Debt negotiations usually seem to get resolved at the very last minute. Â After all, the resolution is almost always that someone is not going to get paid as expected, and this gives every “someone” strong incentive to hold out as long as possible, in the hopes that intransigence will get them a slightly better deal.
But even by these standards, the negotiations over Greek debt are really pushing the limit.  It’s been hard enough getting the private creditors–on whom the entire haircut looks set to fall–to accept losses which one person quoted by the FT puts at greater than 70%.  But the Greeks are also proving difficult.Patience with Greek politicians has evaporated among its creditors. During a conference call on Saturday, eurozone finance ministers bluntly told Athens to deliver on its promises and agree to reforms or face default next month.
Jean-Claude Juncker, head of the eurozone group of finance ministers, told Der Spiegel at the weekend that the possibility of bankruptcy should encourage Athens to “get muscles” when it comes to implementing reforms.
“If we were to establish that everything has gone wrong in Greece, there would be no new programme and that would mean that in March they have to declare bankruptcy,” he warned.
Mr Samaras last week threatened to veto the package unless concessions were made on private sector wages, claiming the cuts would prolong a recession already in its fifth year. Mr Karatzaferis also opposes further austerity measures.
The two sides were still far apart over projected cuts of 25 per cent in private sector wages, 35 per cent in supplementary pensions and the closure of about 100 state-controlled organisations with thousands of job losses.
On one level, this is entirely amazing. Â As has been exhaustively explained everywhere, includingthis blog, Greece is currently running a primary deficit–meaning that even if they defaulted, their budget wouldn’t balance. Â And since defaulting would cut off the flow of credit, they’d actually be worse off than with almost any of the austerity plans proposed by their creditors. Â So watching them threaten to walk away is somewhat reminiscent of that famous moment from Blazing Saddles
