The city is Athens,
It is too bad – but the bailout is too little, too late. When lenders get greedy and make dubious loans because they pay 8% or 11% there is an obvious risk, and the risk is the lender's. Germany, France, and the European banks have been slow to recognize this.
The 50% haircut in this deal is a good start. But the deal burdens the Greeks with further austerity measures. Papandreou has seen what Merkel and Sarkozy have not: that an economy is not about money – rather it uses money as a means of exchange. Instead it is about the shared destiny of its people, and citizens have a say in the political process.
True, the Greek economy was and is corrupt. True, a large portion of it was under the table. The Greeks will have to work all that out.
But the world is going to be working out something else: that making high-risk loans can result in a 100% haircut. That privatizing profits and socializing risks is a shell game that can't last. That fancy financial products like Credit Default Swaps are dishonourable and lead to ruin.
Look out, world. We have been living in a fool's paradise. Reality is about to hit the fan.