Posted on 10/27/2011 4:48:34 PM PDT by Kaslin
Crisis: The European Union's deal to halve Greece's debt and double its own bailout fund to $1.4 trillion is being hailed as the salvation of Europe's economy and the euro. In fact, they've just kicked the can down the road.
We hate to sound a gloomy note as stocks and the euro rally across Europe and the U.S., but the stubborn fact is the 50% "haircut" Greek bond investors will take is entirely "voluntary." So really, unless they want desperately to dump their debt, they don't have to.
As has been pointed out, a 50% reduction still leaves Greece's debt at 120% of GDP — a level most analysts believe to be economically ruinous. And the $1.4 trillion bailout fund sounds big until you realize EU officials and private-sector economists say a lot more is needed.
"Many market analysts believe that the Europeans will need to have a financial bazooka of at least U.S. $2.75 trillion if they are to prevent the Greek crisis from engulfing Italy and Spain," Desmond Lachman, economist at the American Enterprise Institute, told Congress this week.
Then there's the problem of all that debt. As the chart shows, the EU is still way over-indebted. This deal merely trims it back a bit. What's badly needed is Europe's recognition that its much-beloved welfare-state model is dead, and that laying it to rest will require massive spending cuts.
(Excerpt) Read more at news.investors.com ...
I really don’t understand at the jubilation in the markets today.
All the European debt is still looming, our debt is still growing, all the toxic assets are still on the books.
Unemployment is still over 9%, Obama is still in the White House...
I know it’s not going to work because the Greeks who should be ashamed and grateful are acting like they are victims.
Greek opposition parties to the Left and Right united to condemn the eurozone deal amid mounting social conflict.
Antonis Samaras, the conservative opposition leader, said: “We are not closer to the solution but are faced with nine years of collapse and poverty.”
Who says good times aren't here again?
I heard the DOW went down 60 points right after the arrogant pos gave his speech
Rumor is that Merckel has the duetche mark being printed for the possibility that they may pull out of the EU.
All I know is that these markets are acting crazy.
I think it bears repeating “ You Can Not Bailout Socialism “ period..end of story.
I think it bears repeating “ You Can Not Bailout Socialism “ period..end of story.
I think it bears repeating “ You Can Not Bailout Socialism “ period..end of story.
This time Germany is being played the Rope a dope.
But like in all times past until all the wealth of Germany is taken by its neighbors or destroyed it will not end.
Reminds me of “Irrational Exuberance”.
So who wants to buy Greek bonds now? Italian, Spanish, Portuguese...? They defaulted. It’s pretty much already done, and Europe is repudiating for them while imposing smaller government. Crying won’t help.
Not when it bears repeating.
The implosion of socialism.
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