The prospect of disaster, and the sight of riots, concentrates minds. The European Union and the International Monetary Fund seem to be on the point of agreeing to dispatch €12bn to Greece. That will buy a few more weeks to try to put together a more comprehensive package, assuming the Greeks can somehow be persuaded to sign up for more austerity measures. Gradually, however, the notion is being eroded that Greece can somehow honour its debts. The arithmetic just isn't credible.

Charles Dumas, of Lombard Street Research, puts it best. He calculates that to stabilise Greece's government debt-to-GDP ratio at 142% (the figure at the end of 2010) would require the budget surplus to be 7%-10% of GDP. The figure was minus 10% in 2009 and is likely to be at least minus 4% in 2010. Now recession is causing tax receipts to crumble. The chances of a 7%-10% surplus are "virtually nil", says Dumas, "meaning debt will escalate indefinitely, which is hardly surprising since only growth (or default) can reliably take care of a major debt problem." In some form, there will be a default.