When money was cheap, Paul Emmanuelides borrowed millions to build his brewery.
In Athens, everybody has a story about how easy it was to borrow money after Greece joined the euro and interest rates plummeted. On today's Planet Money, Chana Joffe-Walt brings back a few of those tales.
Her cab driver upgraded from a Toyota to a Mercedes. Paul Emmanuelides, who owned a couple bars, borrowed 7 million euros to build an industrial brewery. People borrowed money to go on vacation — then refinanced the loans. "It was like manna from heaven," one lady says.
Where did all the money come from?
A lot of it came from Newport Beach, home of the giant bond fund Pimco. Adam Davidson was there last week, and he spoke with Mohamed El-Erian, Pimco's CEO.
The firm sold all of its Greek bonds last year. Since then, El-Erian says, Greece has tried to interest the firm in some of its newly issued debt:
The Greek government came with lots of offerings. ... They said, "We are issuing five, seven billion, lots of people are participating, look how attractive these bonds are." ... We said, "Thank you very much, we appreciate it, but our analysis shows that sovereign risk is an issue."
In other words, Pimco's still worried that the country won't be able to pay back all the money it's borrowed.
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