Greek bailout “strategy” unnerves European leaders
The Greeks want to hold a national referendum (next January) before agreeing to their bailout package. This did not go down well with the rest of Europe.
In Athens, Mr. Papandreou’s move unleashed political chaos on Tuesday after it emerged that despite having met his German, British and French counterparts only the weekend before, he had not told them of the plan to hold a referendum in January. Even his Finance Minister, Evangelos Venizelos, was caught completely unaware. It was widely reported that Mr. Venizelos was hospitalized Tuesday with stomach pain.
I’ll say. I have believed for quite some time that the question is not “if”, but “when”. As in, when will Europe go down the tubes?
Greece is within weeks of running out of cash entirely, and a default would lead to a collapse of Greek banks and far worse austerity than any bailout would impose.
In the meantime, the German-Italian bond spreads continue to hit all-time highs.
I had lunch with a German, an Italian and a Frenchman yesterday and we got on to the topic of the economy. No one thought that Greece was going to get out of this alive, even if they take on the rescue package they want to hold a referendum on. The Italian was bewildered at why the markets were punishing Italy so much – too much in his opinion (it does have a Debt to GDP ratio of almost 120%). The Frenchman was worried at rising unemployment and that S&P was going to downgrade their credit rating any day now. The German reacted pretty much as you’d expect someone to react to throwing good money after bad. None of them regarded the political situation in their home countries as particularly rosy. It’s bleak almost everywhere and the powder keg is growing – so the question is, where do you park your money these days?
In the meantime, here is one German chancellor describing how big Greece’s debt is:
9:53pm 
