The improbable Greece plan

By Felix Salmon
February 21, 2012

Greece is now officially a ward of the international community. It has no real independence when it comes to fiscal policy any more, and if everything goes according to plan, it’s not going to have any independence for many, many years to come. Here, for instance, is a little of the official Eurogroup statement:

We therefore invite the Commission to significantly strengthen its Task Force for Greece, in particular through an enhanced and permanent presence on the ground in Greece… The Eurogroup also welcomes the stronger on site-monitoring capacity by the Commission to work in close and continuous cooperation with the Greek government in order to assist the Troika in assessing the conformity of measures that will be taken by the Greek government, thereby ensuring the timely and full implementation of the programme. The Eurogroup also welcomes Greece’s intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece’s debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter’s debt service directly to a segregated account of Greece’s paying agent.

The problem, of course, is that all the observers and “segregated accounts” in the world can’t turn Greece’s economy around when it’s burdened with an overvalued currency and has no ability to implement any kind of stimulus. Quite the opposite: in order to get this deal done, Greece had to find yet another €325 million in “structural expenditure reductions”, and promise a huge amount of front-loaded austerity to boot.

The effect of all this fiscal tightening? Magic growth! A huge amount of heavy lifting, in terms of making the numbers work, is done by the debt sustainability analysis, and specifically the assumptions it makes. Greece is five years into a gruesome recession with the worst effects of austerity yet to hit. But somehow the Eurozone expects that Greece will bounce back to zero real GDP growth in 2013, and positive real GDP growth from 2014 onwards. Here’s the chart:

gdp.tiff

Note that the downside, here, still looks astonishingly optimistic: where’s all this economic growth meant to be coming from, in a country suffering from massive wage deflation? And under this pretty upbeat downside scenario, Greece gets nowhere near the required 120% debt-to-GDP level by 2020: instead, it only gets to 159%. And to make things worse for the Eurozone, the report explicitly says that under the terms of this deal, “any new debt will be junior to all existing debt” — in other words, there’s no way at all that Greece is going to be able to borrow on the private markets for the foreseeable future, so long as this plan is in place.

As in all bankruptcies, the person providing new money gets to call the shots. And it’s pretty clear that the Troika is going to have to continue providing new money long through 2020 and beyond. Under the optimistic scenario, Greece’s financing need doesn’t drop below 7% of GDP through 2020. Under the more pessimistic scenario, it’s 8.8%. And here’s the kicker: all of that money is being lent to Greece at very low interest rates of just 210bp over the risk-free rate. Much higher, and Greece’s debt dynamics get even worse. But of course even with well-below-market interest rates, Greece is still never going to pay that money back.

The cost of this plan is €130 billion right now, and €170 billion over three years, through the end of 2014; it just continues going up from there, with no end in sight. Remember that total Greek GDP, right now, is only about €220 billion and falling.

Oh, and in case you forgot, this whole plan is also contingent on a bunch of things which are outside the Troika’s control, including a successful bond exchange. The terms of the deal, for Greek bondholders, are tough: there’s a nominal haircut of 53.5%, which means that you get 46.5 cents of new debt for every dollar of existing bonds that you hold. The new debt will be a mixture of EFSF obligations and new Greek bonds; the new Greek debt will pay just 3% interest through 2020, and 3.75% until maturity in 2042.

The plan assumes that 95% of bondholders will accept this deal, which seems optimistic to me. Bondholders are by their nature a fractious and contrarian bunch, and Greece is not saying that it’s going to default on holdouts. As a result, bondholders have to guess what might happen if they fail to tender into the exchange: they might get defaulted on and receive nothing; they might get paid out in full; or they might get defaulted on while being offered, for the second time, the same exchange they’re being offered right now. Some of them, especially the ones holding English-law bonds, might well be tempted to hold on to at least some of their bonds, just to see what happens.

More to the point, the plan assumes that Greece’s politicians will stick to what they’ve agreed, and start selling off huge chunks of their country’s patrimony while at the same time imposing enormous budget cuts. Needless to say, there is no indication that Greece’s politicians are willing or able to do this, nor that Greece’s population will put up with such a thing. It could easily all fall apart within months; the chances of it gliding to success and a 120% debt-to-GDP ratio in 2020 have got to be de minimis.

