The Greek conundrum - DEBT FREEZE is a sensible way out

Dateline 16 Jun 2015:  It is crunch time … again, but perhaps even more real this time.  I don’t see how Greece and the troika of main creditors can kick the can ever further down the street.

According to this CAPX article Greece is running a primary surplus, and therefore without the debt mountain could begin to sort itself out.  An article in The Telegraph agrees 

So why don’t the troika take the following very simple approach: debt freeze by which I mean they forego past and future interest payments (all the loans really should have been interest free in the first place) and they leave the debt in place to be repaid starting in, say, 5 years time and spread over 15 years.  Apparently the ECB will return interest paid as & when Greece runs a primary surplus, and I can see the reason for incentives given Greece’s past record, but this does not help the cashflow.  At the same time Greece should leave the Eurozone, but stay in the EU - this would give them the fiscal flexibility to sort themselves out.

Surely this debt freeze approach is better than cancelling the debt, wherein the creditors lose their money and other countries may be tempted to follow suit – this way the money and the debt still exists, it is just locked away for a long time.  A bit like my bank when it gave me a mortgage many years ago.  If a daughter of mine had a financial crisis,  this is the kind of thing I would do – I certainly would not seek to make money out of her distress by charging her interest, and yes I would lose what interest I might get from having it in my savings account, but that’s what parents or Eurozone partners are for, isn’t it?

I wonder if the flaw in this is that, whereas I have the actual money and can leave it with my daughter while I don’t need it and she does, I suspect the troika loans are not real money – it is money borrowed from somewhere else with a servicing cost attached to it.  So they need interest payments from Greece to make their own interest payments, and round and round it goes.