Apparently not. This is the latest from the EU
European officials now say that the task is less to help the country through its troubles than to avoid the sort of uncontrolled default that many experts fear could threaten the global financial system.
Well, let’s be honest. That was true from the beginning. But the EU tried to avoid an “uncontrolled default” on the cheap and it hasn’t worked. Ok, back to my point. Just how bad is the situation in Greece?
After two years of tax increases and wage cuts, Greek civil servants have seen their income shrink by 40 percent since 2010, and private-sector workers have suffered as well. More than $75 billion has left the country as people move their savings abroad. Some 68,000 businesses closed in 2010, and another 53,000 — out of 300,000 still active — are said to be close to bankruptcy, according to a report issued in the fall by the Greek Co-Federation of Chambers of Commerce.
And the current wisdom from the great and mighty?
… (there is) a growing conviction among the Greek political establishment and the country’s lenders that the old dynamic — with Greece pretending to make structural changes and its lenders pretending to save it from default — has become untenable, people close to the talks say.
Based on what I understand about the situation in Greece (read the above article if you want more on that), we will not see a major shift in Greek policy. They simply cannot do what is demanded. Consider this
About a year ago, after missing earlier fiscal targets, Greece promised to sell off $65 billion in state assets as a condition for receiving emergency loans. So far, though, it has sold only about $2 billion worth …
So the only other option would be to weaken the demands. Anything is possible, but I think this is unlikely. That is why I think we are headed for a hard Greek default. Will this disrupt the global financial system? Not if the relevant public institutions can bail out the banks that will take the biggest hair cuts. I think they can and will in a coordinated effort - as long as no other Euro zone member heads down the same rabbit hole.
And the Greeks? None of their options look good. Their best bet (I think) is to get the hell out of the euro zone and pull off an Argentina style comeback.
And the rest of us? We have been living in Euro lala land for too long now. I agree that the “crisis management” can’t go on this way for much longer. So it is time to fasten our seat belts. We may be heading into some turbulence.