February 10th, 2012
04:34 PM GMT
London (CNN) – Give eurozone finance ministers credit.
Markets had been rising. The euro was at a two month high. The banks had apparently agreed to take a steep loss on the Greek bonds they hold, or bought in the secondary market for cents on the euro.
Then, they snapped defeat from the jaws of victory. Why?
Greek politicians have now been told they need to put austerity pledges in writing and then into law, all by next Wednesday; the new deadline.
And they need to find another $400 million of savings to fill the gap.
This is all for Greece to start drawing on the second bailout of some $167 billion agreed last October; the old deadline.
Meanwhile, the banks need to sign off on an agreement to reduce Greece’s debt burden to the private sector by some $100 billion before the next payment comes due March 20th; the next deadline.
Look, don’t believe the deadlines. If, come March 20th, Greece can’t pay its bill, there are two options; default or get a loan.
Will Europe allow Greece to have a messy default? Will the International Monetary Fund or the European Central Bank give Greece a bridge loan or some respite?
Will this mess be resolved so that the $18 billion bill due on March 20th is minimized by virtue of the "hair-cut" under negotiation, or paid from the second bailout?
All this happens as people are starting to talk about the very fabric of Greek society coming apart. I saw none of that when I was in Athens in November. But of course it can happen.
Greece has to find more cuts because the economy is shrinking much more than predicted back in October. The paymasters are not budging; the European Union, ECB and IMF (the troika) agreed the second bailout as long as Greek cuts will bring the deficit target down to 120% of GDP by 2020.
While that target has not moved, the gap is widening because austerity in Europe is happening while (or because of) recession takes hold again.
So, unless Greece is given a break, it will just be quarterly bailouts and more deadlines missed, for years to come.
Enough. Can we please have a deadline which draws a line under this mess.
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