As Socrates once said, It's not over til it's over--the Greek debt crisis lives on

02/10/2012 10:30 am EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

As slogans go it isn’t up to the standards of “Don’t tread on me” or “No taxation without representation,” but Jean-Claude Juncker’s “No disbursement without implementation” does sum up where the Greek debt crisis stands this morning. (Juncker is head of the Euro Group and prime minister of Luxembourg.)

Yesterday’s meeting of European finance ministers adjourned without action on the plan to rescue Greece, because the finance ministers wanted to see 1) more details on the last 430 million euros in cuts and 2) actual legislation to turn Greek promises into Greek laws. The group is scheduled to meet again next week.

This morning the financial markets seem to fear two things. First, that the Greek parliament will balk this weekend at approving this deeply unpopular austerity plan. Second, that escalating demands on Greece from the finance ministers of Germany and other EuroZone hardliners are intended to force Greece to walk away from the deal.

EuroZone finance ministers have demanded that the Greek government actually pass legislation to implement the debt plan before the ministers vote to pass out any money. That seems a reasonable request given the history of this crisis: Greece has repeatedly promised budget cuts, tax increases, asset sales, and economic reforms and then not delivered. The plan now is to have the Greek parliament vote on legislation that would put the rescue package into law over the weekend.

But the Greek coalition backing Prime Minister Lucas's Papademos caretaker government showed signs of fracturing this morning. George Karatzaferis, head of the Laos party, a junior member of the coalition, announced that he cannot vote in favor of the package. The Laos party controls 16 seats in the 300-member parliament so by itself the party can’t stop passage. But the party’s stance could encourage further defections from the New Democracy and Pasok parties, the senior members of the coalition. Right now many members of parliament are virtually in hiding, voicing their opinions only on calls to radio stations. That makes getting a count for the vote difficult

But it’s not clear that even a parliamentary vote on legislation to implement the package would be enough. Some EuroZone finance ministers are demanding that heads of Greece’s political parties sign the agreement as well in an effort to make sure that the next Greek government, which could take office as early as April, would abide by the agreement. Greek party leaders are very reluctant to put their names on that line, fearing that a signature would be electoral suicide in April.

Which leaves me wondering what to make of German Finance Minister Wolfgang Schaeuble’s message to Portugal yesterday. In contrast with the extreme hardline that the German Finance Ministry is taking with Greece, Schaeuble told Portuguese Finance Minister Vitor Gaspar that Germany would be ready to adjust the Portuguese rescue package if necessary.

Just an effort to help a struggling country? An effort to put more pressure on Greece? A sign that Germany is looking to build up Portugal as the next line of defense after Greece defaults?

And as for slogans, my guess is that no one in Europe would be in a receptive mood for Ben Franklin’s advice at the signing of the Declaration of Independence: “We must all hang together, or assuredly we shall all hang separately.”

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