A default bullet dodged

The successful outcome of the private sector involvement plan (PSI) in the Greek bond swap is being billed as a major success and allows the country a little breathing space. A disorderly default has been averted, the debt has been reduced and the Greek economy will gradually return to a state of normality.

PM Lucas Papademos and the government?s financial team handled what were particularly delicate and difficult negotiations. The fact that the two main political parties came to an understanding contributed to this, as it boosted the country?s credibility on an international level.

It?s true that the debt haircut has not made Greece?s problems disappear and the road ahead will be long and painful. What is imperative, however, is for the country to stay on the lifeboat for as long as the unprecedented storm hitting the European Union persists and until permanent solutions with regard to member states? borrowing practices are found. The price being paid by Greeks is huge due to the accumulated unreliability of the country and its politicians, but it would be incomparably higher had we defaulted in a disorderly manner or exited the eurozone.

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