“They can repudiate their existing debt, but who will buy their new bonds?”
You’re not very familiar with the banking industry then. Hell, they’re back to loaning money on houses to people they know can never pay it back. They are beyond hope.
Greace WILL NOT have a problem. They are simply going to do just what Iceland did - which is to tell Europe to SHOVE IT, wait a few months, and start seeing the money flowing in, yet again. At the same time, their people WILL NOT starve by trying pay it back (which they cannot) - they will do much, much, better...exactly as Iceland.
You could be right. The stupidity of the Banking industry has amazed me. However, some thoughts:
1. In the US, political pressure was no doubt put on the Banking industry to force them to make those bad loans (especially to “underserved” populations). Somewhere in there, there was a quid-pro-quo to make it worth their while, even with the potential losses.
2. Iceland is not Greece. People will give Nordics the benefit of the doubt before they would Greeks. The fact that Greece is going Commie may give even the bankers pause. But, time will tell.
3. Germany has lost a lot of $$ on the Greek experiment. If there burn their bridges by exiting the Euro, there ay well be payback.