What does the Greek Bailout Mean?

According to the BBC "Chancellor Merkel told (German) MPs the deal was hard for all sides, but it was the "last" attempt to resolve the crisis"

The deal presented means many things, and there is no easy answer. One thing is that there is an attempt to use EU funds to easy an Euro problem. Something that non-Euro countries are resisting. After all they did not sign up for the Euro particularly anticipating such problems, countries like the UK.

But mostly the solution is neither one thing nor the other. The 'deal' is a typical fudge EU committee decision, who feel they have to do something, yet are afraid to do what is necessary for political consequences within their home constituencies. As such Frau Merkel is wrong, this will not be the last attempt to solve the Greek problem. In three years time we will be back to square one, discussing yet again what to do about Greece.

Why? Simply because as the IMF says, the measures do not go far enough in economic terms. Greece needs debt write-off and directed capital injection into targeted infrastructure project that will boost the GDP. In order to secure the further loans (bailouts) necessary to survive, Greece needs to prove it is serious in reforming its economy and mentality, this is why the deal terms are so stringent (a historic factor brought about by previous Greek governments who took conditional loans, without implementing the conditions). But you do not need a Labrador dog to see that such measures are recessionary, leading to contracting revenues which would otherwise be needed to repay these new loans.

The former Greek Finance Minister, still in Parliament, Varufakis, voted against the new deal, calling it insane. While his Marxists views may cloud his vision, he is largely correct. Basically, piling more debt on an already debt insustainable economy while imposing recessionary policies can only lead to catastrophe. Therefore in three years we will still be discussing the Greek issue.

The situation comes about because of internal politics within some Euro countries. Greece should not receive more loans without proving it is going to reform and pay them back. Greece should not get its debt written off, because that is our tax payers money, and they can work and earn for themselves. Hard talk for a country whose mentality seems to be that it deserves a Rolex, while earning enough for a Timex.

So, the deal imposes tough recessionary austerity, while expecting repayments on an increased debt that was already un-repayable.

The alternative, was to let Greece go from the Euro. Let them arrange their own monetary and fiscal policies to their own liking. Unfortunately the Greeks did not have the stomach for the Drachma, and they said so quite vocally in a referendum.

This left European creditors with little choice but to offer the 'half-measure' terms that they did. They could not plausibly offer less, nor politically more. But these are doomed to fail. It should either have been the full package, with monitored, verifiable, reforms, and an investment package similar to the Marshal Plan - Or Greece should have been allowed to arrange its own economy.

Unfortunately many Greeks seem to be very emotional concerning the affinity between the Euro and the EU, a confusion that may prove costly in the long run.