Saturday, May 21, 2011

The Greek Tragedy Continues (And You Thought US Finances Were in Trouble)

Greece suffers fresh blow as credit rating cut by Fitch - Telegraph. It seems that all those pesky promises that the Greeks made last year when they were handed a few billion Euros by the European Union, aren't going to be kept. Little things, like don't spend more money than you have.

The Germans were pissed before (they are footing a big part of the bill) and even more pissed now.
But Jens Weidmann, the new head of Germany's central bank and a member of the European Central Bank's governing council, argued it was a nation's responsibility to sort out its own finances.

"It is first and foremost up to Greece itself to take appropriate additional steps," he said. "If a country fails to do so, further support should no longer be taken for granted and the country should be prepared to bear the severe consequences that are likely to ensue once financial assistance is withdrawn."
In other words, fix this problem now, or be prepared to be left standing out in the cold.

(The Dutch are also not happy about footing the bill, and were so vocally unhappy they were kept out of a recent round of talks. They weren't happy about that either.)

Meanwhile, European Central Bank threatens to pull the plug on Greek lending - Telegraph A restructuring of the Greek debt would make Greek bond ineligible to be used as collateral when European banks are calculating how and who to loan to. It would pull the rug out from under Greek financial institutions. (Think freezing of the Credit Default Swap market we endured a while back.)

And if all that isn't enough we have all those protests in Spain - in part due to the "austerity measures" since Spain is likely to also need a bailout. But the 21% unemployment isn't helping. (Certainly they will need a bailout if they don't cut government spending in a big way.)

1 comment:

Don Branson said...

I have my own idea how the Greeks can fix their economic woes: This Greek Tragedy