Yesterday we twice made the point that Greece was shooting itself in the foot, making it impossible to receive a bailout.
Let’s revisit the points.
First, there was the violence in the streets as a result of threats of government austerity. The riots were (and are) a clear message to Greece’s more stable EU peers that there’s really no point in bailing the country out with the expectation of strong deficit reduction, because it just couldn’t happen there politically.
We’re talking about a country where 30% of the workers work for the government. That means there’s just no realistic way to take a big hatchet to public spending without causing lots of pain to the people.
Then Greek leaders continued to damage themselves by flinging NAZI gold theft accusations at Germany, as if that were the root of the country’s problems. There’s basically no chance this will make German leaders more willing to bail the country out.
Again, if you’re Angela Merkel, how do you justify to your countrymen spending their cash on this country? You can’t.
So the country is left with the hope, perhaps, that it can pull through on its own, access the public markets and cut spending. That seems like a longshot. Or perhaps the EU can override Merkel and make it happen, but you have to imagine this causes serious political problems down the road, if it’s even possible.
Last week it seemed like a bailout was an inevitability. Now it’s impossible to see how one happens.