People reading media reports of the Greek Unions holding national strikes, and expressing incredulity at the lack of gratitude from Greeks when they are about to be bailed out, are not aware of how bad things have got.
Public sector workers have not been paid since January. Their pay has been sliced by 25% when it resumes.
The bail-out is, in any case, conditional on its getting through fifteen parliaments. Fear might drive it through, but it might not. Bail-outs are expressly not permitted in the Treaties.
Interest rates short term in Athens have shot from 5% to 18% in April alone.
The only way out for Greece is to quit the Euro, devalue, default and get going from scratch again. It is only because of the exposure of British, German and French banks Inter alia to Greek debt, and the fears of what will happen next that is causing the impossible to be attempted.
The Greek people want out already. The governments of Europe don’t want to face the coming meltdown which will also ensnare Spain, Italy and Portugal. The problem with any bail-outs is that they only delay and make worse the eventual crash. That realisation is going to dawn before too many billions of good money are thrown after bad.
The markets are ahead of the politicians sending interest rates rocketing, and the Euro sliding, even with the bail-out declared. This will be like Britain’s exit from the ERM. Politicians can speak forever, but markets eventually just go ahead and decide. That moment is getting perilously close. In the battle between fear and hope, fear is winning the game with ease.
And watch out for Sterling in a Hung Parliament – See Guardian – Exchanges open at 1am Friday.
Other reports on the Euro indicate that it will be saved this time, but the market psychology and fear for its longterm survival can only get worse. The price of the Euro is falling, but it will recover temporarily and then fall further later. (I paraphrase).