European markets staged a vigorous relief rally yesterday after Greek finance minister Yanis Varoufakis dropped his calls for a write-off of Greece's public...

European markets staged a vigorous relief rally yesterday after Greek finance minister Yanis Varoufakis dropped his calls for a write-off of Greece's public debt, proposing instead a package that would include the exchange of European Financial Stability Facility loans for growth-linked bonds. Yet contrary to what the Greek and German governments pretend and to what we read in the press, Greece's public debt is not the real issue either for Greece or for the eurozone. The reality is that nobody really cares about Greece's debt level. Firstly, at €315bn, Greek debt, most of which is now held by euro-area tax payers, is ridiculously small relative to the eurozone as a whole-just 3% of the bloc's gross domestic product. Secondly, with almost 80% of the debt held by official creditors, future interest payments and debt maturities can be determined by negotiation, free from market-imposed constraints. The terms of the loans are already very generous, but they can still be improved...continued: (VIEW LINK)