Can Greece do it? Unlikely - muddle continues

Greece is about to embark on an economic path that few others have taken, an attempt at reducing its deficit by 4ppts per annum for 3 years with a starting output gap bigger than -7%. The last time Greece tried anything like this was 1990 when the output gap was positive, and it took 9 years to get the deficit back to 3%. -- Kevin Gaynor RBS

The Greek government plans to reduce the deficits fro m 12.7% to 8.7% of GDP this year. Greek economic minister, George Papaconstantinou, called his nation "a terrible mess".

There have been strikes by government employees since the planned for budget cuts has been announced. This will continue. It will be hard to make these cuts in the face of citizen upheaval.

Now we have problems with derivatives swaps that have not been clearly included in the budget. Eurostat didn't receive the information, wasn't aware of the swaps, and does not have confidence in the budget numbers. They were used to make deb limits looks lower. This will turn people against banks. The song that "banks and derivatives are the evil" will start which will further ignite problems. We are also hearing that the spreads on Greek debt are too high and an overreaction from bond vigilantes.

So what is the EU plan for Greece? It is unclear. There is communication of support but no concrete plan.