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BUSINESS 22 September 2011 Last updated at 20:54 ET Greece's debt crisis odyssey Greece and
BUSINESS
BUSINESS

22 September 2011 Last updated at 20:54 ET

Greece's debt crisis odyssey

Greece and its lenders are locked in discussion. The "Troika" of lenders - the European
Greece and its lenders are locked in discussion. The "Troika" of lenders - the European Union, International Monetary Fund an
Greece must take more painful steps to cut its borrowing. But Greece faces riots and mass protests on the streets of Athens. The g
parliament - only 155 of 300 MPs backed the last round of austerity in June. At stake is the next 8bn euro tranche of bailout money
needs to avoid total crisis. Starting from the top, follow the decision tree to decide what happens next.
Does Greece meet the Troika's austerity demands?
YES or NO
Recession deepens: Greece has to cut its borrowing to a target set by the
Troika. But austerity deepens Greece's recession. Along with mass tax
evasion and strikes by tax collectors, this has already made Greece over-
shoot its target twice.
Impasse: Greece has failed to deliver pro
Troika has threatened to stop releasing ba
cash, Greece faces a crisis.
Does Greece miss its borrowing target again?
Does the Troika release the bailout
NO
YES
YES
NO
Greece has a funding shortfall: Despite the
austerity, Greece still needs more cash. The Troika
can lend it, or else Greece has to make more cuts.
Greece has a cash crisis
have enough money to pa
must choose which paym
Should the Troika
Does Greece stop rep
demand more austerity?
or give another bailout?
YES
Austerity succeeds: After years of painful
cuts Greece does not need to borrow any
more to fund government spending. But
Greece still has huge debts to repay.
The Troika blinked: Greece has
won the stand-off. The Troika is
evidently too afraid of the conse-
quences to let Greece go bust.
Banking crisis: Default
leaves Greek banks bus
and risks a Europe-wide
banking crisis.
Does Greece renegotiate its debts?
Does Greece continue with
austerity?
Does the Troika bail
Greece out?
YES
NO
YES or NO
YES or NO
Greek banks collapse. Even after halting debt repayments, the government still can not pay all
Greek banks
collapse. Even after
halting debt
repayments, the
government still can
not pay all its bills.
NO
PYRRHIC VICTORY
DEPRESSION
MORAL HAZARD
POLITICAL TURMOIL
Greece forces its lenders to
write off most of its debts,
which probably bankrupts the
Greek banks (its biggest
lenders), meaning they must
be nationalised. Greece still
may face years of low growth
as its economy is
uncompetitive inside the euro.
Greece may face years of
grindingly low growth as its
economy is uncompetitive
inside the euro. In addition, the
government probably has to
pass even more growth-
sapping austerity to cover the
cost of its debt repayments.
Greece has its lenders over a
barrel, earning kudos with the
Greek public, and allowing it to
slow down painful austerity.
But Italy and other high-debt
countries may copy Greek
tactics. Germany - which is
now seen as on the hook for
bailing out the entire eurozone
- may find it much more
expensive to borrow, and may
consider leaving the euro.
The Greek economy may fac
total collapse, with banks
closed and the government
unable to pay for basic public
services. This is likely to
cause massive civil unrest an
a collapse of the government.
Greece has already seen
rioting and the takeover of
government offices. The CIA
has warned of a possible
military coup.

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