This week, the so-called troika of lenders — the European Union, the European Central Bank (ECB), and the International Monetary Fund (IMF) — agreed to extend another massive aid package to debt-plagued Greece, its second since 2010. The $170 billion bailout comes just in time, forestalling Greece's default on a $19 billion debt payment due in March. Many European leaders are breathing a sigh of relief, since a default could have led to chaos in financial markets and the dissolution of the euro currency bloc. But they aren't exactly doing cartwheels in the streets either, because Greece continues to face daunting, perhaps insurmountable challenges. Even with this latest bailout, are Greece's financial problems beyond repair?
Yes. Greece is doomed: The bailout is predicated on "fairy-tale" projections, says Derek Thompson at The Atlantic. The troika forecasts that Greece's debt-to-GDP ratio will stabilize at 120 percent by 2020 — a "fantasy" that absurdly assumes that Greece's crippling recession "will stop accelerating sometime starting… yesterday." With a new round of harsh austerity measures setting in, the Greek economy will only contract further, putting Greece on track to record "one of the worst recessions for a developed country in modern history." Even with this latest bailout, Greece won't be able to pay its debts under that kind of pressure. The troika's plan is "unrealistic and doomed to fail."
"Greece is still doomed: why the new bailout is a fantasy"
Maybe. But the bailout at least buys time: The bailout isn't meant to solve all of Greece's debt problems, says Ezra Klein at The Washington Post. It simply prevents immediate catastrophe, and should allow Europe to "muddle along" for a few more years. "Perhaps, by then, the global recovery will be stronger than we had thought, or the rest of Europe will be in a stronger position to help push Greece over the finish line." Until then, "doomsday just keeps getting delayed." Maybe that's enough for now.
"Muddling along in Europe"
Greeks won't take this lying down: With no bright spots on the economic horizon, "the Greek people will suffer and Greece itself will go through a time of testing not seen since the unrest following World War II," says Rick Moran at American Thinker. Furthermore, the troika is taking unprecedented control over Greece's finances, all but demanding that Greece relinquish its "economic sovereignty." With new elections scheduled for April, don't be surprised if voters "throw out the entire government" in exchange for one that rejects the bailout deal altogether.
"Greek bailout a done deal"