The negotiators from the euro zone European union on behalf of the nineteen member countries reached a last minute deal with the Greek government to extend the existing arrangement due to expire on February 28 for a further 4 months to enable further negotiations on establishing a new framework to proceed. The new government’s margin to manoeuvre has been restricted somewhat but it can reduce the size of the primary surplus it is forced to run as a percentage of the GDP and some of its anti austerity measures can be implemented though not all of them. Once further details emerge we will be able to better assess whether the Greek Government has properly escaped from the straight jacket they were in.
Greek bond prices rose slightly so that the interest rate on them fell to 9.89 %. This is still a punitive rate for Greece to have too pay to finance its debt particularly since such a large percentage of the debt is owed to the IMF, the ECB and the special EU emergency financial fund. Clearly all these institutions could and should receive a lower rate of interest instead of one that borders on usury when the rate on German ten year government bonds is close to zero at 0.36 %. Usurious interest rates and overburdened debt loads are an ancient story in Greece. Both Aristotle and Engels commented upon it. Solon in the sixth century B.C. banned debt bondage and limited the size of land holdings.(See James Macdonald A Free Nation Deep in Debt, N.Y., Farrar, Straus and Giroux, 2003. p.26)