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Calculated Risk: Greece – who knows?

Indeed. If I were a betting man, or had any money to bet, I’d go with a managed (i.e., “politically spun for maximum benefit”) default.

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  1. Well, here it is two weeks later, and those of us who understand human nature know. Greece is in a slow descent into chaos. Look at the bond yields. (link is near the bottom of the Calculated Risk page) Two things show up. One is an interest rate of over 40% for 5 year bonds. This indicates that about 40% of investors think they might lose their investment in Greek bonds. Then the interest rate for 10 year bonds is just over 25%. A declining curve (long rates lower than short rates) indicates a recession is approaching. It also means the bond holders intend to re-sell those bonds on the market before the recession hits.

    Two quotes:
    “The New Democracy leader Antonis Samaras said on Monday that his party would not vote for any new austerity measures”
    “Without his support, Greece will probably not receive additional aid.”

    These spell it out. Greece will not budge. EU will not bail them out. The only questions are when will they collapse, and how much damage will it do.

    Posted on 17-Nov-11 at 09:58 | Permalink

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