February 21st, 2012
06:22 PM GMT
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(CNN) - Back on track, the finance minister cried, giddy from all-night negotiations. Back on track they shrilled, grateful that they had got a deal to shovel another €130 billion into Greece to prevent a default… for now.

Wait a moment. From the second my Blackberry buzzed with economists’ analysis this morning, there has been an uneasy truth they may be “back on track” - but for how long?

It may be raining on the eurozone’s parade. There are a lot of private economists who basically say this deal is not good enough because no matter how much money is being shovelled into Greece, it still leaves the country with a debt-to-GDP ratio that is too high.

While the lower official interest rate and the ECB paying over profits helps, there is no escaping the fact that Greece is still left with too much debt. This story is now firmly one about how much debt Greece still has on its books.

Paul Donovan of UBS chimed in with an early email at 06:14, in time for breakfast, calling 120.5% debt-to-GDP “an unsustainable level.”

Barclays Capital attempted to be fair, calling the debt dynamics “challenging.” Finally, they could resist no longer. “Public debt will remain excessively high,” they intoned. That sounds very like Donovan’s “unsustainable.”

Stephen Pope of Spotlight Consultancy was even more blunt. “One has to be honest here,” he wrote. “There is not a solution in this deal.”

Challenging. Optimistic. Questionable. All good words to describe a situation which HSBC has summed up in a sentence: “The Greek crisis is far from over.”

I don’t always believe private economists working for banks have the final answers. They either missed or weren’t looking for the financial landmines that blew up in 2008. So far, though, they have been right most of the time. They said the first bailout would fail and it did. They warned that Greece would need far more money, and it has. And finally they are declaring that this latest deal won’t solve the problem - and it doesn’t .

Despite the ringing endorsement from the eurozone to “provide adequate support to Greece during the life of the program and beyond” my gut feeling is that if this one doesn’t work, they will pull the plug.

Judging by the economists comments today, they won’t have long to wait.



soundoff (46 Responses)
  1. Killian Donnellan

    Not very long

    February 21, 2012 at 8:29 pm |
  2. John

    One gets the feeling that Mr. Quest is actually rooting for a Greek default.

    February 21, 2012 at 9:58 pm |
  3. Pavel

    Why not to forgive Greece their entire debt? They will never be able to repay it anyway.

    February 21, 2012 at 10:21 pm |
  4. Carl van Zijll de Jong

    We all know: “When one blind man (woman) leads another, will not both fall in the ditch, or never come out of the woods!” All economies around the globe are corrupt (i.e. anti natural), manmade, hence violating the “laws of Economics”. The present monetary system is a ponzi scheme causing the money to flow to an elite few. Do we really have to reach rock bottom first in order to admit our stupidity? Do we like what the Greek government does, selling their own people into slavery... austerity pack... lower pay rate? We should teach the next generation to abolish the present economic system and teach them the principles of “The World Monetary Order”.

    February 21, 2012 at 10:37 pm |
  5. kalyaja

    Greece is a basketcase. Everyone knows it. The eurozone decided to give it a GO because they don't want to be seen as a failure of eurogroup. If you don't have income, no jobs and produce nothing but keep borrowing money, where will you get the money to pay back the loan? How can you get back on your feet? How can the government raise taxes if people have no jobs in first place? It's just a matter of months not years before Greece default.

    February 21, 2012 at 10:59 pm |
  6. William

    Yep, another 130 billion down the drain. Every Greece citizen, from 0 till 120 years old owes the world now 22.000 euro's int rest is 1000,– per year and more to come. They can't even pay the intrest so forget about the rest. Best thing: let Greece default! Stop the EU!!

    February 22, 2012 at 1:42 am |
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    true saying

    February 22, 2012 at 2:31 am |
  8. Chris

    Last for whom? The Greek people or the Bondholders? The people aren't seeing a cent so I guess the question is:

    How long before the Banks ask for more?(and pass it onto the Greek people)?

    February 22, 2012 at 2:34 am |
  9. George

    What could be the cost of those civilian Arabian wars for western countries “fighting” already with their economical crisis?

