Or, call me at: ZeroHedge points out exactly why it’s a sure deal Greece will default sooner rather than later. European leaders have been trying to improve the solvency picture for Greece (whether they’ve been successful is certainly up for debate), but there’s a side of this mess they can’t possibly solve – at least not any time soon.
As Reinhart and Rogoff point out in their book This Time is Different, sovereign default is not so much a fiscal decision as it is a political decision. In other words, nations tend to default primarily because it’s the politically expedient thing to.
Paying more than 5%? Stop throwing money away! Click for a free rate quote.
Unless European policymakers can do something to fix the pain the debt crisis has caused for individual Greek citizens and families, there’s no possible way they can prevent a default. Once the debt crisis reaches the point where staying the current course is politically untenable, Greece’s leaders will end this. And from the way things are looking over in Greece right now, that day may not be far off. From ekathimerini.com, via ZeroHedge.com (emphasis added):
About 160,000 jobs will be lost this year in the commerce sector, according to the National Confederation of Greek Commerce (ESEE) as the constant decline in disposable income has led to a sharp drop in turnover and a steep rise in the number of enterprises shutting down.
The jobs to be lost concern 60,000 employers and 100,000 employees in the sector, ESEE expects. Given the data for a 6.2 percent fall in household consumption in 2011 and the Eurostat forecast for a further decline by 4.3 percent this year, ESEE warns that soon Greece will be in a condition of absolute poverty.
With 60,000 enterprises having shut down since the start of the crisis to date, their number is set to double by the end of this year, ESEE estimates.
ZeroHedge calculates that the loss of 160,000 jobs is a 4% reduction in the total number of jobs available – and this is in just the commerce sector of the economy. What’s happening in other sectors?
As ZeroHedge writes, Greece’s debt situation is “having a direct, immediate and increasingly more dire impact on virtually every aspect of the economy”. In other words, Greek citizens are taking a beating over this debt crisis. This can only go on so long before Greek leaders, under pressure from their constituents, decide that enough is enough.
Paying more than 5%? Stop throwing money away! Click for a free rate quote.
