5% is actually a number close to German wishes than what would have made full sense. At least it's probably a number that Greece can live with.

It's a good compromise, overall, it can even be spun that way.

Wind power

The lectures about moral hazard fall on my deaf ears.

I'm not a banker so I don't know what loans are supposed to go off at, but I know these facts:

1. The deal was struck at a rate of 4.83% for 3-year bonds. 200 basis points higher than IMF loans.

2. There is a 50 basis points surcharge added that brings the cost of the loans to Greece to 5.33%.

3. Greece did a deal just two weeks ago after the last so-called agreement where they sold 5 billion euros worth of 7-year bonds at a rate of 5.9%. The auction was oversubscribed.

4. In the aftermarket, the bonds headed north from there as investors called the EU's bluff and perceived that the word coming out of Germany was that Greece was not going to be backed. From there the interest rates rose to 7%.

5. Some economists have analyzed that a 3-year bond at 5.33% implies a 10 year-bond at 7.xx%. If that's so (again, I'm not an expert) one might argue that this deal is actually above the rate Greece was getting in the open market just two weeks ago. I'm not capable of evaluating how many points higher a 7-year bond should be over a 3-year bond, but I'm just guessing that if you're giving 5.33% for a 3-year, then you're going to give more than 5.9% (the rate Greece sold at in the market two weeks ago) for a 7-year bond.

6. When you parse the wording in the agreement that envisioned a Greek bond at "market rates" you are essentially talking nonsense, since Greece would be pricing in default, at that point. If the market rate produces default, and you will only give Greece money at a rate that produces default, you are pissing away your money.

7. Wolfgang Munchau at the FT thinks that this will not help Greece overcome its debt problem and that it really constitutes a net transfer of wealth from Athens to Berlin. http://www.ft.com/cms/s/0/762c8ebc-4596-11df-9e46-00144feab49a.html

News that is doubly hard to understand for Greeks in the midst of an investigation that shows gov't officials were bribed by military industrialists to the tune of $80 million, a bribe that increased the country's debt burden by saddling it with unneeded and unwanted equipment. http://www.ekathimerini.com/4dcgi/_w_articles_politics_100010_12/04/2010_116293

I have been reading that there are several papers coming out analyzing the origins of Greek debt. The authors are leaking that the bloated bureaucracy (average salary 12000 euros) is not the greater part of the problem. A country that lacks industry goes into hock $15 billion a year for military equipment (for many years) and an equal amount of other development (in projects that produce no return) while the projects are awarded through corruption. this amounts to criminal activity at the highest ranks of Greek political life.

It is VERY hard to see an exit given the Greek power structure, the loans to Greece at high rates, etc.

I don't think this was a bad deal for Germany since the loans are short-term, Greece will pay them, and Germany will make money. Long-term, Greece's debt will continue to rise.

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100004853/has-germany-agreed-to-uncondit ional-surrender-over-greece-not-yet-i-suspect/

This Telegraph article argues that the loan will not come to pass at all.

http://blogs.wsj.com/indiarealtime/2010/04/13/greece-strikes-again/

Just as bankers were beginning to hope that Greece had finally ceased to plague their deals, Union Bank of India decided not to go ahead with a deal immediately at the end of its dollar bond roadshow.

Here, Greece is to blame for a bond deal gone bad for an Indian Bank. Now, I know that there is a limited amount of money out there for investment, but the world is pretty big. Surely, the $1.5 billion Greece sold yesterday did not suck all the money out of the world.

Another one:

http://www.usatoday.com/money/world/2010-04-13-greece13_ST_N.htm

"Think of it this way: A German worker is being asked to work a little longer to let a Greek civil servant retire a little earlier," says Marc Chandler, senior vice president of Brown Bros. Harriman.

Greece did raise its retirement age for civil servants from 61 to 65. Germans though still retire at 67. Yet, all the money that Germany pays into Europe each year is subject to the same dynamic since not many European countries have a retirement age of 67. Not to mention the fact that either way, a Greek worker is going to collect money for the state, whether they get 12k euro from their gov't employer, or 12k in social security.

But, I wonder if Mr. Chandler had voiced similar opinions about TARP? "Think of it this way: American children will be asked to work harder in the future so that I can keep my well paying job."

Then this one takes the cake: http://www.cnbc.com/id/36461833

I read that Greek hairdressers can retire at age 52 since they work with dangerous chemicals. I figured that it was a joke but I'm told it's for real.

Now, unless hair is part of the Greek civil service, this guy makes little sense. Next we'll hear that Greek dogs live in air-conditioned doghouses. According to cats living in NYC's Battery Park.Mr. Farrell doesn't have a hair dresser, so he must not realize that hair dressers can retire at the age of 51 in any country.

The laughs just keep on coming.