EconomicsGreece: EU: 'Financial Times' says "prepare for worst"

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Greece and Europe must prepare for the worst

Greek Prime Minister George Papandreou is out of ammunition. The embattled leader has been gradually losing control of his socialist party for some time, but the trend has sharply accelerated this week, as larger and angrier crowds take to the streets. He now plans to form a new government, but hopes that he can win passage in coming weeks for a new fiscal plan — needed to ensure the next European Union / International Monetary Fund loan tranche, and any future bailout package — are all but dashed. European leaders need to think about what to do next, and quickly. http://link.ft.com/r/9ULF66/XHLWQG/6O6PS/5CG5ZJ/JIKM3Z/E4/h?a1=2011&a2=6&a3=16 From WORLD 8:41pm Greek deal fails  to ease contagion fears Spanish borrowing costs hit 11-year highs Editorial Evaporating reform of Greece Insight Policymakers can’t kick the can Video Political crisis weighs on Greece June 17,2k11

The A-List: Greek crisis threatens European decade of economic implosion

From day one, immense challenges faced the coalition of international institutions that opted for a liquidity approach to address Greece’s debt solvency problems. Now that this coalition is stumbling and bickering publicly, the outlook for Greece has taken a significant turn for the worse. Even as Greek Prime Minister George Papandreou prepares to reshuffle his cabinet, he must know his nation’s predicament is now extremely hard to reverse. http://link.ft.com/r/S4XZQQ/YBTIT9/2BHRI/V1F0TJ/7208HE/FW/h?a1=2011&a2=6&a3=17

EconomicsEurope: Greece and Portugal: Defawlt on bail-out repayments elicits call for expulsion from EU

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Financial Times email newsletter (May12,2k11)

Greece and Portugal should both go gracefully

Even as the ink is drying on Portugal’s European Union and International Monetary Fund bail-out agreement, evidence is mounting that last year’s bail-outs of Greece and Ireland have failed. Far from improving their access to the financial markets, Greece and Ireland face record borrowing costs. Notwithstanding the slightly less draconian terms of Portugal’s agreement, it will surely suffer a similar fate. The EU will try to get away with “soft” restructurings, involving a combination of longer maturities and lower interest rates. But this will not work and by 2013 there will be no viable alternative to “hard” restructurings (default), comprising debt write-downs of 50 per cent or more. Unfortunately, in the case of Greece and Portugal at least, even this will not guarantee continued membership of the euro. http://link.ft.com/r/8P1R88/XTU6HO/70OUJ/HD77WD/EWZXLG/CM/h?a1=2011&a2=5&a3=12

FT email newsletter (May17,2k11):

Merkel rejects Greek debt restructuring

The German chancellor spells out her strong opposition to restructuring debt in any eurozone state, as finance ministers press Greece to accelerate its sell-off programmehttp://link.ft.com/r/CTBPCC/IYX1T1/6O6PS/3OTO6X/40BWM9/XL/h?a1=2011&a2=5&a3=16</blockquote>

The situation is dire for the economic recovery of both Greece and Portugal.  And the man most responsible for the International Monetary Fund's role in ensuring both countries, both countries having now defawlted, has resigned after scandal.  A new head of IMF has been designated, she being also from France and having been active in the bail-outs of the two countries which have failed to meet their obligations.

This is a dire situation for the global economy.  The USA trend toward a similar status, by defawlting on its national-debt interest payments, looks even bleaker against this portentous background.

-- EconoMix