Following yesterdays somewhat dramatic Greek vote, Neil MacKinnon, Economist & Strategist at VTB Capital joined us to take a look at the outlook ahead,
IMF distance themselves from Greek deal
He began by saying plainly, this is a bad deal for Greece, evident by the way that the IMF is looking to distance itself from it. The IMF have called for debt restructuring but been blocked by Germany, who fear a precedent being set and a restructuring contagion effect impacting on the rest of the struggling periphery. MacKinnon believes that this solves nothing, “The Greek Crisis is not finished, but Greece is.”
MacKinnon continues to add that creditors have already exacted a heavy price on Greece and the Greek economy is already 20% smaller than it was in 2007.
Greek debt restructuring inevitable
History shows that debt restructuring is not a new concept and has happened plenty of times before and his main area of reflection is the absurdity of the whole situation. He feels that in a few years we will look back in disbelief at how bad a deal this really is. Debt restructuring is inevitable, it’s just a question of how and when.
A new Treaty of Versaille is being written
According to his view, creditors are just trapping Greece in a debtor’s prison and had he been advising the Greek PM, he would have advised to play the default and Grexit cards. MacKinnon finished by expressing his support for comments by the former Greek Finance Minister Yanis Varoufakis who recently claimed that a new Treaty of Versaille is being written.
Sadly, we all know what that led to.