Greece -- too little, too late?
Greek Prime Minister George Papandreou addresses Socialist members of parliament in Athens (Nov. 3, 2011) Credit: AP
One of the characteristics of Greek tragedy is that everyone knows the ending before the play begins.
If only we could be so certain about the modern Greek tragedy unfolding in Europe. Some things are clear: Greece will never pay the entire $480 billion it owes, and it can't sustain the kind of austerity imposed upon it, no matter how deserving of such penance it may be.
European leaders, recognizing momentarily that they are not starring in a comedy, have already put a debt write-down on the table. But they haven't gone nearly far enough, and so a terrifyingly sudden and messy Greek default looks increasingly likely.
The Europeans should be scrambling harder to avoid this. There's simply no alternative to an orderly but massive write-off of Greek debt, possibly coordinated with write-downs for such smaller, floundering eurozone nations as Portugal. These debt reductions can be coupled with support for other threatened European debtor nations -- particularly Italy -- and the European banks that hold so much shaky debt.
What's really scary is, this might not work. But it's worth a try, because a sudden Greek collapse could send a tidal wave of defaults across the Atlantic to inundate American banks -- and swamp a U.S. economy already struggling to stay afloat. A catastrophic Greek collapse could even drag the world into a depression. Fast action might head that off. What's clear is that business as usual will likely lead to a much larger tragedy. hN
