Sunday, April 01, 2012
Yes, the EU crisis continuesMohamed El-Erian, CEO of the investment firm Pimco, warns in The Greek debt drama has merely paused for an interval Financial Times 03/13/2012 that despite the recent additional bailout funds, Greece is still in serious shape with unsustainable debt loads even under optimistic assumptions:
This difference relates to Greece’s ability to deliver on its part of the bargain – particularly an additional dose of heavy austerity at a time when youth unemployment is already 51 per cent and the economy is contracting at a rate of seven per cent a year. Even if socially and technically feasible, the upcoming elections in Greece will introduce yet another element of complexity.Spain and Italy are much bigger risks at the moment than Greece to the eurozone. But no one can really say what event may finally trigger the first exit(s) from the euro.
What last week’s debt reduction deal really delivers is a bit more time for others to reposition for the next, more disruptive, act in this unfolding Greek drama. For European policymakers, this means even more urgent building of firewalls to protect countries such as Italy and Spain, continuing to strengthen the core through better fiscal and political integration and forcing banks to raise capital. For investors, it is about reducing their exposure not only to another default by Greece, but also the risk of the country’s exit from the euro.
Tags: eu, euro, european union, greece
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No subject for immortal verse
That we who lived by honest dreams
Defend the bad against the worse."
-- Cecil Day-Lewis from Where Are The War Poets?
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