After an all-night round of talks among Eurozone finance ministers, Greece was granted its second bailout, this one for €130 billion, in a package that includes recently passed austerity measures and a debt restructuring. But confidential reports distributed to the finance ministers indicate that the deal will not work and may even be counter-productive.

New statistics out of Greece show that austerity shrunk the economy more than expected last year. GDP in Greece fell 6.8% in 2011, and a slightly faster 7% in the fourth quarter. The country is in a fifth straight year of recession, approaching a full-on depression.
European leaders are still trying to impose more austerity, but some Eurozone finance ministers may be trying to force a default and exit from the euro.

Greek lawmakers held up their end of the bargain by agreeing, despite mass riots in Athens, to crushing austerity measures required by the “troika” (the European Union, the IMF and the European Central Bank) in order to receive a new bailout. But the European finance ministers remain hesitant to deliver the bailout funds, claiming to be wary of what they consider past broken promises by Greece.

As I mentioned on Sunday, the Greek Parliament agreed to a bailout deal that exchanges funds from Europe for new austerity measures that will sink the economy even further. The measures effectively destroy labor law and decimate wages.

Amid general strikes and riots in Athens, the Greek Parliament passes a late-night vote on new austerity measures that are seen in European capitals as a prerequisite to the release of bailout funds for Greece.

Greece has agreed to new bailout terms, with brutal austerity measures attached, but Eurozone finance ministers don’t believe the Greeks will follow through, so they’ve held up the provision of the funding.

This must be the day when everything gets sewn up into neat little packages. The Greek government has announced a deal has been reached to secure their second bailout, though one junior partner has not confirmed agreement. The head of the European Central Bank is saying a deal has been done as well.

Greek bailout talks have deadlocked again, but at the moment the culprit is not the hedge funds seeking a higher payout on the distressed debt they bought, but the “troika” of the EU, ECB and the IMF. They gave Greece a Monday deadline to accept bailout terms. And those terms, frankly, are totally insane.

Yesterday, 25 of the 27 Eurozone countries signed a fiscal consolidation pact that almost immediately drew scorn from observers as inadequate and largely irrelevant to the problems of the continent, including the absence of growth stimulus policies and means to address internal trade imbalances.

After fits and starts, Greece may be on the verge of a deal on its private sector debt. Greece will apparently get the lower interest rate it wanted out of its creditors, though not all of them will participate, and the ECB is refusing to take the same haircut on the debt it holds. Meanwhile Greece is agreeing to impose even more austerity measures, to meet arbitrary debt limits, even though their economy is in depression.