Tuesday, April 26, 2011

Daily Austerity Watch: Greece Burns, Debt Ceiling Nears

by Jonathan Berr

24/7 Wall Street

April 25, 2011

Greek Prime Minister George Papandreou is on a quixotic quest — to borrow a metaphor from another cash-strapped European country — to convince the world that his country will not have to restructure its debt. The trouble is that not even the stray dogs in Athens believe him.

In fact, 46 out of 55 economists surveyed by Reuters predicted that Greece will have to restructure its debt in the next two years. The Greek press is reporting that the government is considering a “velvet restructuring” that would include a voluntary agreement to extend repayment terms, according to The Guardian. Maybe creditors will go along with a restructuring because the alternative of a default is pretty horrendous. There is a growing political isolationism in Europe that argues that heavily indebted countries such as Greece, Ireland and Portugal should sink or swim on their own. Regardless, debtors don’t get to make these calls. Creditors do.


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