IMF Won't Agree To Greek Deal Unless Greece Receives Debt Relief

The IMF released a memo which argues that Greece will not be able to pay down its debt without some form of relief from its creditors.  The implication is that the eurozone requires some form of fiscal union to be workable.  There is no cost free way to deal with the Greek debt.  Creditors will need to take a hit one way or another.  If they don't write off some of the debt, and force Greece out of the eurozone,  they will still take a hit on the Greek debt.  The Greek economy cannot generate enough of a surplus to pay down all of its debt.

Its hard to imagine how this will turn out well.  Politicians in Germany and other Northern states have taken a popular stand against writing down a portion of the Greek debt.  There is little popular support for a stronger fiscal union which includes transfers from rich states to Greece.  The IMF is one of Greece's creditors and it will take a hit on the Greek debt along with creditor nations.