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Remember That Greek Bailout Thingy?

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Markets have been rattled by reports in the German media that the Greek rescue deal contains two secret clauses. The package will be "immediately and irrevocably cancelled" if it is found to breach the EU Treaty's "no bail-out" clause, either in a ruling by the European court or the constitutional courts of any eurozone state. While such an event is unlikely, it is not impossible. There are two cases already pending at Germany's top court in Karlsruhe, perhaps Europe's most "eurosceptic" tribunal.

The second clause said that if any country finds it cannot raise funding for the rescue at interest rates below the 5pc charge agreed for Greece, it may opt out of the bail-out. BNP Paribas said this would escalate quickly into a systemic crisis if Spain were in such a position, because the other countries cannot carry an ever-rising burden. The bank warned the euro project itself may start to disintegrate rapidly if these rescue provisions are ever seriously put to the test.


More from FT Alpha

Greece doesn’t have to repay the loan for up to three years.

The loan can have a maximum term of five years.

The euro countries are offering up to €80bn, with a minimum draw-down of €1bn.

Greece must pay lenders a “service fee” of 0.5 per cent on the loan.

In the first three years, Greece has to pay a 3 per cent premium over Euribor. After that the premium increases to 4 per cent, and by two percentage point increments thereafter.

Greece has a duty to prevent fraud, corruption and other “irregularities” in the adoption of the loan. Athens has to allow inspectors unrestricted access to check up on how the loan is being used.

Greece has to repay the loan on a pro rata and pari passu basis to all lenders — i.e. there can’t be a preference for individual states in the repayment waterfall.

If lenders can’t extend credit to Greece, for instance because of political reasons, the initial loan can be financed by just some of the eurozone lenders.

If a country has to borrow to lend funds to Greece, and if its borrowing expenses are more than the interest rate paid by Greece, the lender can ask other eurozone states to pay the difference. If the latter refuse to pay the difference, the country could refuse to lend to Greece altogether.

If a constitutional court in a eurozone country, or the European Court, rules that the loan to Greece violates national or European Union law, the loan agreement for the country, or the eurozone as a whole, would be void.

Edited by Laura
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Ill say it again.

What Bailout?

constantly announced....never actually done.

this whole thing is about Appearance. a nice suit and a shave, a ferrari loaner and £10,000 in the wallet and even a tramp could pull the bird.

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So each country needs to try and sabotage its own fund-raising so it can get out of it.

It would appear that no one really wants to bailout Greece.

However I thought it was reported that the first 20bn had already been sent?


Greece has received the first tranche of a 110bn-euro ($136bn; £94bn) loan to help it overcome its debt crisis, the European Union has said.

The European Commission said 20bn euros from the EU and the International Monetary Fund had been drawn on.

The bail-out package for Greece - which has an 8.1bn-euro bond repayment due on Wednesday - was agreed earlier in May.

On Monday, eurozone finance ministers insisted the euro was still credible despite its slide against the dollar.

So how do the Greeks return the money if everyone pulls out?

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So each country needs to try and sabotage its own fund-raising so it can get out of it.

Yep. Germany finally embraces the Club O'Med ideals.

True union has arrived,

a nano second before the whole act falls apart.

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  • 429 Brexit, House prices and Summer 2020

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