STEVE INSKEEP, Host:
Welcome to the program.
ZANNY MINTON BEDDOES: Good morning.
INSKEEP: We just heard about people questioning the wisdom of demanding more austerity from Greece. Is there any chance that Europeans would approve another bailout without a lot of Greek sacrifice?
MINTON BEDDOES: I think probably not. I think there will have to some more Greek sacrifice. They've already agreed the terms with the Greek government, but the question is whether the Greeks can deliver on those terms. And as your very sobering report pointed out, there's growing opposition within Greece to doing so.
INSKEEP: You know, would things be better or worse if there was an alternative? And really, the only alternative is to default on their debt in a rather chaotic way. And I suspect things would be much worse in Athens if that happened, but it's clearly getting increasingly politically difficult in Greece to deliver on the very, very stringent demands that the Europeans and the IMF are making.
INSKEEP: Although, of course, some Greeks might wonder if there really is no alternative, if the Greek government had to go back to the European Union and the big lenders and basically say, look, we can't deliver politically on this. We need something that's a little bit less draconian. Are you sure the Europeans would not have any room to ease the terms a little bit?
MINTON BEDDOES: They might. I mean, at the moment, they're standing firm. They might well, because, you know, the saying goes if you owe the banker a dollar, it's your problem. If you owe him a million dollars, it's their problem.
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MINTON BEDDOES: And so you're absolutely right. There could well be some brinkmanship there going on. But I think a sort of bigger point is - and it's easily forgotten in this, is that Greece actually has to do a lot of these reforms - maybe not quite so much fiscal austerity that's being demanded of them quite so quickly, but the Greek economy really has to be overhauled if it is going to remain in the Eurozone, and that overhaul is going to be very, very painful.
INSKEEP: Even though Greece is not so big, is it too big to fail from the point of view of the Europeans and the wider financial community?
MINTON BEDDOES: And even more so is the fear spreads to other countries. There'll be other countries in Europe that have to go down the same route. Portugal and Ireland, as you know, already have rescue packages with the Europeans. But there are other countries that are very heavily indebted. So the reels of fear that drives people, that worries people about this is that this is the beginning of a kind of Lehman II, as the French...
INSKEEP: Oh, Lehman Brothers in the United States.
MINTON BEDDOES: Absolutely. It could be Europe's Lehman.
INSKEEP: Well, we've just got a few seconds here, but do you have a good sense of why the first bailout for Greece was not enough? Because surely they thought it was enough at the time. Just a couple seconds here.
MINTON BEDDOES: For me, the real answer is that they treated Greece's problems like a liquidity problem, like they just needed a short-term loan to tide them over.
INSKEEP: Cash-flow problem.
MINTON BEDDOES: Exactly, cash flow. But I basically think that Greece is bankrupt, and Greece's debt will have to be restructured. It owes more than it can possibly pay.
INSEEKP: Zanny Minton Beddoes, thanks very much.
MINTON BEDDOES: My pleasure.
INSKEEP: She is economics editor for the Economist magazine. She spoke with us this morning from Washington.
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INSKEEP: It's MORNING EDITION, from NPR News.
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