Greece: Out Of Cash, Out Of Time, Out Of Options
On Friday Greece is due to pay at least a quarter of the €1.5bn due to the IMF in June.
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The creditors say they will only disburse the money if the Greek government enacts various key economic reforms and does not roll back reforms the last government agreed with the lenders and if the Greek government undertakes to run large enough budget surpluses every year in the future that Greece might have a chance of paying back the money the creditors have lent it.The Greek government says there is no possibility of it ever paying back all the money it has been lent and the creditors need to accept that, write off some of the debt, and not insist that Greece runs large surpluses (predicated on the fantasy of paying back the debt) or cuts back on pensions or enacts other similar measures that run contrary to the Greek voters’ will (as expressed in the last election).
Most commentary still appears predicated on the idea that there will be some last-minute deal – either because the creditors will back down and give Greece some more money without requiring it to be paid back or because the Greek government will back down if it understands that not doing so would ultimately mean leaving the euro.
I, on the other hand, don’t believe either side is particularly interested in achieving a deal.
The Eurozone does not want to make any compromise with the current Greek government because:
(a) they don’t believe they need to because Greek threats to leave the euro are empty both because internal polling suggests Greeks don’t want to leave and because if they did leave that doesn’t really constitute any threat to the euro;
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