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The Greek "Rescue": Where Did the Money Go? An Analysis

Pablo Bortz

No 29, Working Papers Series from Institute for New Economic Thinking

Abstract: This paper analyses the financial assistance provided to Greece in the first two rescue packages granted by the Troika (European Union, European Central Bank and IMF). It looks particularly carefully at claims by Sinn that a third of the public credit granted to Greece financed its current account deficit, while another third funded capital flight by Greek nationals, with only the remaining third used to pay creditors. The paper shows that Sinn inflates the assistance given to Greece by mixing several different concepts in the total. It also critically reviews the claim that the assistance was used to finance the current account deficit or capital flight by Greek citizens. Realistic accounting shows that 54% of the financial assistance provided to Greece was used to repay (foreign) debt, while another 21% was used to recapitalize Greek banks (some of which were owned by foreign institutions). Other claims about the rescue package are also analyzed in relation to the treatment of Greek and foreign banking exposure to sovereign debt.

Keywords: Quantitative Easing; Monetary Policy; Federal Reserve; Inequality (search for similar items in EconPapers)
JEL-codes: E02 E58 E61 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015-11
New Economics Papers: this item is included in nep-eec and nep-pke
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Downloads: (external link) First version, 2015

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