Two different sources warn the Greek debt crisis will cause broad economic turmoil

European leaders are scrambling to save Greece from a debt default that could cause global economic turmoil, but the Greeks themselves seem in denial.

In a reaction that is causing frustration and anger abroad, the Greeks seem more inclined to blame others for their troubles than accepting that something is deeply wrong with their country and painful medicine is urgent.

"The ordinary people don't understand the seriousness of the situation...not only for Greece, but for the whole world economy," said Jan Randolph, director of Sovereign Risk Analysis at IHS Global Insight.

Source of Greek Crisis? A Nation in Crisis

The head of the Commonwealth Bank has warned the deepening debt crisis in Europe has the potential to plunge financial markets into turmoil and create a new credit crunch...

"Greece and the problems generally in Europe are cause for concern.

Certainly I think the Greek situation has to be sorted, and in the end I don't think the outcome is going to be palatable for banks or the Greeks," Mr Norris told The World Today...

"What always happens in these sorts of situations is that the cost of credit goes up.

We've already seen over the last few weeks that rates start to increase again internationally.

It does have the potential to cause significant dislocation in the European markets," he said.

"Unfortunately while we are to a large degree disconnected to what goes on in Greece, the fact of the matter is that markets now are globally interconnected so what happens in one market tends to have an impact on other markets."Economists are comparing the Greek crisis to the last credit crunch which led to the disastrous collapse of Lehman Brothers in September 2008.

CBA Chief Warns on Greek Debt Crisis

Global economic turmoil. Significant dislocation in the European markets. Pretty ominous warnings there from two notable people in the finance and banking industry.

From the yahoo news article we read...

Meanwhile, the former chairman of the US Federal Reserve, Alan Greenspan, says a Greek default is "close to certain".

From CNBC....

"The protests are not going to go away and the Greeks can't deliver ...it looks like you're seeing growing divisions between the IMF, EU and ECB," said David Lea, western Europe analyst at Control Risks.

"I think we're moving inexorably to default."

A Greek default now appears inevitable. The repercussions will be felt elsewhere, certainly within the European zone countries, and begin to have adverse affect elsewhere around the world. Contagion is a real threat, but to what extent the damage will wreak is yet to be seen. And there are other challenging factors already weighing on the world economy beyond the Greek problem which could surface when the wave of toxic investments get hit. These developments should be watched carefully.

Of course, the real problem is that there is no solution to the real problem.

What I mean by that is that this system has been designed to crash in and of itself.

Because when we want to fix the crashing system we throw money at it. Money that disappears into the pockets of those who created these problems in the first place due to their greed and shortsightedness.

Greek bail-out timeline

* May 2010: EU and IMF agree bail-out package to prevent Greece defaulting on its debts; in return, Greece agrees to make 30bn euros of budget cuts over the next three years
* February 2011: EU and IMF experts tell Greece it must make further cuts to keep its recovery on track
* April 2011: EU figures reveal Greek deficit revised up to 10.5%, worse than previously thought
* May 2011: Greece begins privatisation programme but is warned the IMF may not release more funds because Athens cannot guarantee it will remain solvent for the next 12 months
* 29 June 2011: Deadline for Greece to agree new austerity package

The problem is already spreading.

Meanwhile, eurozone finance ministers have failed to agree on how to make private creditors contribute to a possible second Greek bail-out.

Ministers meeting in Brussels continued their discussions late into the night on Tuesday on ways of making private bondholders share the cost of a second rescue package without throwing financial markets into turmoil.

As a result of their failure to reach a deal, the cost of insuring Greek debt against default shot to an all-time high.

In a sign of possible contagion from the Greek crisis, credit rating agency Moody's said it might downgrade the three largest banks in France because of their exposure to Greek debt.

Share prices for BNP Paribas, Credit Agricole and Societe Generale all fell as a result.

France appealed for calm, saying it opposed a Greek restructuring which could entail write-offs for private banks.

"The French position is voluntary - no restructuring, no credit event and in line with the ECB," government spokesman Francois Baroin told reporters in Paris.

The EU and IMF are demanding the measures in return for the release of another 12bn euros in aid next month which Athens needs to pay off maturing debt.

The Greeks are protesting the new austerity measures claiming solidarity with Spanish protesters. Look at our future my fellow Americans. If we do not control our debt, the banks will assume more direct control over us and force measures that even you socialists will hate.

I feel like things right now are like they were in early '08. Except this time it's not large investment banks that are gonna go down it is nations. The financial crisis was never really solved. The insolvency that existed then in the banks of the world has been transferred to the central banks and sovereigns of the world.

The Greeks should absolutely default, leave the Euro, and go back to the Drachma. They are going to get hard times either way and austerity is going to happen either way. If they default they keep national assets (all government debt is by nature unsecured) experience economic hardship but might recover more quickly. With accepting bailout after bailout, they lose national assets at pennies on the dollar to banks and other vultures and the IMF/ECB/Franco-German banks will take their cut from any recovery.

It really seems like a no-brainer to me. Both roads bring crushing austerity, but default leaves the Greeks with assets and control of their currency to help in the recovery.

If so many countries are in debt/struggling economically at the moment, why can't we just wipe the slate clean and start again? Like ending a game of Monopoly and starting a new one, just hand out the starting money to each country and begin again.


In my simplistic view of the world this makes sense

The irony of those bankers blaming the Greek people just blows my mind. The real culprits were scumbag poloticians and even bigger scumbags at Goldman Sachs. They worked in unision to hide these debts and cooked the books so the cheap money would continue to flow in. Ofcourse they dont get any of the blame they just collected there money and left the Greek people holding the bag.

In the meantime this "crises" gives the govt. the oportunity to sell off state assets at firesale prices. These bankers gobble up the assets. Its a sweet deal everybody wins, well that is everyone but the Greek people. This isnt just happening in Greece either, you'll be seeing alot more of this before its done.