Ratings agencies have today been hammering the Greek credit rating to one notch above Pakistan. Wee George Osborne has been saying we won't be contributing to this next new package. I wager he will talk differently at the coming finance minister's meeting in Brussels.
Greek 10 year bonds now yield almost 16%. That is unsustainable and makes a debt default or in Eurospeak rescheduling inevitable. Portuguese ECB bank borrowings jumped 23% in April. Its only the ECB that will lend them money against their bonds currently yielding 10% at 10 year maturity. The Irish are pressing to have the interest rate they are having to pay reduced. This is a huge problem for the Eurozone to keep their bail out package terms aligned.
Spain, currently yielding 5.3% at 10 year maturity will be watching very closely what terms are offered to the other PIGS and will demand similar treatment themselves. Still the Eurocrats claim leaving the Euro by Greece or anyone else is unthinkable/impossible! Staying in for Greece and Portugal will eventual cause a popular uprising in which politicians and EU officials could well be attacked so maybe leaving is not so impossible after all.
A lot of these leave the Euro stories are emanating from Germany piling domestic pressure on Merkel. A report by German magazine Der Spiegel on Friday alleging that Greece was considering leaving the euro zone drew indignant denials from Athens and EU ministers.
Profligate Greece or super efficient Germany will have to leave the Euro. It can't survive with both countries using the same currency.
Its a pity Farage's EUKIP is institutionally incapable of capitalising on this EU mess.
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