Greece: miracles take longer - FT.com As Ferrari says to Victor Laszlo in Casablanca, "Might as well be frank, Monsieur. It would take a miracle to get you out of Casablanca, and the Germans have outlawed miracles. It is the same with Greece. A miracle is required to get Athens to meet the almost impossible targets it has been set by its friends in Brussels and Berlin. The central assumption in the latest bail-out is that the country's debt ratio will fall to 120 per cent of gross domestic product by 2020 if it implements swingeing austerity measures. How likely is it that this miracle will occur? The best that can be said about the €130bn bail-out - and it is not a small thing - is that it adds another layer to the firewall behind which Greece is now quarantined. Other vulnerable eurozone countries may breathe a little easier. In Greece, however, the bail-out is likely to do more harm than good. Its debt ratio is 165 per cent of GDP. A deal with private sector creditors should reduce its €330bn of government debt by about €107bn, according to HSBC. That will take it only part of the way to the 120 per cent target. And that is not even half way. The austerity measures could push the target further out of reach. There is a proper emphasis, especially by the International Monetary Fund, on getting Greece to improve its competitiveness. The IMF calculates that labour costs fell by 2.5 per cent in 2011, but that the gain was offset by the rise of the euro. That meant that the country's real effective exchange rate was unchanged. The competitiveness gap with its trading partners may take a decade to close, estimates suggest. This could be quickened by inflows of foreign capital, but the bail-out offers no incentives for anybody to invest in Greece. The effects of austerity may change this dynamic, but not any time soon. This was the moment to address the Greek debt problem once and for all by writing it off rather than writing it down. The bail-out has bought everybody a little more time to get used to that idea. Like those waiting for exit visas, Greece looks set for a long stay in Casablanca.