EU to Greece: It's over

The EU continues to blather on about how Greece, unlike the European bankers that lent it money, has to take it's medicine. Yesterday The Economist published a series of charts, reproduced below, revealing not only the foulness of the medicine, but its ineffectiveness.

The imposition of austerity policies demanded by the EU has caused Greek debt to escalate rather than shrink. Before the GFC is was 109% of GDP. Now its 175%.

Why? Because as the Greek economy shrinks – it's now 25% smaller than before the GFC – debt grows as a percentage of GDP. There are no signs of recovery, either. The recent 'growth' is an illusion, a function of deflation rather than real economic growth.

The EU strategy seems to be to save the patient by first killing the patient. What's next, a course of leeches?

Meanwhile, the rhetorical tone intensifies. 'The problem is that Greece has lived beyond its means for a long time and that nobody wants to give Greece money any more without guarantees', said the German finance minister, who believes a deal will not be reached.

So the idiocy and brinkmanship continues. Last night the EU rejected the Greek plan to extend the current €240bn bailout, which expires on 28 February. The prospect of default is now very real, with potentially devastating Europe-wide consequences. This is one very alarming game of chicken.