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Have Europe's leaders kicked the Greek can as far as it will go?
Unnervingly, it is starting to look like the answer may be yes. Policymakers this week failed yet again to take decisive action on Greece's debt crisis, rattling markets and prompting billionaire George Soros to brand officials' failure to restructure Greek debt a "mistake."
The central problem -- beyond Greece's running out of money again -- is a standoff between bailout-shy politicians and instability-fearing central bankers. The assumption has been that they would come to their senses and make a deal to forestall catastrophe.
But their little game of chicken souvlaki now threatens to jolt Europe and perhaps the world with a new financial disaster.
On cue, Moody's warned Wednesday that a Greek default – which is looking likelier by the day -- could ripple across the European banking system. It put three big French banks on review for a possible downgrade and warned that other reviews may follow.
EU commissioners have a "profound sense of foreboding" about Greece and the future of the eurozone, a leaked account of a meeting has suggested.
The account, seen by BBC News, said this was in reaction to the "damning failure" of eurozone ministers to agree a new bail-out for Greece last night.
It was written by an official who attended Wednesday's gathering of commissioners in Brussels.
The author warned that the markets would now "smell blood".
It added that any default on Greek government debt - as espoused by Germany - would leave the Greek banks insolvent and "threaten the viability of the ECB [European Central Bank] itself" which owns 49bn euros of Greek bonds.
European Commission President Jose Manuel Barroso was said to be "clearly more worried now than he was a year ago when the sovereign debt crisis first broke".
Originally posted by downunderET
reply to post by wisintel
You dont lend someone money when you know they cant pay it back.
Greece is going down, and there is nothing they can do about it.
Originally posted by wisintel
The thing that kills me, is that they frame the issue as being between the banker's and the politicians and completely disregard the opinions and feelings of the tens of thousands of Greek citizens rioting in the streets. I believe they have a pretty huge say in the outcome of any deal.
They don't even mention how said deal effects real people.
While fears stirred by Greece’s deepening debt crisis raced Wednesday through global financial markets, a quick check of U.S. banks showed they risk losses on tens of billions of dollars should the Mediterranean nation default on its payments.
U.S. banks had total exposure of $41 billion to Greece by the end of 2010, according to the latest figures from the Bank for International Settlements issued June 9. Most of the financial commitments appear to be indirect.
About 83% is tied to “guarantees” that range from protection for sellers of credit derivative contracts to other obligations owed to third parties. Still the data are murky, according economic consultant Kash Mansori.