Redwood: Greece is already bankrupt

If bankruptcy is the inability to raise all the money in tax or borrow the money you need to sustain your expenditures from commercial banks and bondholders, then Greece, effectively, went bankrupt last spring.

The country was unable to borrow in the normal way from the markets and banks. The government negotiated a special deal to borrow money well below market rates from the IMF and euroland countries, on the basis the following year it would be able to borrow again in the markets at affordable rates. The Greek government imposed a programme of tax increases, spending reductions and privatisation sales to pull it back from disaster. Unfortunately, the programme to cut the deficit did not work as planned. Far from warming to Greece, in recent months banks and bond markets have made it clea...