According to this report the odds that Greece defaults on its obligations to the EuroZone is now at 98% which only proves, once again, that bailouts works….works to grind the economy to a halt and ensure that any recovery is impossible.
Greece has a 98 percent chance of defaulting on its debt in the next five years as Prime Minister George Papandreou fails to reassure investors his country can survive the euro-region crisis.
“Everyone’s pricing in a pretty near-term default and I think it’ll be a hard event,” said Peter Tchir, founder of hedge fund TF Market Advisors in New York. “Clearly this austerity plan is not working.”
…An index measuring the cost of default protection on 15 European governments to a record. European bank debt risk also jumped to the highest ever amid speculation French lenders will be downgraded because of their holdings of Greek bonds.
…“The contagion impact of a default will be severe, because next in the firing line will be Italy, Spain and it will take in the whole of the European banking sector too,” Suki Mann, a strategist at Societe Generale SA in London, wrote in a note yesterday. “This trio are already under intense pressure, but it will get much worse.”
Some have suggested that Greece should just default and get it over with, and somehow this will be a quick fix. German Chancellor Merkel disagrees:
Merkel rejected the notion that a Greek bankruptcy—a possibility raised a day earlier by her deputy that spooked markets—would provide a quick solution to the eurozone debt crisis.
She argued that Europe instead needs to stick to its efforts to cut budget deficits and improve its competitiveness, and that resolving the crisis would be “a very long, step-by-step process.”
…Merkel dismissed the idea that the debt crisis “could evaporate with one buzzword—be it eurobonds or insolvency or other words.”
“I am deeply convinced that won’t happen,” she told reporters after meeting Finnish Prime Minister Jyrki Katainen. The chancellor didn’t mention Roesler but pointed to the potential dangers of untested action.
“We must always keep in view that we do everything we do in a controlled way, that we know the consequences, because otherwise a situation could very quickly arise in the eurozone … that none of us wants and that could have very, very difficult consequences for us all,” Merkel said.
She suggested that even an orderly default couldn’t come any time soon, noting there wasn’t even a mechanism in place for a eurozone nation to default. The future European Stability Mechanism—the eurozone’s permanent bailout fund—will start up in 2013.
Greece has had two bailouts sent their way worth over 150 billion dollars but still faces disaster because of their Socialist policies which includes the fact that once your a Greek public servant you have a GUARANTEED job for life. But now they just may have seen the light:
Over the past few days, Finance Minister Evangelos Venizelos has issued a series of pledges to accelerate delayed reforms meant to cut the cost and size of the public sector, and raised the prospect of firing up to 20,000 public servants—which would break a major taboo in a country where state employees have guaranteed jobs for life.
In a last desperate bid to plug the revenue hole, the government on Sunday imposed a new, two-year blanket tax on property.
New taxes? Yeah, we all know how well that helps a economy grow.
Sigh…
Either way, the EuroZone was doomed from the start as Nigel Farage, leader of the UK Independence Party, prophetically stated more then a year ago
[youtube]http://www.youtube.com/watch?v=mGmnvkZszcw[/youtube]
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Serves them right. Let the default, and all those holding the paper of Greece should NOT be bailed out.
But, they will be bailed out.
One part of the austerity movement is a new property tax of one Euro per square meter of property owned.
To make sure the government got this money they tried to add it to the electric bills of property owners.
But, get this:
Greece is between a rock and a hard place.
I look and look and cannot see a way out for them.
Germany has done the math. Several more bailouts of Greece are cheaper for Germany than a Greek default. Bailouts and continued slow decline it will be. More trouble for America, as we are a globalized economy now.
They could really use Obama over there now. You know, with his Harvard Degree and all.
100% is a much cleaner number…..
I don’t know, maybe, with some thought, and that Harvard Degree and all, he could push it over 100%.
I’ve commented on an earlier post that the EU asked Greece to create jobs when it was handed its last tranche of bailout money, which is an absurd, even cruel joke, when you consider the target of that request – it’s like asking Obama to figure out how to create jobs. Socialists don’t even understand the question.
Greece is already bankrupt, but the real story to watch will be Germany. It is caught in an impossible situation. Germany is a manufacturing engine marvel, and seems to have a grasp of product marketing that is showing the rest of the world how to really “do it” on numerous industrial fronts. Germany also depends on the rest of the EU to purchase its Mercedes Benz, BMW and Audi automobiles, and other heavy equipment and products. GE could learn from Siemens. Germany will continue to prop up Greece because its failure would start a run on banks, . . . French banks in particular. That wouldn’t be favourable for Germany and would begin the international dominos dropping.
The whole world is holding its breath to see if Germans will continue to put up with its leadership extending the bailout game.
Just to kick the NYT for fun, it claimed eleven years ago that “the structure and ethos underlying Fortress Germany have begun to crack like a house on a California fault line.”
The NYT might review its ability to evaluate or write about anything.
One of the major problems with Greece is that people cheated the tax system in place and the government didn’t go after all those tax dodgers. Even a fiscal conservative goverment would have a hard time if the people refused to pay taxes.
The problem with Germany is the same problem faced in the U.S. It is so high up on the economic food chain, that it has few people to trade with in a positive way. Even VW has had to have major government assistance in order to sell it’s cars which have been relatively cheap. Making it worse, the Euro has gone up vs the dollar so a 17,000 Euro car is $23,171 U.S. That just limits Germany’s export market even more. Germany just can’t afford to loose customers and that’s why it has been giving out loans in the first place.
@Tom in CA: Perhaps you are right- over 100% would be the new norm with an Owebama factor- after all, he’s been to all 57 states, right?
With his math, no wonder we are in such trouble now.
And he’s doubling down on stupid, what with this “Jobs Bill”- bullshit- it is just more of the same failed things he had tried and failed at before.
I guess that makes him insane.
Greece is an interesting beast…
Hiked taxation policies on wage and property, decreasing wages for public employees, increasing retirement age, decreasing pension plans… and the private Economy is still bleeding to death (aka fewer taxable wealth generators if any live this crash.)