Europe’s politicians know this, of course. But at the very least they’re buying time: this deal might well delay catastrophic capital flight from Greece, and give the Europeans more time to work out how to shore up Portugal if and when that happens. Will they make good use of the time that they’re buying? I hope so. Because once the Greek domino falls, it’s going to take a huge amount of money, statesmanship, and luck to prevent further dominoes from toppling.

Comments
38 comments so far

Nice write-up. However, I am not at all sure why you expect they are doing this “in order to buy time to become able to shore up portugal when the time comes”. Looking at how both Ireland and Greece are being treated, I see no reason whatsoever to think they are trying to fix anything. All they seem to be interested in is to impose austerity everywhere, and privatize state services so ‘western’ investors can snap up the nicer companies on the cheap, to pad a few bottom lines and to allow for higher bonuses to be assigned. Go “open” market go!

Posted by Foppe | Report as abusive

It is a grim plan but what other options are available? Going back to the Drachma is not plausible. The comparisons to Argentina are flawed. Greece, unlike Argentina, has very little to export in terms of raw resources. Argentina devalued at the start of a multi-year emerging markets and commodities boom, and profited mightily from this bull market. Is Greece to hope for a multi-year boom in olive oil?

This plan, brutal though it might be, is geared to improve Greece’s competitiveness. The medicine, internal devaluation, is harsh. But there is no other viable plan to improve Greece’s competiveness — leaving the Eurozone is a lark.

Posted by Kosta0101 | Report as abusive

A drachma discounted by 40% might make jump Tourism by a 20% ? If so you’ll have a jump in GDP of 3 to 4%.

Posted by hansrudolf | Report as abusive

During the 1950s and 60s, huge numbers of Greeks emigrated to Australia, because the Greek economy did not recover like those of northern and western Europe.
Melbourne became the city with the second largest population of Greeks after Athens. The future of themselves and their families was more important than any loyalty to a dim future in Greece.
Most were very hard working and successful, often in small business, restaurants, etc and soon whole suburbs of large middle class houses were Greek majority, to house their extended families.
Many Greeks now would have better futures by emigrating to Argentina, Australia (tight visa quotas now for “family reunion”) etc.
So the Euro enforcers may need to patrol high fences with armed drones, and put checkpoints at ports and airports, to stop them from escaping debt slavery.

Posted by Neurochuck | Report as abusive

It may well be that the Germans believe the Greeks should just “take it like a man”, like they did with the horribly-planned and executed reunification, but that ignores the fact that Germany had a strong economy, whereas most of Greece’s industry has disappeared by now — thanks to 15 years of “competition” with mercantilist German and Dutch companies.

As for tax cheating: it isn’t the bureaucrats who are cheating, it’s the attorneys, doctors, tax consultants, who are doing so. The retire at 50 is bullshit propaganda (sure there are 10 people who get to do so, and yes the train service seems to be fairly corrupt, but they are hardly representative); the average greek (see OECD data) works 2100hours a year, whereas the Germans and Dutch work somewhere in the vicinity of 1400hrs; and whole legions of them have retired well before age 60.

The solution seems to me fairly “obvious”, though difficult if not impossible to realize (not least because the moralizing Calvinists who learned their economic theory from Samuelson and Friedman would never accept it): create an exit possibility for them, and give them support so they have a chance to rebuild and feed the population. And then turn around and do that for a whole bunch of other countries who are being destroyed by the EZ stability- and growth pact criteria. Because there are few international treaties as evil as that thing.

Posted by Foppe | Report as abusive

@Kosta 101 – again with the olive oil. Olive oil accounts for 2% of Greek manufactured exports. Going back to the drachma is not plausible? You don’t know the composition of the country’s exports so how can you know what’s plausible and what isn’t? If it were up to you Slovakia would still be using the Austro-Hungarian crown, all other options having been ruled out as “not plausible.”

CDN-Rebel, two parties come together and agree on a loan. Q: How can you tell which one is guilty? A: The one who speaks Greek

If you are unhappy about Greek tax cheating, here’s some advice: don’t lend them any money! oops, too late

Posted by johnhhaskell | Report as abusive

This plan is EXTREMELY well designed if your goal is the emergence of a Hugo Chavez type figure in the dominant position of Greek politics.

