Blimey, these Greek austerity talks are going on so long, they make the Odyssey look like a pamphlet. Negotiations between prime minister Lucas Papademos and his coalition partners failed (yet again) to come to an agreement on new austerity measures yesterday. But a consensus is needed as a condition of a €130bn (£108bn) bailout from the European Central bank, and a €100bn write-off of private sector debt. So talks will resume again today – but if they can’t come to an agreement, this may be the beginning of the end for the euro…

The good news is that the two sides apparently managed to come to some agreement on the subjects of bank recapitalisation and cutting public spending by 1.5% of GDP. But European lenders also want it to do something about so-called ‘13th and 14th month’ salaries (annual bonuses, basically) and cut the level of its minimum wage. In return, the ECB will help it implement a debt plan which would mean private creditors have to put up with a 50% haircut on Greek debt (thus effectively halving its value), and create new, 30-year bonds with a decidedly manageable 4% interest rate.

You can see why Papademos’ coalition partners aren’t happy about the idea: with living conditions falling rapidly, they don’t want to do anything to jeopardise their popularity before elections that could take place as early as the spring. ‘I am not going to contribute to a revolution that will humiliate us and that will burn Europe,’ said (far-right) Laos party leader Giorgos Karatzaferis, while his conservative contemporary, Antonis Samaras, said the country is ‘unable to bear’ more austerity measures. Bodes well…

The general consensus had been that the Greeks had until noon today (that’s 10am our time) to come to an agreement, although a Greek official has, rather bizarrely, now denied that, saying that they don’t have to decide on anything until before the next meeting of Eurozone finance ministers. ‘The only deadline is to have a staff agreement for the second bailout and the agreement of the political leaders before Eurogroup,’ he said today. Although that doesn’t give them an awful lot longer – the next meeting is expected to take place this week.

Whatever the deadline, the clock is ticking: on March 20, €14.4bn worth of loans to the country will mature, effectively bankrupting it. There was supposed to be a meeting of eurozone leaders to discuss the subject today, but in the absence of an agreement, that’s already been cancelled, replaced by a quiet cup of tea between German chancellor Angela Merkel and French president Nicolas Sarkozy. It’s a classic Catch-22: if Europe allows Greece to default, that could trigger a run on the euro – but it now seems more and more sensible. And given all the squabbling, you couldn't blame the Greeks for thinking they might be better off abandoning the bailout and declaring themselves bankrupt...

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