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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