Greece, Creditors Still Labor Under Illusion of Recovery

IMF chief Christine Lagarde (L) with German Chancellor Angela Merkel. (AP Photo/Michael Sohn)

While Greece and its creditors are patting each other on the back over yet another deal to save the cash-strapped country, the evidence is that it hasn’t.

Prime Minister and Radical Left SYRIA leader Alexis Tsipras caved in to the lenders to get release of more monies from a delayed third bailout of 86 billion euros ($96.86 billion) but agreed to break more promises and impose more austerity.

He said adopting policies he said were killing the country while he was out of office are now putting the country on the road to recovery without explaining the contradiction.

And in an analysis called Painful Choices Still Hang Over Greece, Martin Wolf of The Financial Times wrote that both sides are still practicing the illusion of “extend and pretend,” to keep piling loans on top of loans to pay loans while pretending it’s working but is just adding to the debt which is essentially mathematically impossible to pay.

“The Eurozone pretends Greece is not in default; Greece pretends it will reform; and both play for time. What would an honest reckoning look like?” he asked.

He said among the country’s creditors that the Washington, D.C.-based International Monetary Fund has made a mess of it and even while admitting austerity hasn’t worked is agreeing to back more of the same and allowed Germany – Greece’s biggest lender – to push talk of debt relief back until 2018 at the soonest.

It also has just said that, “In all key policy areas — fiscal, financial sector stability, labour, product and service markets — the authorities’ current policy plans fall short of what would be required to achieve their ambitious fiscal and growth targets.”

No one among the creditors really believes Greece will attain a primary surplus of 3.5 percent of Gross Domestic Product (GDP) but pretends it will until another crisis is lurched into and more time is bought with more jury-rigged false measures.

“In order to make debt sustainable, without a reduction in its face value — which Eurozone members want to avoid — there need to be further substantial extensions of maturity and deferrals of payments, as well as the fixing of official interest rates at not more than 1.5 percent,” he said.

Given Greece’s position – tax revenues far off target, privatization woefully behind schedule, runaway tax evasion, Europe’s worst corruption, scandal piled on scandal – he said there are three options for the Eurozone.

The first is to keep doling out just enough money for Greece to tread water and not drown in its own debt but continually fail to meet fiscal targets.

“The Greek government will go on complaining, like a permanent adolescent, over the stinginess of those acting as its guardians,” he said.

A second option would be for both sides to admit they are essentially lying about the fiscal goals, to reduce the debt and implement real instead of imagined reforms.

“A third option, rejected so far by the Greek people and the eurozone, is to accept that it just cannot thrive within the Eurozone,” he said in the doomsday scenario Greece wants to avoid most of all.

He concluded that the IMF has to finally make up its mind what it really wants and for the agency chief Christine Lagarde to stare down German Chancellor Angela Merkel, although already conceding to her.

“If the IMF does not get the concessions it seeks, it is honour bound to withdraw from the Greek mess. It should do so. It might be unable to save Greece. But it can at least save itself,” he finished.