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David Kuo of The Motley Fool U.K. on Greece’s continued efforts to finance its economy.
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Talk more about all of this David -- European expert for the -- full UK and not.
I don't wanna make a joke here by it it seems as if -- gonna be the fools because the IMF is saying it's not sustainable even the package they've worked out.
Why are the Europeans doing this why not just let them default and clean up the mess -- Well how to be me -- -- -- I would have actually just let them default because there only three things that he can do with that.
You can either services in other words you pay it -- and pay off the interest.
You can default on that we can inflate -- away.
I think as far as defaulting on it would be hugely embarrassing for the Europeans so they are prepared to sort of say let's talk about enough for now let's have look at the other two options.
Which is to either inflated away or to somehow.
Make showed you know that.
They -- they can do some kind of service -- And what this really what what this bailout really needs that they -- going to give Greece about a 130 billion euros to trying to service this debt so that they can -- -- like around.
OK so let's take -- let's follow what the the strategy here -- here is.
You give them the money to finance that -- that bonding and issue new bonds the bond holders are gonna take a huge hit.
On the current bonds.
But the Greeks are not going to be able to make the payments on the new bonds are not going to be able to service the new bonds as we go forward.
So we we continue it would seem to delay some kind of economic recovery because there won't be inflation in Greece -- economy's contracting and -- there there -- shambles.
We're just gonna be you and I'll be talking about the the next Greek bailout -- -- six months.
A -- I think sooner than that because what is really happening as far as Greece is concerned is that.
The stipulation from the front from Europe is to try and get your budget deficit down.
Faster than the economy is shrinking not anybody who's ever tried I don't know if you've ever tried -- Adam but have you ever tried running up and down -- -- I yet when I was much younger and I got a lot of trouble -- data.
South Florida to believe that.
Well they ego you CME -- other asking Greece to do right now they're asking it to run up and down estimates old run down and up escalator and it is almost.
And insoluble problem for Greece.
But what this thing -- you've got to get your budget deficit down but the economy shrinking at 7% to yet so that is.
Is -- that that as a percentage of the GDP is increasing so quickly and that is why the IMF is so concerned but the other issue -- is that.
As far as Greece is concerned yes you give it a 130 billion Europe but at some point in time.
You have to find -- you have to give it another tranche of money it's already taken a hundred billion euros.
Is taking -- 130 billion euros now but at least they kicking that can down the road and they think well maybe somebody else we'll pick up at tablets around and run -- it.
But -- -- my feeling about this problem is is this if you have a raging fire and you try to put it out by throwing a couple of ice cubes and it just doesn't work.
And we.
I think the only solution you have as far as Greece is concerned -- to say okay I'm.
Let's put it to rest now let let let let's put the hold of -- to rest now.
And just can't get out of the Euro and then we'll worry about you know what happens after that the banks are now strongly enough to some -- tolerate that.
I mean you've already mentioned that many of the creditors -- gonna be taking huge hits on these Greek debt so why not just accept the fact that you don't have to write -- -- 70%.
But a 100% of those -- Hyundai let's move on from that.
And save -- continuing flow of money that's gonna be chasing Greece and save it for what is the real issue and we're not even talking about Italy I mean -- That that's what this is designed to prevent is us having to talk about Italy and them having credit problem -- What does the big danger because I mean if we actually managed to.
Put the Greek problem to rest at least for about six months -- during the six months.
Period people will be looking at its -- people will be looking at Spain and say.
OK so what are you gonna do about Italy what are you gonna do pops up about Spain and of course the problem will resurface again I -- I heard earlier on -- -- talking about.
Inflationary problems in America with regards to get fuel products.
Now that is only the tip of the iceberg and what we're -- to invest -- is that you have to be very very aware what is going out.
Because this money doesn't come from nowhere this money is being created -- and -- my top my my call it the long term restructuring.
Obligation that Europe has in America you called quantitative easing over here we called quantitative easing.
And in Japan the doing exactly the same.
What the central banks are really doing is to just keep on creating money.
Pumping it into the system.
Now that money would eventually turn up and they will be hugely inflationary.
-- when when inflation does rates and I think people need to make sure that they are invested in.
Assets that can keep pace with inflation if they don't -- whatever money they have -- -- shrink over time.
Right David -- I'd like to say thank you but I'm not feeling very optimistic after all of that fat again is David -- from -- full UK we we appreciate you joining us -- very early here in the United States approaching afternoon there in London in the UK.
Heading towards six say.
