The €130 billion question: is EU postponing the inevitable?

Feb 21, 2012

Latest bailout will mean an austerity regime the Greeks will never be able to cope with

EUROZONE finance ministers in Brussels agreed to a second Greek bailout in the early hours of this morning, approving loans worth more than 130bn and getting private holders of Greek debt to take losses of 53.5 per cent on the value of their bonds. To secure the deal, Greece has undertaken to reduce its debts to 120 per cent of GDP by 2020 and accept greater EU monitoring of its fiscal system. But many see the so-called rescue package as simply postponing the struggling country's inevitable exit from the eurozone.

Don't break open the Ouzo yet
What we have is an agreement in principle, not a final definitive rescue of Greece, blogs Robert Peston for BBC News. "Before we crack open the vintage Ouzo, let's just see how it goes down with the relevant private-sector lenders, politicians in the only creditor country that really matters - Germany - and Greek citizens."

More pain for Greeks
This is uncharted territory for the eurozone, says Mark Lowen also for BBC News. A managed Greek default, with over 50 per cent of the country's private debt being written off, wasn't even being considered as an option several months ago. But the latest deal will mean "more austerity and spending cuts, and even more pain for Greeks".

Lost cause
The latest bailout commits another mountain of euros to a cause that most think was lost some time ago, writes the Greek economist Yanis Varoufakis for Channel 4 News. Terrified by what an "amputation" might mean for the eurozone's integrity, Europe's paymasters are forcing the Greek government to accept conditions that are impossible to meet, says Varoufakis. "Wholesale desperation has once again led Europe's leaders to… widespread deception."

The youth are paying
It's the Greek youth who will be paying for the latest bailout, says David Blair for The Daily Telegraph. They will be victims for years to come thanks to the austerity being demanded by the latest bailout deal. Unemployment for the under-25s is already 48 per cent, and the minimum wage has fallen by 22 per cent. "But Greece has suffered perhaps the most wounding blow of all – its national dignity and self-belief have been undermined".

Greeks expect the worst
Greeks feel angry and resentful but also resigned about the latest rescue package, says Patrick Cockburn in The Independent. Most Greeks are sceptical about austerity measures "that have sent the economy into a tailspin". This does not mean, as yet, that they want a default and a return to the drachma. Opinion polls suggest 73 per cent of Greeks want to stay in the eurozone - "but 49 per cent doubt if Greece will be there in two years' time".

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