    February 22, 2012 at 3:03 am |
  10. Don

    How can one get into debt that is more than their GDP is questionable. If you borrow $80 billion to build roads and bridges and actually use that money to build them then someone has EARNED that money and that would be part of the GDP and considering the multiplier effect, the GDP should be more than what you have borrowed. Unless the funds had been siphoned off or leaked from the economy all together. That sound Greek to me....

    February 22, 2012 at 3:55 am |
  11. Bert from Ballarat

    The SOLUTION Is in the Swiss bank accounts – where I believe the Greeks are the 2nd largest depositors ! The Greek government needs to raid the Greeks who have siphoned off billions to the Swiss bank accounts (whilst the government was asleep – again ), and bring back those billions to prop up the Greek banks with cash to lend out to businesses to re-start the economy. They won't survive on sunshine and sunscreen !

    February 22, 2012 at 5:30 am |
  12. GG

    Germany is NOT giving Greeks anything. They are lending Greece money of which they are making a profit. They are NOT allowing Greeks to cut military spending as the majority of their arms are from Germany. Germans are NOT paying for all WWII damages that killed 558 000 Greeks. They burnt 90 towns entirely. They wounded seriously nearly 1 million citizens and left 1.3 million jobless. When they packed up and left, they destroyed most of the infrastructure, including ALL bridges. The Germans took ALL Greek gold reserves. If that were not enough, Greece loaned money to Germany for their rebuilding of which they still have not payed. The majority of today's economic scandals involve German companies. At least the Germans should have shown a lot more respect to Greece, its history and its people. Maybe this is their revenge for the fact that Hitler's forces were slowed down and thus late to attack Russia. If that is the case, does this mean that there are still people in Germany holding key positions with friendly thoughts towards Nazism?

    February 22, 2012 at 5:33 am |
  13. H.D.

    The article misses the point somewhat. It analyzes the bailout merely economically, not politically. The bailout was never intended to make Greece economically "solvent." The larger purpose has been to build Greek confidence in order to encourage it to take greater responsibility and motivate its restructuring. It has also been intended to show international investors that the EU still has confidence in Greece and stands fully behind and ready to help.

    February 22, 2012 at 6:51 am |
  14. Chris

    H.D. "The larger purpose has been to build Greek confidence in order to encourage it to take greater responsibility and motivate its restructuring"

    None of the bailouts went to the people but to the banks BUT the debt back onto the Greeks. Is that fair?

    How is that going to build confidence? How will this help the Greek people.

    February 22, 2012 at 9:13 am |
  15. John

    Tragic what is happening. The next generation of educated young professionals are and will be leaving for "greener" pastures. Greece is going to have a generation gap that will hurt generations to come.

    February 22, 2012 at 9:21 am |
  16. Pat

    QUest's and CNN's constant euro-bashing is frankly annoying.

    February 22, 2012 at 9:40 am |
  17. austriacus

    The EU is buying time to strengthen its firewalls. In the end, Greece may be doomed to default.
    If Greek rich people prefer to invest in Bulgaria, why should European investors go to Greece ?

    February 22, 2012 at 9:46 am |
  18. azeddine el-mahdag

    only soultion to greece is saving money to next generation if they continue to borrow money from eu that will make greece work one year for zero because money come to go to rate

    February 22, 2012 at 10:08 am |
  19. Richard

    @Pavel

    You don't get it. The goal of the international bankers is never to have the debt paid back. They want us all to be enslaved to debt. Then they can milk us for interest for all eternity. On borrowed "money" that was created out of thin air. Quite a racket if you are sitting at the top.

    February 22, 2012 at 10:28 am |
  20. Kam

    Would someone blow the whistle on whose next and start using prevention policies. I believe that there are a few countries in the same predicament but has not surfaced yet. Don't let Greece dilute all funds available. And I agree with Richard, someone or (some country) is laughing all the way to the bank.

