End Game approaches for Greece

Up until now, Greece has remained afloat due to the belief that the rest of Europe would bail them out. That belief took a body blow yesterday when the ECB said it wouldn't change the rules for Greece.
Because of this, the Euro tumbled today, while yields soared for Greek debt.

However, the real shocker for the market was the revalation that Greece was "looking at everything" in order to meet its borrowing needs. This indicated that it wouldn't be able to afford the higher interest rates in the not too distant future.
Increasingly the markets are viewing Greece as in a cul-de-sac, with no way out but eventual default. The question is what will this mean to the Euro?

The anti-bailout stance was reiterated last week when ECB executive board member Juergen Stark, a German deficit hawk, bluntly stated that markets were deluded if they thought other member countries would reach for their wallets to save Greece.
If the excessive deficit remains uncorrected, the EU could also punish Greece by forcing it to make a huge, nonrefundable deposit with the European Commission. But that would only reduce market confidence and multiply Greece's economic troubles.
Neither kicking Greece out of the EU or a fine makes economic sense. But letting Greece flaunt the rules could do irreparable harm to the credibility of the euro as a sustainable currency.
Olli Rehn, the newly installed European commissioner for economic and monetary affairs, expressed fears of a potential "spillover effect for the entire euro area" during his European parliamentary confirmation hearing.
Former IMF and Wall Street analyst Desmond Lachman, however, was much more pessimistic when he raised the idea of Greece defaulting in a piece for Financial Times last week.
"Much like Argentina a decade ago, Greece is approaching the final stages of its currency arrangement," he predicted, adding that "after much official money is thrown its way, Greece's euro membership will end with a bang."

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sovereign default

Did you see any specifics on the probability of sovereign default and a time line?

I saw their credit default swaps soar through the moon but are we going to really get a domino crash and burn?

Have you noticed when it comes to the Zombie banks, everyone runs around and says "OMG, it's Economic Armageddon, we must bail them out! But when a country fails, it's oh, sign, oh well, what can we do, they have to cancel their entire social structure, go bankrupt, wipe out their social safety nets, yada, yada.

What's wrong with that picture?

(how can we allow these glorified chips of doom to be traded and piled on to pay out when something really bad happens? Major need to look into CDS on Sovereign debt )

There seems to be a real misconception about the

way that European integration has unfolded. It depends on crises.

A currency default crisis with Greece would force the EU to either abandon the euro project, or.........

to take every last shred of management of the economy out of the hands of the Greeks.

It may not be stated somewhat more gently, but Athens is probably going to be bailed out in exchange for clearing government budgets, wages, the whole thing with Brussels.

The UK (and Ireland) will probably get the same deal when things there spin out of control and the UK is forced to enter the euro.

What we are talking about is pretty much a total control over countries economies in the same way that Washington has over state governments.

Sovereign credit defaults won't be the end of the euro and EU. They will be the start of something much more resembling a single, federal state.


This begs the question though as to who will come to our aid when we finally default. I'm guessing we have about 10 years till that is going to happen but its not a pipe dream its a countdown.