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The report explained Greece's impossible burden. It also "paints a troubling outlook for the debt restructuring, expected to begin this week." Bond swapping creates "a class of privileged investors who will chase off" others when Greece tries selling fixed income securities at market. Germany, the Netherlands and Finland opposed a deal doomed to fail.
The report warned "Greek authorities may not be able to deliver structural reforms and policy adjustments at the (envisioned) pace." Perhaps never with shrinking revenues unable to cover liabilities.
It's "now uncertain whether market access can be restored in the immediate post-programme years." Left unsaid was restoring it's impossible ever. Greece faces protracted deep depression. Its life force is ebbing. Only its obituary remains to be written.
A Final Comment
Greece's debt deal provides a model for future European sovereign restructurings. It's one of six or more troubled countries. Portugal looks like the next domino to fall, but Spain, Italy, Ireland, and others may follow.
Moreover, implementing Greece's deal entails problems. Reality may prevent fulfilling promises. If April elections are held, new MPs may balk. Declaring a debt moratorium, defaulting and leaving the Eurozone are options.
Moreover, private lenders may object. Legal challenges may follow. A sweetheart banker deal may unravel. Pressuring China and Japan to help isn't working. China Investment Corporation, the nation's sovereign wealth fund, and Chinese central bankers aren't willing to buy troubled European sovereign debt. According to one official, "(w)e aren't stupid."
How it all plays out isn't known. Technocrats run Greece. They may cancel April elections and stay in power. Public sentiment remains the wild card. Impossible to bear pain may become uncontainable rage. More than buildings may burn.
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