1. The Greek government has replaced all the heads of their military branches with officers considered more friendly to the regime.
Wow! Given Greece's history, that is a stunner. The left fears a coup? This might get even uglier that I had imagined.
Italy's public debt is on the cusp of explosive dynamics, where the higher interest rate on new debt combined with a low economic growth rate causes the debt to GDP ratio to continually rise even if the Italian budget is in primary balance (spending net of interest payments = revenues).
People, the Euro as we know it is over. I say it's a coin flip to last until Christmas and maybe 15% to last until spring break.
Germany and France are asking Greece, "do you want to stay in or not?" and Greece is saying "what, are you guys deaf?".
I am not sure what Germany and France are up to. If Greece goes, Italy definitely goes and that's game, set & match.
If they want to keep the Euro together they need to take on Greek debt as their own and settle in for a long hard slog dealing with Italy.
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The chance that France and Germany will send the Italian army into Greece to “restore order”? Very low, but violent suppression of some sort is certainly possible.
Even if Merkozy gets the Greek deal done, the EUR will fail when any one of Spain, Portugal, or Italy demand the same 50% national debt write off. European banks will fail and, because they have insured some Euro banks risks, so will some major American financial institutions. Will we notice? Knock down a house of cards and the table is still there. Is the whole crisis a case of “emperor’s new clothes”?
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