Greece is one of the sorry, spendthrift PIIGS of Europe, part of the “Club Med” that unproductive group living way beyond its means, living essentially off the strength of productive European nations, mainly Germany. Germany’s newfound assertiveness demands that if the PIIGS can’t live by the EU rules they should get out. Ireland one of the PIIGS has taken on the hard medicine of deficit reduction without general strikes. Greece on the other hand, stopped by strikes, has essentially said look I’m entitled to your charity, I’m part of the entitlement generation, there’s no need for me to work hard, save, invest and pay back debts.
Papandreau has threatened going to the IMF according to today’s Bloomberg report, by Neuger and Stearns. Now going to the IMF is embarrassing to countries in the EU, particularly France, so Greece is relying on French pride (hubris perhaps) to turn Germany’s hard line soft! As the Bloomberg report points out, this is a “game of chicken!” Greece is negotiating from a position of weakness and I’m sure, given the fact that other PIIGS are close to the trough, that Germany is well aware of the risk of moral hazard. I would commend a re-read of my recent Stratfor post on subject.
If Greece is a prelude for us in the United States, also living beyond our means, who will bail us out?