We are glimpsing what will likely become a familiar scenario. There is no more can kicking for Greece. It is facing a March 20 interest payment on its debt of nearly $20 billion. Without the infusion of cash from the EU, Greece will default and probably tip the whole thing over.
But the EU won't give Greece the $130 billion - or more - in bailout money unless Athens' creditors agree to a steep cut in the value of the bonds they hold. The plan calls for a swap of the old bonds for new ones with a sizable reduction in their overall value - up to 70%.
Then there are the austerity measures that Greece must take that would be extraordinarily painful for most citizens. The government of Prime Minister Papademos is having hard time getting the other parties on board to share the blame for the pain.
With the country's stability at stake, the government is racing to clinch agreement on a plan that's been in the works since July, with talks between international monitors and Greek officials running in parallel with discussions among caretaker Prime Minister Lucas Papademos's coalition members and Greece's government and its private creditors.
Open questions involve how much more aid Greece needs, how much more austerity is required, and how to involve the European Central Bank in the debt swap. Facing a 14.5 billion-euro ($19.1 billion) bond payment on March 20 and general elections as soon as April, Papademos must heed calls for tighter austerity to complete the talks on a second aid package in time. Venizelos said everything needed to be completed by tonight.
The discussions have led to tussles among European central bankers and political leaders. The rescue blueprint includes a loss of more than 70 percent for bondholders in a voluntary debt exchange and loans that will probably exceed the 130 billion euros now on the table.
Deutsche Bank AG Chief Executive Officer Josef Ackermann said a collapse of Greece's economy would open a "Pandora's box" that would kill a euro-area recovery.
"We are in a make-or-break situation and Greece plays a very important role -- and if we find a solution in the next few days, I think we're on the right track," Ackermann told a panel yesterday in Munich. Ackermann was due fly to Athens last night as talks go on over the swap involving Greek debt with a face value of about 200 billion euros.
The clock is ticking and no one appears to have set the alarm.