Nearing critical mass

Here are a pair of items our readers may find interesting that I pilfered from ZeroHedge.

First, Norway is halting payments to Greece.
Norway will first stop all further financial aid payments to the highly indebted Greece. The reason is that Greece does not fulfill its obligations descendants, the Norwegian Foreign Minister Jonas Gahr Store said on Thursday before the Parliament.
According to ZH, here comes the first domino. Norway, which is a member of the European Economic Area, and actually one of the few solvent European countries, is saying let the chips fall where they may. It may be just the first. Look for every other country currently on the sidelines vis-a-vis Greece (and just as insolvent) to follow suit as the European experiment falls apart.

Secondly, and adding insult to injury, Fitch Ratings has downgraded Greece's long-term debt paper to 'B+' from 'BB+'.

And while EUrocrats are talking about a 'soft' default, extending pay-back time and lowering interests on loans to Greece, Fitch is warning it will not play ball.
An extension of the maturity of existing bonds would be considered by Fitch to be a default event and Greece and its obligations would be rated accordingly. If contrary to Fitch's expectations, private sector 'burden sharing' as a condition for new money extends beyond exhortation and is coercive, the credibility of policy commitments regarding the European Stability Mechanism and EU-IMF programmes for Ireland ('BBB+'/Negative) and Portugal ('BBB-'/RWN), as well as Greece, would be severely diminished and in Fitch's opinion would adversely impact financial stability across the euro area.
In short: if the EUnion follows through on its suggestion for a extending loans and lowering interests, Fitch will consider Greece in default. And if commercial paper holders are forcibly made to take a haircut, Fitch will do the same to Ireland and Portugal.

It seems we are nearing critical mass.

[UPDATE001] Reuters confirms the Norway story, adding that Finland, a full EUnion member, is also contemplating not handing over more money. On top of that, the IMF is suspended its review of Greece until the government draws up further austerity measures. A suspension could mean a delay in the disbursement of much-needed IMF funds. Greece is fast running out of willing donors. (h/t EURef)

[UPDATE002] And to give this post a little couleur locale, De Telegraaf (NL) has seemingly kicked off a campaign against handing Greece more Dutch money, by publishing a lengthy article about how the average Greek views the current situation. It's quite shocking, the lack of humility and attrition and the unbelievable arrogance with which the EUnion money is expected to keep flowing. Featured prominently as well is the massive corruption endemic in Greek daily life. The by-line reads : 'Sleeping in, a lengthy lunch, an afternoon nap and ouzo at night'. One Greek is quoted, saying he has no plans to work until his 65th birthday.
At 53 it's enough. That was true for our parents and ancestors, and it is true for us.
In the mean time the PVV has stated it will not agree to any more Dutch bail-out money for Greece, and even coalition partner CDA (at the time the bog opponent of Greek accession to the EUnion) is divided over the issue, despite the dire warnings, issued by our PM Mark Rutte and CDA finance minister Jan-Kees de Jager, of the coming of the apocalypse if we stop paying off the Greeks.

2 reacties:

Fredy zei

This could be the first domino. But then again: Norway is not an EU member, does not have the Euro as a currency and has dollar based an oil economy. So they are just not in the same boat as we are.

Klein Verzet zei

 True, but they are a substantial contributor. With Norway (and possibly Finland) withdrawing support we have the proverbial first sheep across the dam. On top of that, the shortfall by Norway ditching Greece has to be made good by other countries, which won't sit well with the populations of those countries. We aren't there yet, but we're getting closer.

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