Guardian
Editorial
February 21, 2012
"Is this the way they say the future's meant to feel?" asked Pulp. "Or just 20,000 people standing in a field?" As dawn broke in Brussels, it was not E-fuelled but €-fuelled delusions which slowly gave way to an €-fuelled comedown. The eurozone's financial leaders emerged bleary-eyed to hail "a comprehensive blueprint" that would put Greece on the straight and narrow. Having stayed up late enough, with enough frenzied friends, they no doubt believed they were doing something amazing. But a nagging awareness of the outside world soon made itself felt.
In the harsh morning light, the deal looked like a pact to keep going by necking more of the drugs already swallowed in vast doses. There will be a fresh bailout loan of €130bn, new "voluntary" reductions in payouts to private holders of Greek debt, with parallel losses on bonds held by public institutions, which are weirdly structured to conceal the hit foreign taxpayers are taking. Oh, and in return for all this, the Hellenic Republic must endure further cuts, now and into the future. Greece, lest we forget, is already in the depths of a true Great Depression, with a fifth consecutive year of contraction now predicted, even by the EU. The eurozone is relying on the remedies of Hoover and Brüning to pull it out of the mire.
It won't work, which is the first reason why the small-hours sense of a resolution on Tuesday was a hallucination. Even before the announcement, a secret report prepared for the ministers warned that Athens could require yet another bailout before long. The official claim that Greek public debt will now fall to a high but supposedly stable 120% of GDP is pure assertion. How could it be otherwise? The GDP half of that equation is a known unknown, but seeing as any would-be investor will look at the heightening social chaos and think twice, there is reason to be fearful. All the risks are, in the jargon, on the downside.
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