Tables are turning on Greek debt deal

[muriel_volestrangler]

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But what's less often noticed is that the balance of power around the negotiating table has also shifted lately; against the Eurozone institutions and politicians who most want to see a deal, and in favour of the Greeks themselves.
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Finally, and more quietly, the Greek government has slashed its way to a primary budget surplus: as of now it is only borrowing money to pay off the debt. That could change things quite a bit.
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Here's why this matters: traditionally, countries that need a massive write-down of debt will try very hard to avoid a disorderly default when they are still borrowing from the markets to fund basic government services.

However, the balance of arguments shifts a bit, when they "only" need to raise money in the markets to service their debt. Further budget cuts, simply to pay investors their interest, are harder to defend politically. And the immediate fallout for basic services of losing access to the markets gets slightly less terrifying.

http://www.bbc.co.uk/news/business-16746455

That could change things a bit; it means the Greeks are already suffering the pain they'd need to if there was a complete default, so they have a possible alternative to "pay up or else". The argument now seems to be whether the interest rate on ECB loans to Greece is lowered, as well as private lenders; I think the ECB is going to have to agree to this in part, since they can no longer say to Greece "you're still living beyond your means".

[rdking647]

1. greece should do this

tell the creditors that they are going to offer a new deal that brings their total deficit down to 120% of GDP. tell the bond holders that their bonds have now had their principal reduced to whatever level this requires. give the bondholders a deadline to agree. if teh bondholders reject it then greece should unilaterally reduce the balance to 100% of GDP.

[bemildred]

2. You can't get blood from a turnip.

All these rich creditors need to take some of that money they are hoarding and buy themselves a clue.