Latest Financial Crisis - Greece

It looks as though the financial markets have taken a look at Greece's proposal's to cut debt, looked at the Eurozone and IMF bailout package and decided that Greece will not be able to afford its debts over the next few years without a lot of bailouts which are still in the process of being organised. As a result, their credit rating has been downgraded to junk status.

Effectively, Greece can no longer afford to service its own debt.

Any bailout is now going to depend on Germany being prepared to support the Euro and pay for it. Understandably, Germany is not really happy about this and are refusing to pay out until Greece comes up with a credible plan for reducing their debt. With the downgrade, that may no longer be possible.

The knock on effects from this could be the following.

Greece gets kicked out of the Euro and allowed to devalue. They were not exactly honest when they applied for membership of it and as a result, their fiscal policy is going to be run from Brussels, or more likely Berlin.

Portugal and Spain also have economies in a similar situation. Once Greece is resolved, the markets are likely to look at those two countries with an eye to making some easy money at government expense.

So, is any of this being reported outside of Europe?

Does it worry anyone that a country which should have been in reasonable financial state is about to go bankrupt?

Do the markets have too much power when events like this occur?

It is being reported and watched carefully outside Europe. People are fearful of the fallout and the Dollar is rising in response to this latest crisis. One description I heard for this unexpected result is the following:
"This is like campers running from a bear. You don't need to be faster than the bear, just faster than the other campers. Well the US is faster than Europe right now in the eyes of the markets."

The Greece issue has been getting coverage for weeks on financial networks and NPR. (National Public Radio)

The markets do have to much power but it is the nature of the beast. They are international markets, how to contain them without doing serious injury to the markets?

As to worrying about a country going bankrupt, yes it is worrisome, much like Iceland was worrisome.

Looks like Spain is next on the list. Already downgraded by S&P.

Portugal, Ireland and Italy are apparently next in the firing line of countries that could get into heavy trouble with a run on the markets.

I thought Portugal was also downgraded yesterday.

I'm not sure the Greeks understand how dire this is. The reaction to the problem and demands for austerity was to strike and thus shut down the #1 industry of Greece, Tourism. I suspect they just might get kicked out of the EU Economic circle.

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Originally posted by What Exit?

I thought Portugal was also downgraded yesterday.

I'm not sure the Greeks understand how dire this is. The reaction to the problem and demands for austerity was to strike and thus shut down the #1 industry of Greece, Tourism. I suspect they just might get kicked out of the EU Economic circle.

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The big problem is that there is no graceful backout method for a country to leave the Euro.

Not to mention Angela Merkel has a choice, save Greece and the Euro or save her coalition at the upcoming elections next week.

What a choice!

I did not say it would be graceful. :)

From this side of the Atlantic I hear grumbling that Greece did not live up to its agreements and promises that it made to join the Euro. The Germans in particular that would foot the largest part of the bailout do not seem amused by this situation. I just fear that if Greece is effectively evicted, it will cause a cascading effect on the other weak countries; a loss of confidence.

To put it in words we Americans can understand, they're arguing whether or not Greece is "too big to fail." :lol:

(I'm a daily NPR listener and have been aware of it for as long as they've been discussing it.)

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Originally posted by OneCentStamp

To put it in words we Americans can understand, they're arguing whether or not Greece is "too big to fail." :lol:

(I'm a daily NPR listener and have been aware of it for as long as they've been discussing it.)

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I barely watch TV News at this point, I wonder how well they are covering it. I did catch a good report on one of the finacial News Networks. I think it was Bloomberg though and that tends to be the best one.

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Originally posted by CatInASuit

Not to mention Angela Merkel has a choice, save Greece and the Euro or save her coalition at the upcoming elections next week.

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Latest news seems to confirm what has been suspected for a while. The EU and the various countries including Germany managed to force concessions from Greece. It looks like the bailout will happen. Our opposition indicated that they might not vote for the bailout but they won't prevent fast-track legislation either, i.e. they are washing their hands of it in a somewhat half-assed way.

The upcoming state elections will be very interesting. It is the most populous state, very diverse and a swing state. It is also the first election since the national elections in September. Current polls are inconclusive and it remains to be seen whether there will be an unexpected coalition.

One of the Greek commentators indicated he thought it helped Obama called Angela Merkel to convince her to help Greece before Greece turns into the Lehman Brothers of European Nations.

It sounds like the powerful and angry and often petulant Greek Unions made a brief protest for face value but are accepting the reality that the country has no choice now.

Wait until the unions hear the latest. The retirement age is being hiked by 14 years from 53 to 67. Pay freeze for the next three years, cuts in the 13th and 14th months salary bonuses they get for Easter and Christmas.

And everything still depends on the Germans saying yes. The fine line is making sure the penalty is so serious that no-one else will want to default without ruining Greece. Otherwise the next countries round will all want to be bailed out as well.

CIAS, the reports I heard is the Unions have heard this news and are resign to it though I am sure they will find a way to punish someone for it eventually.

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Originally posted by What Exit?

CIAS, the reports I heard is the Unions have heard this news and are resign to it though I am sure they will find a way to punish someone for it eventually.

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Well the bailout has been agreed between the EU and the IMF with Germany's backing.

The unions are currently unfurling flags on the Acropolis showing their feelings and there were plenty of riots of the May Bank Holiday with more country wide strikes coming up.

This will go on for several years more.