Tales of woe are emerging from Greece at an accelerating pace – government workers who become suicidal after learning that they’re being downsized and the proliferation of soup kitchens – but, should the nation default on its debt, some of that misery could spread elsewhere, according to the graphic below from this Spiegel story, even to Germany.
Also see this related collection of photos from Spiegel and this New York Times Magazine story from yesterday about the rapidly changing Greek lifestyle. It’s not all good.
Just when you thought it was safe to buy stocks again – after the Greek austerity deal was approved over the weekend amid rioting in the streets of Athens – another credit rating agency seems intent on spoiling all the fun. Following a similar move by Standard & Poor’s last month, Moody’s cut credit ratings for Italy, Spain, Portugal and three other smaller European nations and said they may strip the U.K. and France of their triple-A rating.
It seems that European policy makers are not moving fast enough for the credit rating agency, Moody’s chief credit officer Alistair Wilson noting, “We do not think they have done enough to reassure the market that we are on a stable path. What will guide long-term ratings is the clarity and the performance of policy makers and the macro picture”.
After stumbling upon the U.S. Government Debt website and fiddling with their charting tools a bit, a chart that I’ve never seen before appeared – a very long-term picture of public U.S. debt relative to GDP going back to 1792. Back in the old days, the only time the nation would rack up debt was when they were at war and then they’d pay it down
All that changed not long after the last vestiges of a gold standard were abandoned in the 1970s and it’s been a three-decade long climb up debt mountain ever since. Moreover, since the graphic above includes only public debt, the picture is significantly worse when including intergovernmental liabilities such as social security (see comment below).
The Greek Parliament approved more austerity measures required to facilitate the next round of $170 billion in bailout money from their EU/ECB/IMF overlords as citizens set buildings on fire and battled some of the 4,000 riot police deployed in Athens.
Bond holders will take haircuts of 70 percent on the money they foolishly lent to the Greek government and, for the time being at least, a messy Greek debt default has been averted.
Well, it looks like yesterday’s version of the “deal” on Greek debt has turned out like all the others over the the years as lawmakers squabble about passing the latest round of austerity measures and European officials say even that won’t be enough. The image below from the Telegraph’s live coverage of the debt crisis sums up the situation nicely.
Financial markets are now a “sea of red” in advance of the 9:30 AM EST open in New York as violence is again erupting in Athens, striking workers unhappy with what the unions have dubbed a “tombstone” policy for Greeks society.
Clearly, “imminent” was a poor choice of words last month to describe a deal between the Greek government, their EU/ECB/IMF overlords, and Greek bondholders that would facilitate the next round of bailout money in order that the Greeks avoid a messy default next month, but, this morning, some are using that word again as a deal might finally get done.
Here’s where things stood as of last night as Greek officials deliberated:
Understandably, Reuters appears to be confused by what’s going on in this very fluid situation. Between the time that this URL was copied for the links post a few minutes ago until the time it was posted, the title changed from “Greece heads to Brussels empty-handed” to “Greek political leaders agree on bailout reforms: sources”, however, they were careful not to use the word “imminent” in the updated story.