Greek Central Bank Outlines Plan To Implode Greek Economy To German Media

Provopoulos, the governor of the Greek central bank was interviewed by a German media outlet. In the interview the governor states that the Greek government will pay back 230 billion Euros in debt to creditors.

Let me explain why this plan to repay 230 billion Euros will destroy the Greek economy.

The most obvious point is the size of the Greek economy. As of 2012 the predicted size will be 270 billion Euros as measured in terms of GDP.

1. Greek GDP

Greek Central Bank Governor outlines plan that will destroy the Greek economy – Image Source:

Repaying 230 billion Euros will leave 40 billion Euros in the economy. Spread between 10 million people, the population of Greece leaves  4000 Euro per year per person. That is around around 70% less the 2008 levels.

2. Greek Government Spending

The Greek government has pledged to cut its spending by over a billion Euros a month. That is one billion Euros less in the economy a month.  This is going to further exasperate the the effects of the attempted debt repayment.

3. Bank Lending

Banks in general are not lending to Greek citizens or businesses regardless of the assets that those entities own. There is no sign of this changing in the short term. No only do greek banks have to return their lending to something similar to that pre crisis they would have to lend more in order to make up for the 230 billion Euros that will be sucked out of the Greek economy due to the debt repyament plan outlined by the greek central bank governor.

4. Trade Deficit

Greece has a trade deficit which averages aounrd 1.5 billion Euros a month. So in addition to paying back the 230 billion Euros as the Greek central banks governor outlined Greece will also be hemoraging money in the form of the trade defcit further exasperating the effects of trying to pay back 230 billion Euros

5. Unable to print currency

Unlike the days of the Drachma the Greek government is no longer able to devalue its currency by 20% year on year in order to devalue its debt. In short the Greek debt is not going to lose its value to massive inflation. In short, the primary way the Greek government stayed solvent prior to the Euro has been taken of the table.


The Greek central bank’s governor’s claims that the Greek government will pay back 230 billion Euros to its creditors is obviously false and impossible.

The money simply does not exist. Unless private banks are prepared to lend sufficient quantities to make up for the 230 billion Euros being sucked out the Greek economy and/or the Greek economy can improve its efficiency by 80% over the next 8 years there is only one possible outcome to the governors plan and that is Greece being set back 50 years.

Incidentally this is what the Greek central bank governor has outline previously in a threat to anyone that wished to leave the Euro.


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