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Big Shocker: Greece Needs Another Bailout

Greece still does not have enough money to pay its debts, and may require a third bailout, says the Wall Street Journal, quoting an IMF official:

“Greece will require additional financing, which may take the form either of official-sector involvement or of additional loans, hopefully on more favorable terms,” Thanos Catsambas, an IMF alternate executive director, who represents Greece at the Fund’s board

As Europe contemplates a third Greek bailout, the €173 million from the second bailout has yet to be fully disbursed. The release of these funds is contingent upon the successful implementation of structural government reforms (read: austerity measures). This is easier said than done in a country reeling under strikes and protests; thus far, only about 22 percent of reforms have been implemented.

Greece’s situation shows the limits of the new powers of the European Central Bank. By making the potentially limitless ECB bond-buying power dependent on highly unpopular and difficult to implement Germany-approved ESM austerity measures, many receiving countries may still find themselves running out of funds.

Europe spends money, Greece gets poorer. Greece gets mad at Europe, and Europe hates Greece. To some people, this looks like sound policy and clear thinking. Those are the same people who set up the euro to begin with.

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