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Old 04-23-2010, 10:18 AM   #1
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Default Financial clusterfuck in Europe

okay, so according to the press the greeks are about to apply for imf/eu-money in the next few hours. i guess most of you have been following the story, for those who didn't, here's the short version:

the greek government has been spending pretty recklessly over the course of the last, say, decades. it was okay for them to do so because getting more and more credit used to be fairly cheap. the recession was hard on the people, it was harder on governments though, especially the ones with huge spending. due to the fact that the greek economy more and more relied on tourism (hit the most) and lacks any sort of major industries as of now, the credit default swaps went up since 2009. that means they will have to pay higher interest rates for the bonds they sell.

people were pretty sure greece wouldn't be able to cope with its financials unless external experts would take care of the mess. so brussels and washington came up with an umbrella if things were to get worse.

well, they did. as per usual, greek officials had been blatantly lying about the deficit(revised from 12,7% to ~14% in 09) - and the market place is having a field day. german bankers have warned merkel that greece is bound to end up like hypo real estate, a german banking conglomerate that swallowed billions and billions of cash just like a black hole due to its hidden accounts.

if the greeks were to default, it would have quite an impact on western europe as well: banks in france (~70 billion euros) or germany (~45) hold most of the greek debt - which is obviously why sarkozy was pushing a hellas-friendly agenda for some time now and keeps trying to get berlin to pay.

so here we are with greek basically bankrupt. the worst thing is that other countries are likely to follow: portugal's credit default swaps have been rising steadily, spain might be even worse, even france is getting some heat - and last but not least, the "last resort's", germany's, interest rates are higher than ever (still very low, but nonetheless).

do you believe we're gonna get out of this any time soon? will we see a major default in the euro-zone? and what about the u.s. or the uk?

Last edited by Stensland : 12-09-2011 at 05:17 AM. Reason: crisis has broadened
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