The Harsh Deal With Greece Was Set To Reduce Threat of Contagion

This article describes the current agreement with Greece from the perspective of the troika. Greek tax revenues would be held in escrow and supervised by an external authority. The first demand of the tax revenues would be used to pay interest on the debt. Whats left over would be available for other purposes. One of the goals of the agreement is reduce the threat of contagion. Letting Greece of the hook easily might have encouraged other states to take an easier path in dealing with its debt obligations.

Frankly, its hard to see how Greece will be able to meet its debt/GDP obligations under the current plan. Tax revenues are bound to fall as the economy continues to contract.