    February 22, 2012 at 11:24 am |
  21. Migen Bora

    Let me understand this. A country borrows for decades fare more that it could afford , presents false financial data and balance sheets for at least 10 years now. And then they receive up to 53% discount on its debts , a first bailout , than a second bailout and its people are even angry at EU and Germany.
    Yet in the media no one mention this. It looks like this little and cute country`s economy has failed for some bad luck or external reason , and big economies must help it. Why?
    And if (God helps us) this is the end of the Euro , so let it be. It is failed anyway.
    This is unbelievable.
    They must pay every cent out of it (so other countries won`t try to do the same). If they can`t , let them sell something (islands , sea and air space or everything else).

    February 22, 2012 at 12:51 pm |
  22. Roland

    Everyone in the EU knows we won't see that €130 billion again don't think tax payers/governments lending Greece this money don't know this.But for now they can carry on eating from the troth.Kick the can down the road and pretend everything is going to be ok at least for a little while.

    February 22, 2012 at 12:57 pm |
  23. Roland

    eating from the trough the trough not troth...im not a PIIGS farmer although maybe i should become one.

    February 22, 2012 at 1:00 pm |
  24. ana

    The good article Sir Richard ...well...´Greece back on track -but how long?´ We´ll see,although most of us, same as you clearly see/know the answer! Wait a moment please!!!

    February 22, 2012 at 1:53 pm |
  25. Pano S

    Germany is NOT giving Greeks anything. They are lending Greece money of which they are making a profit. They are NOT allowing Greeks to cut military spending as the majority of their arms are from Germany. Germans are NOT paying for all WWII damages that killed 558 000 Greeks. They burnt 90 towns entirely. They wounded seriously nearly 1 million citizens and left 1.3 million jobless. When they packed up and left, they destroyed most of the infrastructure, including ALL bridges. The Germans took ALL Greek gold reserves. If that were not enough, Greece loaned money to Germany for their rebuilding of which they still have not payed. The majority of today's economic scandals involve German companies. At least the Germans should have shown a lot more respect to Greece, its history and its people. Maybe this is their revenge for the fact that Hitler's forces were slowed down and thus late to attack Russia. If that is the case, does this mean that there are still people in Germany holding key positions with friendly thoughts towards Nazism?
    Germans have to give back the money that they stole and Greece will be debt free. They should also pay for the murdering of women and children of all ages like they did with the Jews. We are not any less humans that them.
    They also have to give back billions of euros from simems plus send back to Greece for trial the people from simens that they where giving kick backs to the politicians in order to get the contracts. also they need to kick simens out of Greece and work with american companies to benefit a real allied....

    February 22, 2012 at 3:05 pm |
  26. jwrunning

    Everyone seems to be missing the key point here. The debt-to-GDP ratio – on which this deal is based – is irrelevant. It's debt-to-tax take that matters, and the Greek tax take isn't going up in a hurry, even if the economy could turn around from 7% decline to surplus in a year. This one isn't over for a while, yet.

    February 22, 2012 at 4:00 pm |
  27. Pavel

    @GG and Pano S

    Guys, though I am able to understand you sentiment about Nazi Germany you whining is not going to get you anywhere. My country (the Czech Republic, former Czechoslovakia) was betrayed by the allies (France and Britain) in 1938, it was invaded by Nazi Germany in 1939, it was invaded again by the Soviets in 1968. Czechoslovakia, one of the most developed countries in the world in the 1930s, was a mere third world country when the iron curtain fell in 1989 (socialism did not improve our standard of living, I can assure you). The way back to prosperity has been long and painful but whining about the past would not get us anywhere. The standard of living in the Czech Republic is still lower than in Greece, but I blame neither Nazis nor the Soviets.

    February 22, 2012 at 5:12 pm |
  28. Guntzburg

    When I tried to open a beach kiosk in Athens, some years ago, I was refused because I did not give a bribe, no wonder the beach had no facilities.

    I then left Greece for good, it was the last straw, corruption, and government employee abuse was too bad.
    I blame the banks for financing this bad behaviour, Greece would be sorted a long time ago, naturally.

    I enjoy seeing Germany and others pay for the unfair harm they caused me and others like me.

    Greece could have been so much different if we were not forced to leave.

