Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

Finally, in the first days of May, the deal was done. Greece agreed with the troika not only to slash its deficit but to aim for a surplus. It promised to deliver a turnaround in its budget balance of a staggering 18 percent of GDP.48 In 2010 alone the reduction of its deficit would be 7.5 percent of GDP. Every area of Greek public life would be touched, from ministerial contract cleaners to privatization of state assets. Everything was up for grabs. In exchange, Greece would receive a bailout far larger than previously conceived: 110 billion euros, of which 80 billion would come from the EU and 30 billion from the IMF, payable in quarterly installments over three years. The loans were at tough rates and it was clear that servicing them would create a repayment shock in 2013. But it was the best that the lending countries were willing to offer. Merkel promised an affirmative Bundestag vote for May 7. The question was whether the markets would give Europe that long.

What Could go wrong ?