A split has opened in the eurozone over the terms of Greece’s second €109bn bail-out with as many as seven of the bloc’s 17 members arguing for private creditors to swallow a bigger writedown on their Greek bond holdings, according to senior European officials.Tyler Durden comments:
The divisions have emerged amid mounting concerns that Athens’ funding needs are much bigger than estimated just two months ago. They threaten to unpick a painfully negotiated deal reached with private sector bond holders in July.
While hardliners in Germany and the Netherlands are leading the calls for more losses to be imposed on the private sector, France and the European Central Bank are fiercely resisting any such move. They fear re-opening the bond deal could spark renewed selling of shares in European banks, which have significant holdings of Greek and other peripheral eurozone debt.
Because of the recent economic downturn and Greece’s slow implementation of austerity measures, officials estimate Athens’ funding needs over the next three years have grown beyond the €172bn forecast this summer. The scale of the shortfall will be determined by international lenders over the next few weeks
So let's get this straight: the funding hole was €109 billion two months ago, and it is €172 billion, an incremental differential of €63 billion in two months, or €360 billion annualized.How on Our Dear Lords green Earth does one run up a national debt from 109 BILLION to 172 BILLION in just two months? Is the EUnion now actively euthanizing Greece? What is going on here?
...Pardon us, while we...
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We apologize but...
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[UPDATE001] Ambrose Evans-Pritchard has a hammer, sees a nail, hits it on its head: Frau Merkel, it really is a euro crisis.
Greece’s debt levels are around 250pc of GDP, at the lower end of the developed world.The answer:
Spain’s sovereign debt is admirably modest at around 65pc. Italy’s household debt level is the envy of the rich world. It has a primary budget surplus. Italy has many problems, but the budget deficit is not one of them.
So why is there such a destructive and long-festering crisis in the eurozone?
The reason this crisis keeps grinding ever deeper is because the euro itself is a machine for perpetual destruction. The currency is fundamentally warped and misaligned.The conclusion:
EMU should not be saved.Nor should the EUnion, I'd like to add.