John Hemming, you really are talking total nonsense.
http://www.theguardian.com/business/201 ... ill-needed
Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors.
The documents, drawn up by the so-called troika of lenders, support Greece’s argument that it needs substantial debt relief for a lasting economic recovery. They show that, even after 15 years of sustained strong growth, the country would face a level of debt that the International Monetary Fund deems unsustainable.
The documents show that the IMF’s baseline estimate – the most likely outcome – is that Greece’s debt would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending reforms demanded. That is well above the 110% the IMF regards as sustainable given Greece’s debt profile, a level set in 2012. The country’s debt level is currently 175% and likely to go higher because of its recent slide back into recession.
The IMF has made it abundantly clear that it believes Greece's debts are unsustainable. If it was just the IMF responsible for dealing with this crisis, instead of the ECB and EU as well, then a significant chunk of Greece's debt would already have been written off, and Greece could be heading towards recovery.
But the ECB and European Commission won't allow this to happen
for political reasons. Such a move is being vetoed by the Euro-authorities because it would set what they see as a dangerous precedent, and it would be politically explosive in Germany. It sets a dangerous precedent because there are other countries in the eurozone who have been denied debt relief and there is a worry that if some of Greece's debts are written off then Ireland, Spain and Italy may eventually demand similar treatment.
Greece is just the worst example of several "deficit states" within the eurozone. The underlying problem is a structural defect of the eurozone itself and Greece did not create that. A load of politicians and european bureaucrats did it, and they were motivated by political ambition rather than economic rationalism.
The fact that Greece is partially to blame (that's why it is the worst example) is not actually relevant at this point. Once you accept that Greece's debt is unsustainable and that a partial write-off of that debt is being blocked for political reasons then arguing about how Greece got into this mess is beside the point. Unsustainable means UNSUSTAINABLE, and agreeing to take on more debt, and to implement punitive austerity which will cause further economic contraction, makes absolutely no sense at all.
I cannot understand why you don't understand this. Yes, some more reforms are required in Greece, but unless the European authorities are willing to admit in return that Greece's debt is unsustainable and agree to write some of it off, regardless of the political consequences, then the only rational course of action for Greece is to refuse to accept the Troika's conditions and let events take whatever course they take.
