Europe woke up on Monday to headlines about the humiliation of Greece, the triumph of an all-powerful Germany and the subversion of democracy in Europe.

What nonsense.

If anybody has capitulated, it is Germany. The German government has just agreed, in principle, to another multibillion-euro bailout of Greece - the third so far. In return, it has received promises of economic reform from a Greek government that makes clear it profoundly disagrees with everything that it has just agreed to. The Syriza government will clearly do all it can to thwart the deal it has just signed. If that is a German victory, I would hate to see a defeat.

As for this stuff about the trashing of democracy in Greece - that too is nonsense. The Greek referendum on July 5 was in essence a vote that the rest of the euro zone should continue to lend Greece billions - but on conditions determined in Athens. That was never realistic. The real constraint on Greece's freedom of actions is not the undemocratic nature of the European Union (EU). It is the fact that Greece is bust.

Much of the comment about the loss of Greek sovereignty, in the outline deal just agreed, has focused on the idea that Greece will now have to privatise €50 billion (S$75 billion) worth of assets, and that foreigners will supervise the Athens-based fund. Given the record of corruption and clientelism of successive Greek governments, that sounds like a very good idea. But Syriza's deep opposition to privatisation makes it unlikely that anything like €50 billion will be raised.

Of course, the dilemma of ordinary Greek people is horrible.

I was in Athens last week and felt very sorry for the individuals I met who fear for their jobs, savings

and future. But the notion that all this is the fault of cruel Europeans, who have mindlessly imposed austerity on an otherwise healthy country, is a neo-leftist fantasy. Greece has been badly governed for decades and was living well beyond its means.

When the crunch came, the Greek government was running a budget deficit of over 10 per cent of gross domestic product and the private sector was refusing to lend to the country. Without the loans extended to Greece by the International Monetary Fund and the EU, the adjustment to austerity would have been instant and much more brutal. The idea that Greece's creditors have been inflexible is also untrue. Private-sector creditors to Greece have already taken a "haircut" in 2012 - and Greek debt repayments have been extended long into the future.

Meanwhile, ordinary Germans, Dutch, Finns and others also have every right to feel aggrieved.

When they joined the euro, they were told there was a "no bailout" clause in the treaty setting up the single currency. That was meant to reassure taxpayers they would never have to pay the bills of other euro zone countries. Well, so much for that.

There have already been bailouts for Spain, Portugal and Ireland - as well as three packages for Greece. A new loan of €85 billion to Greece would be almost double the annual gross domestic product of Serbia, a medium-sized country in the same region. For all the talk that the Europeans are meanly refusing to write off Greek debts, it is actually well understood that it is highly unlikely Greece will ever fully repay the €320 billion it already owes.

It is striking that the most vocal denunciations of the euro zone's meanness, in refusing to write off Greece's debts, came from economists based in countries whose own taxpayers are not on the hook.

This latest iteration of the Greek crisis has also seen a more open rift between France and Germany. The French government emerged as the champions of keeping Greece inside the euro and of easing austerity. If I were a German taxpayer, I would have been chilled by the sight of President Francois Hollande of France hugging Greek prime minister Alexis Tsipras as they left the EU building.

For France also has self-centred reasons for trying to reverse austerity in Europe. This is a country that has not passed a balanced budget since the mid-1970s. After this latest crisis, the French are likely to return with ideas for "strengthening" the euro zone - such as EU-wide social insurance. Who do they think might pay for that?

As for the Germans, at the latest summit, they were clearly flirting with "Grexit" - the idea of forcing Greece out of the euro zone. They drew back after numerous warnings, such as the one issued by the foreign minister of Luxembourg, that such a course of action would be "fatal for Germany's reputation in the EU and the world".

Rather than risk such an outcome, the German government has agreed to yet another bailout for Greece. Yet, in reality, the euro is already poisoning Germany's attitude towards Europe and Europe's attitude towards Germany.

The whole saga brings to mind a saying of that great German, Karl Marx - "History repeats itself,

first as tragedy, second as farce." The latest Greek debt deal manages to be both a farce and a tragedy, at the same time.

THE FINANCIAL TIMES