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In light of what’s been going on in Europe over the last few days, perhaps it’s worth reviewing this Clark and Dawe video from last year on the area’s sovereign debt crisis.
Since this was originally aired, it would appear that about the only things that have changed are the actual debt totals for each nation and my guess is that they’ve all probably gone up.
The Greek sovereign debt crisis, now rapidly approaching its two-year anniversary later this year, has resulted in a second major bailout of about $160 billion for the wayward eurozone nation as described by European Union leaders late yesterday.
Based on the details of the deal provided in this Reuters report, it’s a rather complicated agreement that may or may not result in credit agencies declaring Greece to be in some form of default on its debt. Fitch ratings said they expect to assign a new “post-default” rating of “low speculative-grade” to their bonds, if and when all the dust settles.
It will be another week of market moving developments in Greece as legislators debate the austerity measures that the EU/ECB approved last week, steps deemed necessary to secure another $150 billion or so of funding that the Greek government can not obtain elsewhere, unless they want to pay punishing interest rates.
Of course, the locals were out protesting over the weekend and that is likely to continue in the days ahead, their argument being that a default (and an exit from the Euro system that would likely follow) would be better than the austerity measures being debated this week.
Der Spiegel reports on how Greek society is adapting to the many “austerity measures” that have been enacted in recent months. It sounds as though the painful (yet much needed) lowered expectations of what government can and should provide are well underway.
The austerity measures that were supposed to fix Greece’s problems are dragging down the country’s economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.
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The government’s draconian austerity measures have managed to reduce the country’s budget deficit by an almost unbelievable 39.7 percent, after previous governments had squandered tax money and falsified statistics for years. The measures have reduced government spending by a total of 10 percent, 4.5 percent more than the EU and International Monetary Fund (IMF) had required.The problem is that the austerity measures have in the meantime affected every aspect of the country’s economy. Purchasing power is dropping, consumption is taking a nosedive and the number of bankruptcies and unemployed are on the rise. The country’s gross domestic product shrank by 1.5 percent in the second quarter of this year. Tax revenue, desperately needed in order to consolidate the national finances, has dropped off. A mixture of fear, hopelessness and anger is brewing in Greek society.
They go on to provide a number of anecdotal accounts about how life has changed for both individuals and communities with conditions not likely to improve any time soon given that massive layoffs are expected this fall.
Boy, the German short sale ban is really going well so far… The lack of support for the new rule by other European nations is no doubt contributing to the uncertainty (read “losses”) being seen in financial markets today as discussed a short while ago on CNBC.
Is anyone keeping track of the number of ham-handed moves that the Germans have made over the last six months or so? It’s as if they’re just trying to tear the monetary union apart and sink the currency by doing everything but saying so.
Aljazeera reports on recent developments with the euro, a currency that now seems to be in its death throes as both investors and traders begin to question the very nature of the monetary union rather than the efficacy of the latest bailout plan.
This is an even-handed account from the news network based in Qatar, but, given the dramatic difference in views on credit and debt between the Muslim and non-Muslim world, there must be some degree of schadenfreude sweeping the Middle East and Asia these days.
By Tim Iacono, Since 2005
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