Greece: time for a new beginning?

Ugly choices are what seem to be left for Greece these days. Lucas Papademos, the Greek Premier was unable to convince party leaders to accept strict austerity conditions in exchange for a second 130bn euros bailout, raising concerns that the country may be quite close to a default. The trigger for the default! Greeces 14.5 billion euros bond repayment on March 20, which many worry that the country will not be able to meet, resulting in spillover effects on the entire eurozone, especially countries like Portugal, Spain and Italy. A point of contention is also Greek debt, the restructuring of which is what the troika - European Commission, European Central Bank and IMF - is asking for. It is proposing reducing Greek debt by 50 percent of its face value, and restructuring it into long-term bonds bearing a low interest rate. But the restructuring is not believed to do much good for a recession-hit country already struggling with debt repayments. Rating agencies claim if a debt-restructuring deal with creditors is materialised, whereby the creditors agree to take up losses, the countrys sovereign rating will be that of a selected or estricted default. The troika has been pushing the Greek government to adopt austerity plans, including "cuts of 25 percent in private sector wages, 35 percent in supplementary pensions and the closure of about 100 state-controlled organisations" in exchange for a bailout just to make sure the country is not declared bankrupt. In contrast to a selected default, an outright default will take place if the country blatantly refuses to pay back creditors because of the inability to do so. And ironic as it is that such default is also called a messy default, the consequences for the eurozone will be messy at best if this happens. The predicament regarding the troikas suggested austerity revolves around its effect on the growth rate, which is still shy of being satisfactory being projected in the negative uptill at least 2013, according forecasts by Earnest and Young. Greek citizens, meanwhile, are not too happy with the troikas interference in their economic circumstances. A CNN blog by Richard Quest, aptly named Eggs and breakfast for Greece for the frequency with which the country has become a topic of breakfast discussions, talked about the general Greek sentiment, "Greek people would rather be bankrupt and free than bankrupt and under the lash of the eurozone cuts." Unsurprisingly, the impending wage cuts of the austerity plan are also believed to trigger a social explosion in the country. Nevertheless, many analysts believe that the question of a Greek default is more about when rather than if in the current circumstances. Any attempts to restructure the debt or arrange another bailout will only prolong and worsen the crisis the country is already facing. "Debt would inevitably be cancelled, including official debt held by the troika, and there should be negotiations with the lenders under full public scrutiny," suggested an article in the Guardian. It appears that declaring bankruptcy, followed by a reassessment of debt that can be returned and that will be written off, and overall starting anew may not be such a bad option for Greece.