others)" that you mention.
I also checked and the amount of money Finland is taking back from Greece is about 1/3 of the money it gives to the stablity pact. Therefore, if Finland is giving Greece more money than it gets back, you could very well just see it as the money being Finnish money, eg. Finns giving in reality as many euros less to the pact as they require from Greece.
Finland seems to be going to fund the pact with approximately 1,5 billion euros and Greece will be handing 0,5 billion euros from the pact money to Finland.
To me that seems like Finland is effectively supporting the pact with 1,0 billion euros instead of the 1,5 billion it claims to. (because 1,5 - 0,5 = 1,0)
I still fail to understand, by which logic this money comes from anybody else's than Finns' pockets.

And I still also find all of this very ridiculous. I think Finland should balance the situation by giving 0,5 billion extra to the pact, bringing the net amount to 1,5 billion (1,5 - 0,5 + 0,5 = 1,5 ;))
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