GREECE is between a political-economic rock and a hard place. It has at least $183 billion in loans outstanding for which some $31.3 billion in payments is coming due imminently.
The only way the Greek government can borrow more money to meet them is by making drastic cuts - an estimated $6.5 billion - in a budget that is already in serious deficit. The Greek people and especially unions are furious at the impending cuts in their benefits and pensions. They have taken to the streets of Athens to howl for the government's head.
All of this is made worse by the fact that one element of the financial trouble facing the Greek government came from Goldman Sachs and other Wall Street firms. Earlier this decade they provided Greece with off-the-books financing, including loans masked as currency swaps, to help its government cover up the fact - the term is "juke the stats" - that its finances were too shaky to meet the standards that would permit it to join the euro zone.
Now the Greek government is listing badly in the face of its grave circumstances. Goldman Sachs and other financial houses may be betting against its ability to make the payments. They seek to profit from what they consider the country's possible default on some of its loans.
In part because the Greek government lied to the European Union about its financial situation when its application to join the euro zone was approved, and in part because of the apparent role of American firms in fueling the disaster, more fiscally conservative governments in the EU - particularly Germany and France - are reluctant to bail out Greece by providing it the loans it now needs.
The Germans too are in a tight spot. It will reflect badly on the EU and hurt the euro if Greece defaults. Germany is widely viewed as the economic wheelhorse of the EU and in that sense is on the hook. German Chancellor Angela Merkel, however, is by no means eager to clean up a mess that the Greeks and some Americans created while Germany is emerging from the global recession as a result of good management.
The rest of the EU probably has to rescue Greece. The union has set a deadline of March 16 for Greece to put its house in order. At the same time, it would be useful for the U.S. government to air publicly what role Wall Street played in Greece's cratering. Federal Reserve Chairman Ben Bernanke pledged last week before Congress to do so.
Part of Greece's problem now seems to be that one of America's dogs bit it.