Posted by hellosalty | Report as abusive

felix, the eurozone is on record, for a long time, in its pessimism towards greece’s fiscal and economic prospects; so this is not news and we can get it direct from the horse’s mouth rather than psuedo-selfserving analyses from the FT Financial Toxin tabloid. Only the weak and easily deluded bother to read the manipulations of that macchiavellian outpost.

the real story is from the mouth of the swedish finance minister:

(quote) Swedish Finance Minister Anders Borg said: “What’s been done is a meaningful step forward. Of course, the Greeks remain stuck in their tragedy; this is a new act in a long drama.

“I don’t think we should consider that they are cleared of any problems, but I do think we’ve reduced the Greek problem to just a Greek problem. It is no longer a threat to the recovery in all of Europe, and it is another step forward.”

default in greece is covered by CDS liabilities, held mainly by US interests (ref. Bloomberg)

the eurozone has offered greek politicians a cactus, because only Oman could afford the pork barrel politics rife in greece

there is juice inside, but not without pain

Posted by scythe | Report as abusive

@Foppe I didn’t say it was bureaucrats cheating on taxes; my point was it’s endemnic in the society and a big reason for their debt troubles in the first place. If they have a 5% deficit and 6-7% tax evasion…

I don’t own Greek debt – the riskiest market that I would go is Brazil – but I don’t feel sorry for those that do. Their political landscape has been filled with intrigues and open corruption since the monarchy was overthrown… those who bought Greek knew the risks.

As for your solutions: how vague can you possibly be? If I’m understanding you right, you’re saying that the world should give food aid to Greece as they adjust from their EU membership – the biggest economy in the world – to their newfound third world status. How humane! I think the notion that Apple, Google, and MSFT buy all the Greek bonds and forgive them outright has more merit.

Posted by CDN_Rebel | Report as abusive

At the April elections, the Greek voters are going to be heard from. If the Greek voters reject austerity and, as a result, Greece goes into governmental chaos of endless fighting between minority parties seeking dominance and social strife of strikes, who does what to whom then?

Posted by golew | Report as abusive

So it is expected that 95% of greece creditors agree on 53.5% depreciation of existing debt positions. Byproduct of the mouth-to-mouth resuscitation of the Greek puppet is a stronger European Monetary System. Tourism is already 18.2% of national product and remains attractive. Lower wages will increase employment in tourism to over 840,000 jobs (already 19% of the total Greek labor force). Expected immigrants will pave greeks trade channels and promote import of affordable greek products for EU and US. Mostly not mortgaged greek houses form a buffer so that people remain productive and independent of the tirany of lawyers doctors and taxadvisors. Hope that the situation will arise greek governance that stand up stronger for authentic Greek interests than gremia of the past molded.

Posted by BertKerkhof | Report as abusive

Citigroup’s Willem Buiter has a different view:

“what would be your immediate advice for the European leaders and policy makers who are currently in two minds about what to do about Greece?”

Willem: Write off the public debt, recapitalize their banks, using European resources, obviously, because there aren’t any Greek resources. Keep them in the Eurozone, very definitely.

full transcript here:
http://www.voxeu.org/index.php?q=node/76 46#fn

Posted by Th.M | Report as abusive

Here is a solution. Bondholders take a 100% cut. Full bankruptcy. FOr ongoing operating costs until you can sort your fiscal house out sell the other half of Cyprus to Turkey. Turkey should be willing to pay quite a bit for it. Maybe a few of the contested islands in the Aegean as well.

Either that or start wealth confiscation on a massive scale. Take 20% of all moveable assets (cash, art, vehicles, furniture). That is not enough to ruin anybody and should be quite the haul. It also shouldn’t effect their long term economic situation very much because people habituate to their current circumstances very quickly.

The real problem here is that historically when states became this non-functional (no one working and everyone living off foreign debt) they were quickly conquered by their neighbors and forced to live in austerity. In this situation where there is a systematic refusal to make the Greek populace make any real sacrifices you just get an open ended problem because everyone is constantly playing a game of chicken with everyone else.

The Greek people will just continually dare the foreigners subsidizing them to do their worst as long as their worst is “maybe we will make you raise your taxes and cut expenditures if you don’t cause too much a fuss”.

The bond holders need to take a 100% cut because they were clearly lending money irresponsibly. The bond holders are even more culpable than the Greek people.

