The Great Debate UK
from Breakingviews:
The way to end the Greek farce
By Hugo Dixon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The Greek crisis is fast descending into farce. The position of Germany, the euro zone’s main lender, is increasingly absurd. It is adamant that there will be no restructuring of Greek debt -- at least, until 2013. And yet it is equally insistent that Athens' private-sector creditors should contribute up to 30 billion euros to a new, 120 billion euro bailout. That would effectively amount to a half-cocked restructuring.
German Chancellor Angela Merkel’s inconsistencies seem based on her view that a sovereign restructuring won't happen before 2013 just because she said it won't. But her conflicting demands are becoming virtually impossible to reconcile. The ratings agencies are threatening to say that Greece has defaulted if there's so much as a whiff of arm-twisting in the supposed “voluntary” rollover.
While the opinions of the agencies wouldn't mean that Athens had actually defaulted -- they are just opinions, after all -- the European Central Bank is acting as if their thumbs-down would open the gates of hell. To show it really means business, the ECB is threatening in such a scenario to pull the plug on Greek banks, something which really would cause havoc. There’s clearly an element of bluffing on the part of the ECB -- but it is becoming more transparent by the day, to the point of absurdity.
Another day, another crisis
By Laurence Copeland. The opinions expressed are his own.
Here we go again – the same sickening feeling, as stock markets reel amid a flight to “safety”. For months, there have been worries about contagion from the Greek imbroglio, and now the nightmare seems to be coming true, as one after another the weak European economies are put to the sword.
First came Greece and Ireland, then Portugal, now it’s the big league – Spain and, even bigger, Italy (and don’t forget Belgium, an accident waiting to happen for many years now, not very important in pure economic terms, but psychologically significant as the home of the whole sorry euro disaster).
Europe’s bigger crisis waiting to happen
By Kathleen Brooks. The opinions expressed are her own.
So it looks like Greece has staved off default for another few months at least. Investors are breathing a sigh of relief and buying up risky assets like the world is a rosy place again.
The markets always suffer from a chronic case of short-termism, but once a sovereign debt crisis takes hold it is very difficult to reverse. Investors may be concentrating on Greek, Irish and Portuguese funding needs for the next 24- 36 months now, but it won’t be long before investors start to scrutinise longer-term liabilities that are currently being clocked up for the next 10,20 even 30 years.
from James Saft:
If Greece quacks like a default …
James Saft is a Reuters columnist. The opinions expressed are his own.
The proposed bailout of Greece probably can't escape the scarlet D of default, at least if the ratings agencies follow their own guidelines.
Even if the deal goes through, it is insufficient to solve Greece's debt problems, only buying time for those involved to work out how best to engineer a transfer of bank losses to taxpayers.
from Breakingviews:
Letter to the Greeks
By Hugo Dixon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Dear Greeks,
The anger you feel about your plight is understandable. You are staring at several unpalatable alternatives, all of which will involve big cuts in living standards for years to come. But the options you face are not all equally bad. You must avoid an emotional reaction that leaves you in an even worse state -- and you must ostracise those who resort to violence.
from Breakingviews:
Greek Plan B needs two elements
By Hugo Dixon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
LONDON -- The European Union is finally working on a plan B in the unlikely case that Greece’s parliament votes against austerity later this week. The priority in such a plan should be swift action by the European Central Bank to protect the rest of Europe’s banking system from mayhem. The EU should also try to give Athens a second chance to reflect on its folly.
Could Italy go the way of Greece?
Italy has hogged the headlines in recent weeks mostly for political reasons rather than financial ones. But in a few months we may be concentrating on its fiscal woes and unsustainable debt burden.
Last week credit rating agency Moody’s announced it was putting Italy on review for a possible downgrade to its Aa2 credit rating. These reviews typically last three months or so, and although a downgrade would still leave Italy at the higher end of investment grade, it is not good news to be sliding down the scale, especially when a sovereign debt crisis is raging further along the Mediterranean coast.
Units and unities: can currency change really resolve the Greek tragedy?
As the Greek tragedy goes into what looks like its final act, there is increasing talk of the country leaving the euro zone and refloating the drachma. Perhaps the Athens street mobs favour this “solution”, but what would it involve, and would it work?
It is a bizarre situation, without precedent as far as I am aware (though I am no economic historian). Usually, new currencies are introduced to replace old ones which have become discredited (typically after hyperinflation), whereas here we are talking about the absolute opposite: abandoning the euro because it is too strong, in favour of a new drachma, which will be a weak currency by design – rather like launching a ship, in the hope it will sink!
from Breakingviews:
Bearish markets remain in thrall to Greece
By Ian Campbell
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
LONDON -- The sell-off in equities and commodities is tempting for bulls but the falls could easily get worse.
from Breakingviews:
How the euro zone can save itself
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Hugo Dixon
Greece is likely to receive another short-term sticking plaster after the euro zone’s leaders stared into the abyss. But a repeat of the drama of recent days is all too possible. The region can, and must, protect itself against Athenian delinquency.
