European finance ministers finally reached a bailout of Greece, although it was overshadowed by reports that the IMF has estimates that the southern European nation almost certainly cannot make its debt to GDP goals of 2020.
The bailout will provide 130 billion euros in add between now and 2014. Ministers said they expected a large portion of the money to come from the IMF, but the amount was oddly not specified. The IMF board has to approve any contribution, which is to say that the bailout is not entirely settled.
Private bondholders to Greek sovereign paper took a 53% write down. The rumor had been that the figure would be 50%.
Greece still faces the twin problems of a drop in employment levels and severe GDP contraction. Over 20% of the workforce is without jobs. GDP has fallen as much as 6% recently. There is no reason to believe that a period of considerable government austerity will improve either of these.
As has often been pointed out, Greece’s economy is an enemy that cannot be put aside as long as the foundations of it are so weak.