The NYT has the title, Wrong Prescription for Greece. The article says that Greece and its financial overseers agreed on terms for continued bailout payments on July 8 and that this agreement is a cause for relief, because without it Greece would go bankrupt.
According to the newspaper, there is little chance that further sacrifices will revive Greece’s economy or make its debt burden more sustainable. Greece should implement reforms, but the condition for these reforms is not austerity, as required in the agreement, but an economic revival.
As reported in the NYT article, Greece’s PM, Antonis Samaras, felt he had no choice but to accept, as he agreed to cut public-sector paychecks and eliminate 15,000 civil service jobs by dismissing the current jobholders, as noted.
Greece’s Civil Service is bloated, patronage-ridden and inefficient, and it clearly needs reform as part of a broader program of economic renewal and revival, according to the article. Monday’s agreement also calls for a staggered payment schedule that will allow the lenders to suspend bailout payments if Greece has not met its job-cutting commitments by July 19.
The Wall Street Journal has the headline, The Coming Greek Writeoff, and the subtitle, The EU will never get its money back. According to the newspaper, Monday’s agreement to continue lending money to the Greek government was the easy part for Europe. The EU and IMF haven’t spent three years and more than €200 billion just to cut the country adrift now. The hard part will be getting paid back.
As reported in the Wall Street Journal, it is slowly becoming clear even in Brussels and Frankfurt: Greece will never repay the money it’s been lent to “save” it. If Greece is cut loose, or walks away, its the euro-zone creditors who will lose their money.
There is a view in northern Europe that without continual pressure, Athens would fall back into its bad old ways, and necessary reforms would never get done. The continuing uncertainty that surrounds every successive bailout review, and the constant threat that Athens’s creditors will walk away if their conditions aren’t met, can’t be good for Greece’s private economy.
The author reports that for Greece, the end of this rescue can’t come soon enough. And the end may have to begin with an acknowledgment that loaning Greece the equivalent of 100% of its GDP to address its excessive debt problems was never going to work out as intended.
According to the newspaper, writing off the loans to Greece would be politically difficult. It would raise questions about equal treatment of countries like Ireland, which is facing a crushing EU debt burden of its own.
The article concludes, “Greece and its euro-zone partners share responsibility for the economically disastrous outcome of the bailout. Greece alone should not have to bear the cost of what has become very much a jointly owned mistake. It’s time to think about writing off a good deal of its publicly owned debt, just as its private-sector creditors were restructured last year.”