Greece, Greece, More Greece

 Via Reuters:

French Economy Minister Christine Lagarde said she expected a
package of 100-120 billion euros ($133-$160 billion) to help Greece out of its
debt crisis, and had "good hopes" a deal could be reached by the end
of this weekend. . . .

But a bailout will come in return for draconian budget cuts
in Greece, where thousands marched on May Day shouting slogans against
austerity measures they say only hurt the poor and will drag the country
further into recession.

"No to the IMF's junta!," protesters chanted,
referring to the military dictatorship which ruled Greece from 1967 to 1974.
"Hands off our rights! IMF and EU Commission out!," the protesters
shouted as they marched to parliament. . . .

Greece's public sector union has also called a 4-hour strike
for Tuesday, on top of a nationwide strike set for Wednesday, highlighting the
challenge the government faces in pushing through the cuts it has promised
potential lenders.

What’s that old saying about starting to scream as soon as
you see the dentist’s drill?  I
don’t see how this can inspire confidence in Greece’s ability to deal with its
failing economy.

At the same time, a growing number of voices are calling for
a preemptive restructuring, rather than attempting to meet existing debt
obligations.  For example, Nouriel
Roubini and Arnab Das in
the FT argue:

The past weekend’s spring meetings of the International
Monetary Fund in Washington focused on the Greek sovereign debt crisis – the
first such crisis in living memory to concern a high-income country, and in the
eurozone no less. Even more telling than the shift of focus from emerging
markets is the widening divide in the views of those institutions and
governments leading efforts to secure an orderly resolution.

Roubini and Das urge a pre-emptive debt restructuring for Greece
– continuing on the current path risks a disorderly default and financial
crisis.  Lee Buchheit
made a similar point in his
guest post here a few days ago.

Moreover, consensus seems to be building around the notion
that the crisis has not been handled well.  For example, in the
WSJ Stephen Fidler And Marcus Walker argue that:

As the International Monetary Fund and euro-zone governments
finalize their debt rescue package for Greece, there is wide agreement on at
least one thing: European governments could hardly have managed it worse if
they had tried.

Euro-zone governments, held back above all by a reluctant
Germany, have taken so long to arrange financial support for Greece that its
debt crisis is turning into a wider European conflagration that threatens
Portugal, Spain and potentially other indebted countries.

Finally, Felix
Salmon reports that Greece is rumored to have already hired restructuring
advisors (Lazard).  If that’s true,
then things may get interesting very soon.

Related Posts:

The
Greek Bailout: War Versus Dishonor
What Do Those Greek Debt Contracts Say?

Greece: Argentina, Uruguay, or Twin Engine
Plane?



Blame It On Derivatives, Blame it On Goldman
Sachs, Blame It On the Nazis. But Don’t Blame the Greek Crisis on Greece





The Greek Crisis: Economic Meltdown or Mental
One?



The Modern Greek Drama: Comedy, Tragedy, or
Both? 

The Modern Greek Drama, Part 2 





Verge of the Unböring (The Modern Greek
Drama, Part 3)







Is 2010 The Year of Odious Sovereign
Defaults?

Image source: Reuters