Greek Marxists vs. The IMF

With the failure of the Greek government to make a scheduled payment to the International Monetary Fund (IMF), we have moved from high drama to low farce. The Marxists who are running the show in Athens have scored a first: Greece is the first so-called advanced economy to miss an IMF payment in the Fund's 71-year history.

It was all so predictable. The Marxists in Athens did what Marxists do: They ramped up the rhetoric. Yes, the IMF became a "criminal syndicate," certainly not the type of organization that the current Greek government would dare to pay.

As for the IMF, it drew a line in the sand after realizing that it had been way too lenient and generous with Greece. Under normal conditions, the IMF is supposed to be limited to lending up to 200 percent of a country's quota (each country's capital contribution made to the IMF) in a single year, and 600 percent in cumulative total. However, under the IMF's "exceptional access" policy there are, in principle, virtually no limits on lending. For example, the loan made to Greece in May 2010 was worth an astounding 3,208 percent of Greece's quota -- by far the highest percentage recorded for a loan made to any member country.

So the high drama of the past few months had to end in a farce -- and it has.

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Steve H. Hanke is a Professor of Applied Economics at The Johns Hopkins University in Baltimore and a Senior Fellow at the Cato Institute in Washington, D.C. You can follow him on Twitter: @Steve_Hanke