Many investors in sovereign debt and euro zone nations which put up hundreds of billions of dollars are anxious to see if Greek moves toward default on its national paper. A number of investment experts from large fixed income funds like Pimco say that an default is inevitable. Greece faces a deep recession and still struggles with high government costs.

The IMF threw Greece a lifeline, and in the process may have calmed the capital markets, at least briefly.

The agency reported that its staff members were satisfied with the Greek efforts to meet its budget goals. The report, oddly enough, said that the views of the staff did not necessarily reflect the views of the Executive Board of the IMF, which leaves investors and even the Greeks to guess what those views might be.

The reports said that Greece has made a strong start in implementing new austerity programs and that the recession in the southern European nation is no worse than expected. The IMF examiners found inflation was higher than expected and that austerity had yet to take hold in some of the regions of the country that the federal government has not adequately controlled.

What is missing from the report is nearly as important as what is included.  None of the major summary sections of the document discuss the effects of civil unrest and the impact that it may have on the government’s ability to keep revenue from large industries like tourism strong. The report also make no mention of the problems that the government has in collecting taxes in a nation where a significant part of the population has avoided the payment of tariffs to the state.

The report is a “glass half full” analysis that says very little about its empty part.

Douglas A. McIntyre

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