IMF and Bundesbank fear contagion from Greece as bond spreads soar to fresh records

Horsefeathers, every word.

The economic needs is immediate and the Greek government has only three options. Default and screw their creditors, and in so doing deprive themselves of all access to international capital. Or take the EU's money and actually use it, while cutting the public sector to be able to pay it back. Or three, nukes the public sector by putting debt repayment first and boondoggle giveaways dead last.

They will almost certainly pick the second. But there isn't any revolution or any private confiscation involved in a particle of it. You simply don't find the financial realities dramatic enough for your political stage directions. Tough. It makes you silly, it doesn't change the market or Greece.

"Default and screw their creditors"

Sillyness aside. Recently, Iceland told the creditors to screw it. Ireland chose to bite the bullet. Latvia cut public spending 20% and is biting the bullet. Argentina told the creditors to screw it, confiscated private pensions and took control of the central bank.

Greece has quite the history of telling creditors where to go.

My real question is, I guess, does the EU have the balls to enforce economic necessities on Greece?

yitbos

Iceland had its own currency and it fell by half as soon as it defaulted.

Greece needs not just to service existing debt but to borrow 10% of GDP this year. If they can manage their finances without that borrowing, they don't need to default. And defaulting doesn't help them borrow 10% of GDP this year.

Printing might if they defaulted and also left the Euro. That is just a roundabout way of cutting wages by a third or half, as Iceland did. They can cut public benefits and public employee wages by less and avoid the need.

It's all stupid. And clear. They may well engage in such stupid courses of action - financial acumen is not their government's leading characteristic. But none of it helps them.

Countries that decide to screw their creditors may, 10 to 15 years later, borrow again - if they aren't in a crisis, and have their budget more or less in order, and their economy is growing. If Greece had any of those things they wouldn't be considering default to start with.

It's a fools game...

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.