Can Greeks escape defaulting?
It is another day in Greece. There is by now a ritual quality to it. Flights are grounded, hospital workers are striking, tax collectors and customs officials are sitting on their hands. Hundreds of thousands of civil servants are staging a four-hour walk-out.
Yesterday it was police, firefighters and harbour police who were doing the protesting. There have been six general strikes this year.
Today the anger is directed at pension reform which was a condition of the 110bn euro bail-out from the EU and the IMF. For six long months the Greeks have been resisting the austerity being imposed on them.
For some time there have been two versions of how the Greek story would end.
Senior EU officials insist that Greece is on track. It is sticking to the terms of the bail-out. The crisis is subsiding. Growth will eventually return and Greece will manage its debts.
The only problem with this narrative is that I find almost no-one who believes it. There is a widely-held expectation that sooner or later Greece will either default or will have to restructure its debt.
The argument is a simple one. Greece has debts of more than 350bn euros. It is also borrowing from the EU/IMF bail-out fund. But its economy is shrinking, so how will Greece be able to pay off its debts once the bail-out period is over? Most economists say it is impossible and the day of reckoning lies ahead.
So the question remains - can the Greeks defy the pessimists?
Firstly the Greek government has been resolute in implementing its austerity measures aimed at reducing its deficit. Its determination has surprised outsiders.
EU/IMF officials say Athens is sticking to the bail-out conditions.
For the first six months of this year the deficit on a year-by-year basis declined 46%. The government exceeded its own target of 35%. (Revenues, however, missed their target).
This week the Greek government concluded a successful sale of treasury bills.
It was expected that austerity would persuade Greeks to keep their wallets shut. Private consumption is actually up by 1.5%.
Strikes are continuing but some say protest fatigue is setting in. The numbers on the streets are declining.
That, in itself, is surprising considering the austerity plan. Public sector pay is frozen until 2014. Pensions have been frozen for three years. The retirement age has been raised to 65. Public sector allowances have been slashed. Higher paid-civil servants are losing their holiday bonuses. VAT is at 23%. Taxes on fuel, cigarettes and alcohol have been hiked by 10%.
Today a striker was quoted as saying over pension reform: "This is the worst that has ever been passed by a socialist government... the pension reform will bury the weak, the workers."
Many public sector workers are furious but there are many others who seem to accept there is no alternative.
All of these can be interpreted as positives but they don't answer the question of whether Greece can escape its debt mountain.
And here is the difficult part. The pace of economic activity is still slowing. The economy is expected to shrink 4% this year and 2.6% next year. The government doesn't expect the economy to start growing again until 2012. The economy won't be back to pre-crisis levels until 2014 at the earliest.
As Ben May, European economist at Capital economics, points out "the fiscal tightening is going to have to go on for some time". It will get brutal. Public investment has been slashed by 40%. The fiscal adjustment Greece has agreed to amounts to 10% of GDP.
Unemployment rose to 11.9% in April and may well go higher.
Now the hope is that as costs and prices fall, Greece will regain its competitiveness and its economy will start growing again. Under the bail-out deal wages are being held down, even in the private sector, helping to boost exports and attract inward-investment. But can Greece find the economic growth to pay off debts that are predicted to reach 150% of GDP before falling.
Some like economist Nouriel Roubini are convinced it is impossible.
"The 110bn euro bail-out agreed by the EU and IMF in May only delays the inevitable default and risks making it disorderly when it happens," he said.
And that is the dilemma. Will Greece - against all the odds - somehow manage its debts three years down the road or is the inevitable just being postponed?