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Why The Greek Bailout Won't Work

The European plan to kick the can down the road doesn't solve the underlying weakness in the Greek economy.

It's been somewhat painful watching European leaders fumble around for a solution to the Greek sovereign debt crisis during the last year. The agreements made to allow the second tranche of bailout money to flow in July were meant to quell fears that the eurozone was frantically searching for a solution and that officials from other member countries had a real plan to get Greece back on track. Unfortunately despite grand pronouncements that the situation is under control, I'm still worried that the crisis is far from over and that the current plan is just delaying the inevitable.

According to the most recent data from Eurostat, in 2010, Greece's sovereign debt was equal to an astonishing 143% of gross domestic product. And that number has gone nowhere but up since the end of last year as the country's spending still far outpaces the revenue coming in the door. The nuts and bolts of the current plan don't do much to address the underlying issues that there is essentially no way Greece will ever be able to raise enough money to pay down those loans to a reasonable level.

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