A story is told of a man sentenced by his king to death. The latter tells him that he can keep his life if he teaches the monarch’s horse to talk within a year. The condemned man agrees. Asked why he did so, he answers that anything might happen: the king might die; he might die; and the horse might learn to talk.

This has been the eurozone’s approach to the fiscal crises that have engulfed Greece, Ireland and Portugal, and threaten other member states. Policymakers have decided to play for time in the hope that the countries in difficulty will restore their creditworthiness. So far, this effort has failed: the cost of borrowing has risen, not fallen (see chart). In the case of Greece, the first of the countries to receive help, the chances of renewed access to private lending on terms that the country can afford are negligible. But postponing the day of reckoning will not make the Greek predicament better: on the contrary, it will merely make the debt restructuring more painful when it comes.

Greek debt is on a path to exceed 160 per cent of gross domestic product. Unfortunately, it could easily be far higher, as a paper from Nouriel Roubini and associates at Roubini Global Economics notes. Greece may fail to meet its fiscal targets, because of the malign impact of fiscal tightening on the economy or because of resistance to agreed measures. The real depreciation needed to restore competitiveness would also raise the ratio of debt to GDP, while a failure to achieve such a depreciation may well curtail the needed return to growth. The euro may appreciate, further undermining competitiveness. Finally, banks may well fail to support the economy.