Time
June 22, 2011
The Greek government survived its no confidence vote in parliament, and the world is breathing a mini sigh of relief. So where does that leave the Greeks, and what are the next best steps?
According to Greek politicians, the name of the game is bailouts, and Greece is desperate for another one. To get that squared away, its parliament first has to pass another round of painful budget cuts, which would free up the next payment of its last EU/IMF bailout, allowing it to make the next round of debt payments due in mid-July. But as the Greek debt crisis 2.0 continues to unfold, there's more and more head scratching (especially by the Greek people) about exactly where this is all going.
After a year of drastic budget cuts and bailout money to grease the wheels, Greece is no better off. And by most calculations, there is no way that continuing to tread down the same path will put Athens back in the black. That's why, as Michael Schuman pointed out this week, another Greek bailout is just plain dumb. More bailouts don't increase the likelihood that Greece will be able to eventually pay down its debts, and at this point, private creditors won't touch Greek debt with a ten foot pole. Plus, the drastic austerity measures tied to the bailouts are sure to drive economic growth into the ground, which would eventually result in an even more painful default. All those factors lead to one conclusion: Greece is already insolvent.
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