What is happening in Greece?

Nothing good:



The Grand Greek Paradox of
the day, meaning the impressive rise in the assets of a nation more
bankrupt than ever, is neither that grand nor that much of a paradox.
There is, indeed, a simple reason that international investors are
piling in to buy some of the nation’s paper assets (e.g. the freshly
minted government bonds and shares in some banks), even though the
country is economically kaput and its government is steeped in long-term insolvency more than ever. What’s this simple reason? The short-term decoupling of the value of paper assets from Greece’s real economy.




Take for instance the new bonds, worth
€3 billion, issued last week. This new debt has been added to the
existing stockpile of €320 billion for a shrinking economy with a
nominal GDP, currently, around €180 billion. To service it next year
alone (in 2015), the government must achieve a gargantuan primary
surplus of 12.5% of GDP and use it all to redeem debt (while Greeks are
in the clasps of untold misery and only 10% of the 1.3 million
unemployed receive any benefits). Why would a self-interested investor
buy these new bonds, in view of the unsustainability of the country’s
overall debt? The answer is, of course, that Berlin and Frankfurt have
signalled to investors that there is nothing to worry about.



Greece’s Grand Decoupling, the Nuclear Option and an Alternative Strategy: A comment on Münchau | Yanis Varoufakis