    February 22, 2012 at 5:45 pm |
  29. Aitsch

    Ok ... to set some things straight:

    The people don't get anything from the bailout?
    Well, it's right that the bail out pays the debts – but if it wouldn't do – Greece would have to!
    If I don't have enough money to buy food and my mother say "ok, I pay the rent of your flat for you" Do I complain about that she doesn't buy me food and let me hunger or do I use the money I spare from the rent for buying food? The ECB is already willing to abate the interest rate. I think the EU will follow if the day of paying will ever come. Be sure they don't want to make big business – there are safer ways for investments!
    Sure, the EU demands reforms and REALLY hard cuts from the greek population (I have to admit that!) but not because they try to take control over greece, but to keep control over their money! I think that's understandable. The greece government wasn't able to reform their bureaucracy or privatize the government own companies. The only point where they (more or less) reach their goal is in cutting wages and raising taxes. That's hard for the greece people – but not the fault of the EU!

    Next point. I hear it really often "Germany owes Greece money!"
    Please read this: time(_dot_)com/time/world/article/0,8599,2093990,00(_dot_)html
    -> replace the (_dot_) by .

    Only if you think that "give us all your money as a interest free loan or else ..." is a normal agreement and NOT a war crime – then germany still owes you THAT money from the loan. The rest is history!

    And how would you feel if Iran (they are in trouble now) would demand money from greece for burning parts of Persepolis? Or Egypt for years of occupation? Don't get any romantic illusions from the war of alexander the great. It was a normal ugly war with all it's dire consequences for the normal population. The soldiers weren't farming as a part time job. They stole what they needed ... and a little bit more to make it worth to risk the neck.

    I think the EU should make greater efforts to support the greek people – but not because of the crimes of my ancestors, but because of our friends today!

    February 22, 2012 at 5:57 pm |
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    well said, no hard taclez.

    February 22, 2012 at 11:32 pm |
  31. Chris

    Listen to Richard. This debt scam is currently happening to countries all over the world.

    If a country has resources the IMF want, then what they do is target that country by attempting to bankrupt it and bring it to it's knees. Paying off Politicians is just the cost of doing business.

    You get these Politicians to sign off to contracts that are either dubious(ie purchases don't exist or are substandard). The country spends spends and spends and usually to one or two other countries that benefit from these. It is EASY to create debt without one cent being spent as well(sign a contract and that's it debt created).

    Once the country has spent all it's money, the original countries that benefited from these schemes(ie Germany and France) then come in and 'bailout' these countries. But the money never goes back to the people. They take it back. As happened with this bailout. BUT the debt keeps getting bigger.

    The intent of this create a debt that is ongoing that the country will never get out of and will effectively lose it's sovereignty. The Bankers get voting rights, infrastructure, land etc.

    Wheniti doesn't work out and a country wises up(and it's people) and the banks lose the bet, they walk away and let the people fight it out. The germans who will lose their money and the Greeks will lose in paying for something they never got.

    Nice scam.

    February 23, 2012 at 1:09 am |
  32. Constance

    Well said Chris!

    February 23, 2012 at 3:23 am |
  33. jimmy

    For whoever has the slightest idea on how the Greconomics have been working for the past 30 years it's simply a matter of time before the corrupt Greek politicians ask for more money!!! They have build their careers and their personal wealth on 2 pillars a) the "customer" relationship with their voters, by hiring almost 1/3 of the work force to the public sector b) corruption and tax evasion for the rich and the "favorable". Greece has no production and almost 80% of the economy depends on the government. This is worst that an ex soviet economy and it's more like a third world country. To put it simply it can't afford to be in Euro zone. Drachma is the best solution at this moment. Unless the "stupidfanks" or koutofraggoi in Greek lay term keep pumping money tin this barrel with no bottom!!

    February 23, 2012 at 4:50 am |
  34. jimmy

    correction: "stupidfranks" means stupidwesterners, that's how the majority of the Greek "thinking" class refers to europeans and americans!

    February 23, 2012 at 4:57 am |
  35. whosurdaddy

    They will come before I do.

    February 23, 2012 at 5:05 am |
  36. CraigNL

    The answer to this question is fairly simple. The bail-out of Greece will last until A) the North of Europe runs out of money (unlikely!!!), or B) the North of Europe stops paying for the South because they are fed up with paying for the lies, mistakes and laziness of the South of Europe. I personally go for the last option. And I hope that will happen ASAP. Simply because I do not think it is fair to ask for more money to save the South of Europe at the expense of our own elderly, pensions and savings. But then again, I am very against Europe as a united union. So my opinion is a bit colored.

