What's a Greek Tragedy?

As actuaries we do not believe in miracles, or do we?

According to a 'strictly confidential' document from the Troika (= EC, IMF & ECB), Greek's Debt/GDP ratio suddenly raised from 149% to 186% in 2013!

This new insight causes a 'potential need for additional official financing' ranging up to €440 billion!! (are you still with me?)

Let's take a look at how Debt/GDP ratio developed in the past and the new optimistic Troika forecast (red line).

Just to help the Troika, I've added a non-miracle 'Maggid' forecast based on simple and more realistic economic principles.

Not a word in the Troika report about the drivers and cultural changes that are necessary to achieve a long term decrease of the Debt/GDP ratio. Everything is based on  suggestive mathematical art.

Continue throwing good money after bad, is not the way forward. Greece will first have to show that it is not only willing, but also achieving debt reduction. Current measures are insufficient. Start for example to raise retirement age to 65 as a beginning...

Let's pray European leaders give up Keynesian miracle thinking and take the right decision:

Stop helping Greece to finance their debt, unless Greece shows strong progress in reducing debt itself every month .

If not.., the line 'A Greek Tragedy' will get a new meaning....

Sources/Links:
- Troika report
- Zerohedge: Greece
- Retirement around the globe blog

Humor: Actuary Scrooge

Today's Brainer:What's the difference between a pension fund and an investment fund?

Actuary $crooge shows...

source

On Line DIY European Stress Test

Thomson Reuters' Breakingviews now presents an on line DIY stress test. Change the Tier 1 ratio and haircuts of the PIIGS countries and find out the capital shortfall of Europe and the shortfal of individual European banks.

An explanation can be found here and there is also an Excel spreadsheet.

Enjoy stress testing!