Why did Moody’s not evaluate the economic "narrative" Mitsotakis government: Recovery Fund money is running out

The slap in the face from Moody’s came as a major shock to the Mitsotakis government, which had been touting economic gains backed by loans from the Recovery Fund.

At the same time, tax evasion has reached 45 billion euros, despite numerous controls that mean that they exist for the “little people”, while they do not apply to other “insider people”.

A false narrative has been created that the Greek economy is booming, GDP is growing, debt to GDP is falling, banks are making windfall profits, but none of this reflects the truth as Greece is relying on temporary high yield vehicles that will not last.

While everyone is talking about bank lending, lending has continued to decline in Greece for the 9th quarter. Meanwhile, the Greek government sold its stakes in banks at a loss of 40 billion euros, and no one still understood what happened, thanks to the government’s control of the media and the excellent acting and speaking skills of Kyriakos Mitsotakis.

This is the first time in world economic history that a society has suffered such losses and the first time that a society is happy that for 44 billion investments it received… 4 billion euros, and this was called a success.

Moody’s is still reeling from its shocking mistake in 2012, when it gave Greece its highest rating between 2008 and 2010, and suffered the shock of unreliability when it gave unreliable Greece an A1 rating in 2005:

• The A1 rating means 5 scales from AAA – the highest credit rating a country can receive.
• The Ba1 rating that Greece currently has is 10 notches away from the AAA scale.

Moody’s would be the last to upgrade Greece to investment grade, so the next rating is delayed until September 2024, and even then there is no certainty that it will be upgraded. The debt-to-GDP ratio is improving, thanks to rising inflation, but in absolute terms total debt remains in the zone 403 billion euros, which is an all-time high.

Moody’s believes that NATO’s involvement in Ukraine and the possible participation of Greece in hostilities in Ukraine were another reason for the downgrade.

Greek banks have achieved record profitability, but the quality of earnings depends on ECB gifts and the 3-month Euribor. This is an extraordinary return with a shelf life and it has not been recorded.

It was also noted that the sharp increase in bank profitability hit the general economic indicators of the population due to exorbitantly high prices for banking services. This immediately affected the standard of living of the population, which dropped significantly, despite loud statements in the style of “Life has become better, life has become more fun.”

The dynamics of Greek GDP largely depend on cash flows from the eurozone, such as Recovery Fundbut that money is running out, and Greece will have to adjust to reality – a 2% growth rate and a primary debt surplus.

Many people in Greece have forgotten, perhaps because most of the media don’t want to remind them, that from 2032 the country will have to start paying off its debt. This year is not as far away as many would like to believe, and, of course, by then the country should have a different economy, one that finally produces something, and is not engaged in tourism, far from the most stable service sector, which The coronavirus crisis has shown.

Because if she can’t pay, the country will no doubt be put back under memorandum control, whatever that means.

Source link