    February 23, 2012 at 12:20 pm |
  37. Floyd Burgoz

    They will be defaulting within 18 months.

    February 23, 2012 at 4:15 pm |
  38. Anonymous

    please tell the "editor" at the NY Times that I refuse to take their "bait"....That said, read the Op-Ed by Bill Gates on today's paper (2/23rd). I COULD NOT STOP LAUGHING!!! HE of all people surely understand and live by the moral and ethical practice of "shame is not the solution" for IF shame could be a motivational factor for "doing the right thing by one's own conscience" THEN he would NEVER have stolen what does NOT belong to him...But I digress – that accusation to be made and prosecuted VEHEMENTLY in the court of law to be judged by the jury of American citizens and NOT by his crony "friends"...

    I want to ask him this ONE and only important question...
    WHO THE HELL ARE YOU TO JUDGE A TEACHER'S EFFECTIVENESS NOR ACCOUNTABILITY, HUH? Have you spent a year TEACHING in a public school? Other than the vast dollars you have dumped into the system for quid pro quo on behalf of Microsoft alliance with the Dept. of Ed, WHAT MAKES YOU THE JUDGE AND JURY, huh? WHAT ALL OF YOU IDIOTS fail to understand is that SHAME nor PERFORMANCE INDICATOR is NOT the answers but the core issue should and always be DOES THE TEACHER CARE ABOUT THE STUDENT'S OVERALL LEARNING? AND GIVE the individual school to determine the answer and accountability to either reward those good in their community or to get RID of those who only thinks about their pension...IDIOT!!!

    February 23, 2012 at 4:21 pm |
  39. Chris

    No matter how much you tell people to read between the lies and see the scam that the banks have been operating since the 50's, they just can't open their eyes.

    I guess you can't blame the elite. The general public are just not bright.

    February 23, 2012 at 9:14 pm |
  40. stamatis

    yes, there is the part that (does not) work in the public sector, yes the politicians are corrupt, yes it is very hard to work this out, but also there is the hard working people who are struggling in a corrupt country, and we will not sell our country to anyone... and we won't make war either... even though we have more tanks than france and germany together... we just don't do that...

    February 24, 2012 at 3:27 pm |
  41. Khoo Boo Boon

    I am reminded of the nursery rhyme, "Humpty Dumpty", the full lyrics read as: "Humpty Dumpty sat on a wall
    Humpty Dumpty had a great fall. All the king's horses and all the king's men couldn't put Humpty Dumpty together again". I do not believe Greece will ever be the same again with or without any future bail-out.

    Manila, Philippines

    February 25, 2012 at 8:54 am |
  42. John

    Mr.quest I suggest you start paying more attention to the debt carried by the US, and the UK. That's where the real Armageddon is.....

    February 25, 2012 at 4:03 pm |
  43. sameh

    You will not believe what is happening in the stadium during the match

    http://www.elearning-directory.com/arabic-see2

    February 26, 2012 at 8:35 am |
  44. Jac

    Principal + Interest = DEBT

    It is mathematically impossible to pay down the debt out of only some remaining principal. Wake up

    That´s we need to implement Mathematically Perfected Economy. Google it...it´s a real wake up call

    February 26, 2012 at 5:55 pm |
  45. Rp

    Bailout for Greece is nothing else than a very expensive marketing campaign. The EU had to provide the cash to Greece in order to be seen us the defendors of the week. If they would not have done, the markets would have killed irland, portugal, italy, spain, and that would have been the end of the Euro. That is what it wanted to avoid, nothing else. Politicians where afraid of a lehman effect. That is coming to an end. The markets have factored in already a default for Greece, so the risk for other countries is now less. Or do you really thing that the EU did not know about the impossibilty of Greece to repay? They needed time to prepare the markets, and that time was bought through bailouts.

    February 28, 2012 at 7:16 am |
  46. Pablo anwar

    @

    March 14, 2012 at 7:45 pm |

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