Greek Deal Probably Not Worth Making

Pretty much the definition of a situation.
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Just like I promised when you voted for me.

Nobodywanted it.

On the surface, it appears that the plan is worse than the deal that was overwhelmingly rejected by Greek voters just one week ago. "There are many people, including in the federal government, who are quite convinced that in the interests of Greece and the Greek people that what we wrote down would have been much the better solution," Schaeuble said when asked about a German proposal on a "time-out" for Greece from the euro zone.

It’s not going to work.

Critics including many economists and some policy makers have leveled a string of criticisms at Greece’s earlier bailouts. Among the most common charges: The scale and pace of fiscal austerity proved to be an overdose that Greece’s sclerotic economy and unstable political system couldn’t cope with. Forecasts for growth, tax revenues and privatization revenues were overly optimistic. Broader economic overhauls took second place to fiscal cuts. And measures such as labor-market deregulation, inspired by international economic orthodoxy, failed to address Greece’s idiosyncratic problems, such as weak public administration and a sluggish legal system….The new program looks set to suffer from all of those problems, economists say.

And getting to yes made everythingworseforeveryone.

As Germany and France took turns berating and backing Athens over the weekend, it became clear there was more than the fate of Greece at stake. Europe’s most important bilateral relationship—the one between Berlin and Paris—was being put to its most serious test in years. Greece missed another payment to the International Monetary Fund late Monday, slipping further into the debt morass that has devastated the economy. To help keep Greece afloat, the International Monetary Fund may have turn back into a financial contortionist….

The Greece Deal, Then (June) and Now (July) [WSJ MoneyBeat blog]
Some in German government preferred temporary Grexit – Schaeuble [Reuters]
Third Time’s the Charm? Little Optimism Over New Greece Bailout [WSJ]
Greek Crisis Talks Put French-German Ties to the Test [WSJ]
Greece Misses Another I.M.F. Payment [NYT]
The IMF May Twist Itself Again to Help Keep Greece Afloat [WSJ Real Time Economics blog]
Greek government reshuffle ‘probably’ after Wednesday vote: minister [Reuters]

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