Greece to “hit bottom”? Today’s bond trading strongly suggests that the EU is going to let Greece fail to save the Euro. As long as an alcoholic is in denial that there is a problem, they don’t take the steps to solve the problem.
Greek’s debt is owed by Greece, but is denominated in Euros. The interest rate on Greek debt increased while the other Euro based bonds did not. Since they’re all Euro based, difference in rates are entirely an indicator of default risk. It’s sinking in to the European public that the Trillion dollar rescue plan is a wealth transfer to the banks that were stupid or greedy enough to lend money to a country everyone knew was on the path to self-destruction. Somtimes you have to cut a person free and risk death to shock them back into making the changes to fix their problems.
