Take a deep breath

By the beginning of April, Greece must find a way to considerably reduce the notorious bond spreads for two reasons. Firstly, because Greek banks are finding it increasingly difficult to borrow even at high interest rates and are finding doors closed to them abroad and, secondly, because the Greek state has to borrow 24 billion euros and simply cannot afford to under current conditions. The question is how to reduce the spreads and who is going to take the decision to do so. One scenario is that Greece will be left to its own devices and the markets will decide when they are satisfied with the measures the Greek government is taking. In such a case, no one can predict the outcome of what would essentially be a poker game. Another scenario is that someone, basically the EU or the IMF, will say, «Take 24 billion euros under favorable terms but in installments and under strict conditions.» The EU hasn’t done that before and has no idea how to go about it in practice, but sees it a matter of honor not to let a member of the eurozone have recourse to the IMF, which has already bailed out the EU in Latvia and no one wants a repeat. But Papandreou will be telling his interlocutors in Paris today that the IMF restrictions might not be as tight as the EU’s. One danger associated with this is that Europeans will become involved in an endless discussion that will simply increase the risks for Greece. It is outrageous that we have reached this point, and not because we have supposedly become the pretext for a speculative attack on the euro. We are now officially an example of how not to manage finances, of corruption and of deceit. Whatever happens, there is no magic wand to help us because of any admiration for the ancient Greek spirit. There is only a long period of the strictest supervision, harsh fiscal discipline and dealing with a deeply rooted malaise. We will all have to hold our breath and hope to come out alive. So let’s all take a deep breath – we’re going to need it.

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