My big, fat recession

Doubts about the euro are not subsiding, new leadership or not, rescue plan or not.

The international bailout that has in various forms kept pundits, news organizations and politicians busy for at least two years is working its way like a pinball through the process, as expected. Greek leaders stayed up through the night and worked out a plan for cutting the minimum wage 22 percent, reducing pensions, slashing 15,000 jobs soon and 150,000 jobs by 2017. At the same time, an incomplete deal that gives private bondholders a $130 billion haircut -- or devaluation -- on their Greek debt has been dutifully negotiated.

Now it is up to the troika to approve the deals or give them a tweak, and a tweak or two is likely. A decision has yet to be reached on what the European Central Bank, one third of the troika, will do with its Greek bonds, which total about $50 billion.

No doubt there has been some heroic negotiating in Greece, which put a banker, Lucas Papademos, in the prime minister's office four months ago, a move that is apparently working.

No doubt, if the troika, which includes the European Union and the International Monetary Fund, demands an adjustment in the plans as they stand now, it will make investors nervous and provoke another flurry of headlines about how one deal or another is close to collapse.

The problem is that once the numbers add up, they will add up to a big, fat Greek recession, with an economy that is now pegged to contract 6 percent this year.

Before this mess began, one in five Greeks were living in poverty. In two shakes of a lamb's tail, Eurostat said Tuesday, the figure has shifted to one in three.

Is this the time to cut jobs, pensions and the minimum wage?

One way or another, Greece will be viewed as an economic test case for decades to come, a small, relatively self-contained economy with strong unions and a government with a laissez-fare attitude and poor tax collection skills. But the real measure of Greece's value for Economics 101 starts now. They're not even starting from scratch; they're scratching for a place to start.

In international markets Friday, the Nikkei 225 index in Japan shed 0.61 percent and the Shanghai composite index in China added 0.1 percent. The Hang Seng index in Hong Kong fell 1.08 percent and the Sensex in India lost 0.46 percent.

In midday trading in Europe, the FTSE 100 index in Britain dropped 0.41 percent while the DAX 30 in Germany slid 1.14 percent. The CAC 40 in France slipped 0.92 percent and the Stoxx Europe 600 fell 0.55 percent.