Greek Fire, Part 30

The unquenchable conflagration continues to engulf Europe as EU officials are now scrambling to come up with a second Greek bailout in order to prevent a default as the country's austerity measures have failed miserably to turn the Greek economy around.

The European Union is working on a second bailout package for Greece in a race to release vital loans next month and avert the risk of the euro zone country defaulting, EU officials said on Monday.

Greece's conservative opposition meanwhile demanded lower taxes as a condition for reaching a political consensus with the Socialist government on further austerity measures, which Brussels says is needed to secure any further assistance.

Moves to plug a looming funding gap for 2012 and 2013 were accelerated after the International Monetary Fund said last week it would withhold the next tranche of aid due on June 29 unless the EU guarantees to meet Athens' funding needs for next year.

Senior EU officials held unannounced emergency talks with the Greek government over the weekend, an EU source said.

Greece took a 110 billion euros ($158 billion) rescue package from the EU and IMF last May but has since fallen short of its deficit reduction commitments, raising the risk of a default on its 327 billion euro debt -- equivalent to 150 percent of its economic output.

Here's the problem:  austerity measures aren't going to fix the issue.  It's trying to fight a fire with halon to suck all the oxygen out of the room, only the firefighters are still inside.  Here's the bigger issue however:

EU officials said a new 65 billion euro package could involve a mixture of collateralized loans from the EU and IMF, and additional revenue measures, with unprecedented intrusive external supervision of Greece's privatisation program. "It would require collateral for new loans and EU technical assistance -- EU involvement in the privatisation process," one senior EU official said, speaking on condition of anonymity.

Yeah, folks, that means Greece will have to agree to having the EU take over the Greek economy and start making the decisions for them.  Somehow, I don't see that happening.  The price tag for Greece getting a second bailout is awfully high, and I don't see them paying it.  If they don't, and they default, the Euro is done.  If they do, Greece is done.  If you were Greece, what would you do?