Mr. Colm McCarthy:

The two states that have been most voluble are Slovakia and Latvia, but no matter. The Senator referred to them taking further hits on the money they have lent to Greece. What I and, I believe, Professor Barry were trying to say, and this is what it says in the Ladybird guide to financial rescues, is that the losses have already occurred. This business of believing that the losses are caused by the decision to recognise them is the source of many of the current difficulties. People lent money to the Greek Government as part of the official lending programmes and much of this money was used to pay off other creditors, which is the way these things go. At the end of the process, there was a very sharp contraction in the Greek economy and it is probably contracting again. Greek debt is retailing at interest rates of nearly 12.5% on the secondary market and the country cannot repay the money, which means the debt is not sustainable, as the International Monetary Fund concluded. This means that when the Prime Minister of Slovakia states his country does not want to give any more money to Greece, he is misunderstanding the point. He or his predecessors decided some years ago in effect to buy Greek government bonds, although they were not in that form but that is what it amounts to. These have since reduced in price, which is tough but these things happen.