GREECE

With respect to Greece, I have two thoughts. The first is the phrase "you can fool some of the people all of the time, and all of the people some of the time, but you can't fool all of the people all of the time". The fooling relates to the country's national income statistics, which, if not completely made up, appear to have been severely massaged and manipulated in the past. And the people refer to the financial markets, who - despite the above - eventually managed to work out that the Greek economy is in fact a house of cards. Faced with a choice between buying euro bonds issued by Germany and euro bonds issued by Greece, they are choosing the German kind in droves. To be blunt, who can blame them?

The second is that in matters of finance, credibility matters. Greece's euro-partners originally cobbled together a Euro45 billion rescue package, to be used "if necessary". However, the Germans, notably the Chancellor Angela Merkel, faced with a key state election in Nordrhein-Westfalen on 9 May, did nothing to convince their own taxpayers that bailing out the profligate Greeks was in their own interests. The markets took the hint, and decided to test that "if necessary" phrase. The result, in the form of the rescue package announced over the weekend, is that the bill is now up to Euros110 billion. Even that might not be the final figure.

There are lessons to be learned here for politicians in both euro and non-euro countries. As regards the former, have Portugal and Spain really come clean on the extent of their problems? And in the latter, whoever wins the British election on Thursday had better have a credible deficit-reduction plan ready pretty soon.

Walter Blotscher