Posted by QCIC | Report as abusive

“The bond holders need to take a 100% cut because they were clearly lending money irresponsibly. The bond holders are even more culpable than the Greek people.”

The same logic could be used for anybody lending to the US Treasury…

Posted by TFF | Report as abusive

New collaboration between middle class citizens will hold repayment capacity at level and ultimately make greek social economy strong. Give opportunity for peace with neighbors after unproductive boundary disputes. Previously inhospitable mountains and primitive areas as Karpathos and Kasos will be developed and made suitable for EU austerity visitors.

Posted by BertKerkhof | Report as abusive

Good point here!

I am sure that at 2020 Greece will have more debt it had before the bailouts.
Ireland is a different case. Ireland has a much better economy than even France not just Greece or Italy or Spain, and Euro (which is DM in reality) currency is not struggling their economy and their GDP as much as in Greece.

I can say a lot but I prefer the the major political question for me is why this persistence with EU and Euro when is obvious that the only ones who get benefited are the Germans and their satelites?

Should Italy, Spain, Greece, even France to be under Germans?
Do they really want that?

Because at the end EU is about this. And for me that is the most important issue here.

Posted by CapitalisticPig | Report as abusive

Deal “Really” Finalized? Will Greece Survive the Ides of March? Disastrous Piecemeal Breakup of Eurozone Likely in the Cards
http://globaleconomicanalysis.blogspot.c om/2012/02/deal-really-finalized-disastr ous.html
Mish

Posted by MishGEA | Report as abusive

Deal “Really” Finalized? Will Greece Survive the Ides of March? Disastrous Piecemeal Breakup of Eurozone Likely in the Cards
http://globaleconomicanalysis.blogspot.c om/2012/02/deal-really-finalized-disastr ous.html
Mish

Posted by MishGEA | Report as abusive

Nice paper, salute!

Posted by JohnZhang | Report as abusive

GREECE WILL DEFAULT. Period.
And that is good, for everyone.
The Greek people will never follow up on the EU plan, and why should they ? It is not their problem,they did not create it, the EU elite did, and on purpose.

There is nothing more unimaginable than a ‘Greek slave’.

Let the unscrupulous investors take their well deserved losses. They should have all gone to the casinos, where they really belong. Greedy idiots, eat it.

Greece will get out of the Euro Zone and will recover swiftly.
Its only resource, tourism, can bring their economy back fast, provided they don’t let in the greedy investor dogs again.

If tiny Hong Kong can bring in 32 million tourists per year, its main source of wealth, Greece should be able to pull in 100 million per year instead of the mere 10 million it presently gets.
That is astronomical money they could bring in.

Posted by GMavros | Report as abusive

What happens to a people when their backs are to the wall and they can’t feed their families? What would you do?

Posted by myownexperience | Report as abusive

We have to remember there is no Bailout to Greece. Bailout is to system that is vulnerable to crash. It’s “CDS market” that is bailed out..

http://www.commonmaneconomics.com/2011/1 0/why-is-alexander-greats-greece-is-not. html

Diana.

Posted by Free_Market | Report as abusive

The Germans wanted an immediate Greek default and a Greece exit from the euro, as shown by their heartless approach, but they (the Germans) were pressured to settle for this “deal”, which delays the catastrophe for a little while only. During the delay, the explosive buildup of chaotic forces in Greece and elsewhere, where austerity is being pushed hard, ensures a big explosion down the road. The core (Germany, France et al) will survive in some meaningful fashion, at the expense of blasting away the PIIGS. The core increasingly realizes its fortunes lie in surviving such a cleansing blast and in allying ever closer with the East – Russia, China, India – and with the South. We’re just witnessing the process, step-by-step.

Posted by NukerDoggie | Report as abusive

I find it absolutely amazing that 2 years have gone by, many all-night sessions with top-level politicians have taken place, and — not a single initiative to start some sort of private sector stimulus. I guess Keynes once gave the example that, as a stimulus, it would be a good idea to pay a man to dig a hole only to have him fill it again afterwards. True, with one important proviso in the case of Greece: not the government and/or public sector should do that. Instead, the private sector.

