I wouldn’t disagree with you are saying. Greece has a long way to go in cutting its expenditure and there is a big difference between saying you are going to do something and actually doing it. However, there is very little time to do anything before their existing loans mature and that is why the eurozone members are insisting on very tight conditions for supporting Greece.
If eurozone don’t step in then there is a serious risk of sovereign default which might lead to a dominoe affect. This would have seriously implications for banks across the eurozone as well as in the UK.
The problems will arise if the Greek government backs down in the face of popular unrest.
However, as I have said the Ireland situation is different from that of Greece because of the immediacy of the maturing debt. If Ireland had have faced a similar situation I would have no doubt that eurozone would have stepped in.
That makes practical sense on paper Richard, however, I suspect it’s not how most people will be thinking. Your ‘average joe’ will percieve the bail-out as an ability to wreck your economy and then rely on others to pay for it. No one believes the Greeks are suddenly going to become a bunch of super efficient Germans who will dilligently get their heads down at work and fastideously pay their taxes until their economy is exporting itself back to health again. The perception is that the Greeks are just not going to do that, ever, and some might say the same for the Spanish also.
The maastricht treaty said “NO BAIL OUTS”, and at the first sign of the need for one, we have one… Personally I suspect that the markets will be taking a very dim view of this until someone owns-up that maastricht needs redrafting and potentially the euro’s purpose needs redefining.