Greece back on track - but for how long?

Back on track, the finance minister cried, giddy from all-night negotiations. Back on track they shrilled, grateful that they had got a deal to shovel another €130 billion into Greece to prevent a default… for now.

Wait a moment. From the second my Blackberry buzzed with economists’ analysis this morning, there has been an uneasy truth they may be “back on track” - but for how long?

It may be raining on the eurozone’s parade. There are a lot of private economists who basically say this deal is not good enough because no matter how much money is being shovelled into Greece, it still leaves the country with a debt-to-GDP ratio that is too high.

While the lower official interest rate and the ECB paying over profits helps, there is no escaping the fact that Greece is still left with too much debt. This story is now firmly one about how much debt Greece still has on its books.

Paul Donovan of UBS chimed in with an early email at 06:14, in time for breakfast, calling 120.5% debt-to-GDP “an unsustainable level.”

Barclays Capital attempted to be fair, calling the debt dynamics “challenging.” Finally, they could resist no longer. “Public debt will remain excessively high,” they intoned. That sounds very like Donovan’s “unsustainable.”

Stephen Pope of Spotlight Consultancy was even more blunt. “One has to be honest here,” he wrote. “There is not a solution in this deal.”

Challenging. Optimistic. Questionable. All good words to describe a situation which HSBC has summed up in a sentence: “The Greek crisis is far from over.”

I don’t always believe private economists working for banks have the final answers. They either missed or weren’t looking for the financial landmines that blew up in 2008. So far, though, they have been right most of the time. They said the first bailout would fail and it did. They warned that Greece would need far more money, and it has. And finally they are declaring that this latest deal won’t solve the problem - and it doesn’t .

Despite the ringing endorsement from the eurozone to “provide adequate support to Greece during the life of the program and beyond” my gut feeling is that if this one doesn’t work, they will pull the plug.

Judging by the economists comments today, they won’t have long to wait.