People are throwing around 3-digit BN EUR figures. How about using just 1 BN EUR to fund meaningful new investments in the Greek private sector. Investments which create jobs; which jobs pay income taxes; which companies pay corporate taxes; and whose owner pay taxes on dividends.

Why not???

http://klauskastner.blogspot.com/2012/01  /what-ever-happened-to-mckinsey-report. html

Posted by klauskastner | Report as abusive

Great article.

It’s just a matter of time before the Greeks are working for large Northern European corporations for 15-20 Euros a day. Frankly, it can’t get any better than this for the Germans et al – having cheap labour much closer to home (versus East Asia) with full control and oversight NOW put into place, where you don’t have to deal with the unpredictability of closed political systems like China. On top of that, Southern Europe is keeping the value of the Euro low, increasing the competitiveness of Northern Euro service and manufacturing sectors.

But best of all, you get to call an invasion a rescue and having appointed a PM and insisted on an almost 50% cut in the defence budget in just over 2 years, there’s not much to fear. The bright side is that this time around, no shots were fired, no one died and the Greeks don’t have to resort to eating cats and mice off the streets for like the last time – at least not for another few months. And the markets have been loving this excitment since the end of summer.

So, I don’t know why everyone, on both sides of the argument, is complaining! Sooner or later something has to give in this situation. Either the Greeks will accept their fate and the famine, or there will major social unrest and they will pull an Oedipus, get rid of the Sphynx (i.e. Merkozy) and their father (i.e. their politicians) and get back with their mother (i.e. the Drachma) and live live happily thinking that they have cheated their fate, at least for a little while – a well defined and well played Greek tragedy either way.

So, I think Borg (the Swidish finance minister) hit the nail right on the head when he said that hey’re stuck in their tragedy. But he should have probably closed off the interview with a message to the Greeks, that “resistance is futile”! ;)

Posted by BehG. | Report as abusive

I have a plan to ease the austerity of the Greek people. To make structural changes in the Greek society and bring eventual prosperity. I don’t want to be a politician and never had such aspirations. Some of the the changes that I would implement:
All employers in Greece would have to pay their employees by cheque, or bank deposit, and they would be required to hand a payroll stub outlining the payroll deductions. Employees would be required to contribute 7.5% of their wages for pension benefits. Employers would have to contribute another 10%. This would be for the next 10 years until the system is well funded and it becomes viable. Then the contribution that the employer makes can gradually be reduced to the same proportion as that of the employee. -Pension benefits would have a minimum of 400,00 Euro and a maximum of 1300,00
Politicians’ wages would be reduced to 48.000,00 Euro, and a budget of 52.000,00 for a secretary and travel expenses. That would have to be the total expenditures allowed per elected parliamentarian.
The austerity measures introduced are hard for the common people in Greece. To make it easier for them to bear it, I would ask the politicians to legislate that Wholesalers be limited to 12% mark-up on the products they manufacture or buy from farmers. This should have the immediate effect of lowering the cost of living, and thus would reduce the anxiety and pain the Greek people feel right now. -The Wholesalers who buy produce from farmers have to pay up front the farmers when they receive their produce. At the very latest, within a month.
Greek people are probably some of the most unruly people in the world. They are the most dangerous drivers in the world. I have a solution that is not going to cost anything the government or the municipality that hires them. First order of business, call a meeting of all police forces and tell them that starting today you have to make more money than you cost us to work here. You must bring in at least 100 traffic violations per month, other than parking tickets. Minimum fine being 100,00 Euro. It should be easy getting at least 20 traffic violations a day per police officer, but as I pointed out above, all they would have to do is bring 100 violations per month. Not only would the police force be self supporting, but would also generate money for other purposes. It would also make for a safer place! It is not uncommon for Greeks not to stop at a stop sign, to pass another vehicle when there is a double solid line, to speed, to throw trash out the window,etc.
Another measure would be to outlaw “pereosi” in the tax system. This is the most diabolical plan ever devised by the Greek Government. This plan is one of the main reasons why Greek business people cheat on their taxes. It’s because the Greek Government lumps them all together as thieves and cheats. So they send a letter asking the businessman to cough up some more money, or else. Rather then do that, why not go and check their books to see if they were cheats? To safe guard the possibility of the Revenue people cheating, have them paired with other agents from another area that they do not know, and thus cannot conspire to make deals with the one who is audited. There are other measures that I would implement to bring about change for the better. I would do all that for an Annual income of 25.000,00 Euro with the provision that they pay me only 1.000,00 per month till the end of the year. If there is no marked improvement at the end of the year, they could release me without payment of the 13.000,00 that would be due.
I would do this under one condition:
That no civil employee earns more than 40.000,00 Euro per annum.

