Feb 28 2010

Greece Is Back

Published by at 6:22 pm under Debt and Credit,Global Economy

“Tragedy is thus a representation of an action that is worth serious attention, complete in itself and of some amplitude E’ by means of pity and fear bringing about the purgation of such emotions.”  – Aristotle

 

…in the news that is – and it isn’t good.  It seems that Greece has a real financial crisis on her hands.  Greece’s budget deficit is twice what the Government reported as recently as mid-2009.  So once Moody’s downgraded the debt a few months ago, there seems to be serious concern that a sovereign European nation is at risk of default.

 

Greece, in the form of the Prime Minister George Papandreou, is asking for help from other EU countries and while the EU has indicated that it will assist to prevent default, details are sketchy for now.  We will soon find out if the EU will put the money where their mouth is come April and May when Greece has some 20 billion euros worth of bonds and T-bills maturing.

 

Let’s hope this gets sorted out or it could send other European countries like Spain and Portugal over the edge as well.  Interestingly, it has been reported that Goldman Sachs (our favorite investment bank at the center of the universe) helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that “legally” circumvented the EU rules.  Is there anything that Goldman Sachs isn’t involved in?

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