Trenchant cuts to government spending and large rises in taxes don't balance the budget, because they cause the economy to go into recession or to deepen the existing recession.
The Greek unemployment rate is now at a new record high of 25.4%. A year ago it was bad enough: 18.4%. But it has risen an incredible 7% points in one year, and this isn't the first year of the recession. It's the fifth. And its prospects of repaying its debts are no better than they were at the beginning of this whole sorry fandangle.
This is higher than the unemployment rate reached during the Great Depression in the US. And it is still rising! Holy ninniebarn!
What a shameful spectacle of gross incompetence by those in charge; incompetence made worse by the fact that not only has it not achieved its target, but it has inflicted scars on Greece which will last a generation. Pointlessly.
Meanwhile, the same tired old remedy is being proposed to solve the budgetary difficulties of all the other deficit countries (Spain, Italy, the UK, Australia....), and of course we face a "fiscal cliff" in the US where the rabid right cling desperately to their failed nostrums. Like medieval blood-letting: if the treatment doesn't work you just repeat it until the patient dies.
(You might also want to read Lessons from History)
Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.
BTW, clicking on most charts will produce the original-sized, i.e., bigger version.