Posted by Serreos1950 | Report as abusive

“During the 1950s and 60s, huge numbers of Greeks emigrated to Australia, because the Greek economy did not recover like those of northern and western Europe.
Melbourne became the city with the second largest population of Greeks after Athens.”

That is not true. Greece had a remarkable growth from the mid-50s onwards, 3rd largest in the world I believe, on par with Japan, Italy and Korea. There was however a civil war right after WW2 that delayed growth, and a political climate oppressive towards leftists, who left en masse towards greener pastures (and not so green, as some went to communist countries). And also, despite growth, the country, and especially the countryside was just so ravaged that many people were still impoverished – so there was large internal (to Athens) migration as well. Italy is another such example: the North was on steroids, but the South was lagging, and there was massive migration too, to Australia and Belgium mainly.

But your point stands – migration will occur.

PS: Melbourne is actually the 3rd largest Greek city, after Thessaloniki as well :)

Posted by fp3690 | Report as abusive

I am Greek and I have to tell you that what some of you might think about people here is kind of virtual reality.I know you are right about taxes not being paid and pensions of 125% at the age of 50 but that goes only for the minority.Maybe it’s a big minority of 25% or something but it is still not enough to tell what has been going on here.
Corruption, lack of legislation or/and its application and a social structure of inter-dependence that couldn’t allow us to see the forest behind the tree, are all to blame.
Employees with annual salary below 7000 and pensioners with annual income of 4000 are the ones that constitute the main body of the people you consider greedy or not having social conscience and all I am telling you is you are wrong when you call Greeks this or that because most of the people hardly managed to cope with their lives and now face major difficulties even to survive.
The rest, including much of the current political system, still have a lot of money and security when all we face is uncertainty and depression.So please don’t call us just Greeks…most people couldn’t have seen this coming and have very little contribution to all this crap, unlike irresponsible and corrupted politicians and parties.We are all responsible to a point but only because of naivety and excess tolerance.

Posted by Jmo2005 | Report as abusive

“bondholders have to guess what might happen if they fail to tender into the exchange”

This is a joke. Quite clearly Greece said it would legislate to allow it to enforce losses on bondholders who do not take part voluntarily.

If bondholders are forced to take a loss – involuntarily – that is a credit default. If this is not a default – then what in the world would classify as a default? The Wall Street Bankers running the ISDA are playing games with everyone. Their only concern if the profits of their members. If they don’t payout on the CDS’s – why would any investor every want to purchase a CDS in the future.

Posted by geovla | Report as abusive

I urge you all to read Mikis Theodorakis’ “An Open Letter to Public Opinion: The Truth About Greece.” It will set you straight on what has really happened.

Posted by dors4626 | Report as abusive

I saw an interesting interview with some guy from the Institute of International Finance who represent bondholders with €100 billion exposure to Greek debt who said the situation was accept a 53.5% haircut or a 70% haircut. They were going to push for universal acceptance of the latest deal on the basis that it was in their interests to do so.

@Jmo2005 While I respect and understand the feelings of those Greeks on low incomes, in a democracy you cannot just wipe your hands and blame someone else: you as the general public voted for the governments who promised you more goodies than those who didn’t. It’s a hard lesson to learn that goodies always have to be paid for, but that’s democracy for you.

Personally I am not a great fan of austerity in recessions, I think it is far better to apply it in times of plenty, build up reserves that are not paid out as tax breaks for the wealthy, and then use these reserves in times of famine. Heck, they even knew about that in Biblical times! But what happens these days? The total reverse, and its bonkers.

Posted by FifthDecade | Report as abusive

On a further note, just to consider the vast insult added to injury, just know that Germany owes GREECE over $500Billion.

See the following:

http://www.greece.org/blogs/wwii/?page_i d=220

Posted by dors4626 | Report as abusive

So other Euro countries are pumping in the bulk of 240 Billion and they are the bad guys? Do you think the people of these countries were waiting for Greece to be bailed out in times of economic hardship of their own? They are implementing additional austerity just to be able to bail out Greece. Losing ratings and increased cost of lending for government and companies to help out the Greek.

