Wall Street Journal
August 9, 2010
So it's all right, then. The agencies monitoring Greece's ability to meet the austerity targets set for it by the European Commission, the European Central Bank, and the International Monetary Fund are sufficiently satisfied with its progress to recommend release of the €9 billion ($11.95 billion) that is the next tranche of the €110 billion bailout package agreed by the eurocracy and the IMF. Of course, to reach that conclusion, the only one available to those with a political stake in the durability of the euro, the authorities had to ignore a few nasty facts.
Most important, Greece has to rely on the bailout fund because the markets do not deem it sufficiently credit-worthy to be allowed to borrow at tolerable rates. The market has higher standards than the EC, IMF and ECB, and no political reason to show any tolerance. "We don't expect any return to the markets very soon," says Poul Thomsen, the IMF's Greece mission chief. The alternatives remain continued bailouts, or rescheduling or restructuring, to use oft-preferred euphemisms for default.
Little wonder, given some of the facts the monitors chose to downplay. Regional and local governments and entities continue to spend money they don't have. Tax evasion by high earners continues, the authorities so far being unable to get their collection procedures in order, or to cope with threats of tax flight. High-income ship owners, who flaunted their wealth at their champagne-sodden semi-annual "Posidonia" bash, are prepared to suffer exile in the south of France if the government tries to force them to pay taxes bills. Or even endure the less agreeable climate of London.
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