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September 2, 2011
Greece is insolvent! Who Knew?
The Greeks have shown an unflagging ability to obscure and outright lie regarding their finances.
The WSJ reports that perhaps as much as one trillion dollars is needed to bail out European banks. Much of that is needed due to those banks holding so much bad Greek debt. That's right, one trillion.
Rumor has it that Finland wanted the Parthenon as collateral before they would loan any more money to Greece. The Greeks balked at that, understandably.
Now the rest of the EU is lining up trying to secure hard assets for their bailout money earmarked for Greece. The entire Greek bailout agreement is at risk of being delayed indefinitely or blowing up. Yet, who can blame them? Loaning money to Greece is just the same as just giving it to them, you'll never get your money back. So now, in an effort to please the hard asset crowd, German newspaper Handelsblatt reported earlier this week (via Dow Jones Newswires) that EU leaders were considering bank shares as collateral.
Oh boy. Greek bank assets as collateral? What's that worth? Probably as much as the change lost inside the seat cushion of living room couch. OK, then, what's next? Cattle, sheep and other livestock? How about olives and feta cheese? A few goats?
Are any of these dolts listening to themselves?
Greece is broke. Bankrupt. Insolvent.
Reuters is now reporting that Greece has missed its austerity goals and is not living up to its agreements for the earlier bailouts. According to the report:
This pretty much hits all the major problems. A terrible economy, austerity measures not enacted, high unemployment, deteriorating manufacturing all leading to depressed tax revenues. Looking at the Greek markets themselves, we find 10 year Greek government bonds are yielding almost 18%. Two year Greek Bond are at a staggering 43%.
Forty three percent! That says "default" right there.
There is really no means of that nation growing out of its debt or being able to service its debt load in a short, medium or long term fashion.
File national bankruptcy, default on your debt, get out of the euro, and go back to being a beautiful and pleasant, but sleepy southern backwater.
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