And best of all, the countries criticizing most (UK and US) have contributed next to nothing and worse, hold large quantities of CDS (betting for/against Greece .. GS et al).

It is very easy to criticize, but be assured: come up with a great plan and it will be implemented.

Problem is, Greece has been a failed state for decades (centuries?) and will probably continue to do so for decades to come. The problems of Greece do not originate from the Euro, it merely made it easier for them to continue and even accelerate their lifestyle (due much lower interest). Call it culture, whatever. Promises are meaningless, they may ‘work’ 2100 hrs a year but they aren’t producing (even African countries are doing far better), corruption is not only accepted it’s a way of life, etc. etc.. You are not going to change that by pumping in additional funds, every Euro or Dollar is wasted from the start.

All you here from the people of Greece is ‘insulted’, no one accepts any form of responsibility. Worse, politicians (Samaras et al) already implied that after the elections in april every deal was up for ‘renegotiation’.

Europe’s politicians are fully aware of the Greek ‘ethos’ and therefore a guardian is appointed over the bailout money. Not because they like it, but the Greek politicians (who have been appointed over and over again by the voters of Greece.. who apparently enjoyed having Santa-Claus at the helm) have proven themselves incapable of doing so. No insult, plain hard facts, and its denial is the very problem of the Greek ‘ethos’: It is just everybody’s fault but the people of Greece.

With this new package effectively only the Greek bonds and the recapitalization of Greek banks is guaranteed. The ‘ethos’ of the people of Greece has to change, and the only ones who can do that are the people of Greece. It won’t be easy, but you just can’t keep on spending more than you earn. Europe is not taking responsibility for this process; it merely provides a framework in which the people of Greece have a fair fighting chance. Hard? No doubt, but the alternative is far worse.

Europe doesn’t impose terms per se; they impose terms in case the people of Greece want to keep on lending their money. If they don’t like the terms, by all means, exit the Euro zone and handle your problems your own way. It probably will be a whole lot messier than doing it the European way, but no-one in Europe will even try to stop you.

And implying WW2 debts need to be repaid.. Why not WW1, why not slavery, why not the occupation of Hawaii/Philippines, why not the extermination of Indians, why not the Roman Empire? How far back do you want to go? These phrases are just a lousy excuse for incompetence.

Posted by Robbedoes | Report as abusive

FifthDecade I see your point.You are absolutely right.
All I am trying to tell is that you shouldn’t consider Greeks as some arrogant guys with money they never worked for,refusing to pay their taxes.That goes for many and we are all to blame,but I think it’s fair for all European people to know what brought us here, including Greeks.

Posted by Jmo2005 | Report as abusive

Jmo2005, if you are being plundered by the people in power, then you need to put new people in power. Is Greece not still a democracy? If not, then you need a revolution.

Either that or sell your sovereignty to the Germans.

Posted by TFF | Report as abusive

This is the new type of war that everyone better be aware of. No guns and bombs. Clean. Casualties are not visible anymore, TV channels do not broadcast this type of carnage. It does not generate revenue. No more pictures of killed children. No more remorse.Clean cut.
One could argue that Greeks have done it to themselves.
I argue that the main duty of a ruling class in any nation around the world is to cater to its citizens. When they start to cater to the needs of other country’s citizens it is a result of submitting to a higher power and in the past it was decided in battle. Greece is the first to go that way. Many will follow that path.
Any way you look at this , Greece is defeated.It’s citizens have lost the option of fighting the enemy and that is below any dignity level. Only option is selling what is left of the country at a very low price. They and their children are slaves with no say in the process or in regards to their future. This is a fact of life in the year of 2012. By the way , the new war is on for every nation.

Posted by litzcan | Report as abusive

1. No one forced Greece into the Euro. Greece forced itself in.
2. No one forced Greece to keep up an arms race with Turkey. That is, and was Greece’s decision.
3. No one forced Greece to overborrow. That was Greece’s decision.
4. No one forces Greece to stay in the Euro. Greece can default completely and exit the Euro.
5. But Greece cannot expect the rest of the EU to keep paying for its bad decisions.

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