Is Greece going to set off the long feared next wave of the Great Recession?

I think you are referring to the first loan - not the eventual restructuring.

Thus the parasite that was, along with the former management, one of the principal factors in the companies failure was made immune fron the consequences of its misdeeds.

How tragic it is that the euro system has already, in effect, become a two-tier one and that the bottom tier is occupied by the very countries"Greece, Portugal, Spain, and Ireland"that benefited most from their accession to the European Union. The shady way in which Greece behaved in concealing its debts, and the drunken-sailor manner in which other smaller states managed their budgets, has, of course, offended the Germans. It is openly said in Germany now that it would be better to bring back the deutsche mark than to be bailing out quasi-indigent and thriftless banana republics. Talk of that kind doesn't take long to evoke a biting response: Soon enough, Greek Foreign Minister Theodoros Pangalos was reminding nationalist audiences at home of the wartime German occupation of Greece and the carrying-off of the country's gold reserves. "Don't talk about the war" is a strong unspoken principle of European fraternity, and it didn't require very much strain to produce a major fraying of this etiquette. You can count on this atmosphere getting much worse as second-tier countries are requested by Berlin to haul in their waistlines and as Germans grumble about having to tighten their own belts to subsidize less efficient regimes.

The problem is endlessly reported as one of "bailout" terms and "packages" for "debt relief." These are all euphemisms, and they are also all short-term. The fact is that default has entered the European vocabulary on a national scale and therefore that this First World club has its own Third World to contend with. In any case, the great justification for the European Union was always political and not economic, and if the symbol of the second-order dimension becomes tarnished, then the first ideal will not escape great damage, either.

"PIGS" is the unlovely acronym for the nations"Portugal, Ireland, Greece and Spain"that constitute the shiftless out-group within the in-group. (Italy is sometimes included in the club.) It's very improbable that nations that haven't yet signed up to the euro"Britain and many Scandinavian states among them"will now do so. And that being the case, with the euro just another bill you have to exchange when moving around within Europe"then what becomes of the dream? I wish I could have ignored the croakings of an obscure Austrian fascist, but there's something about European history that makes this seem rash.

But why cant the economy be in the hands of qualified experts instead of short term politicians ? Isnt it the politicisation of these matters that created the Greece debacle ?

But why cant the economy be in the hands of qualified experts instead of short term politicians ? Isnt it the politicisation of these matters that created the Greece debacle ?

this failing model just as its disintegration begins in Europe.

FRANKFURT " Greece’s credit rating was lowered to junk status Tuesday by a leading credit agency, a decision that rocked financial markets and deepened fears that a debt crisis in Europe could spiral out of control.


The ratings agency, Standard & Poor’s, downgraded Greece’s long-term and short-term debt to non-investment status and cautioned that investors who bought Greek bonds faced dwindling odds of getting their money back if Greece defaulted or went through a debt restructuring. The move came shortly after S.&P. reduced Portugal’s credit rating and warned that more downgrades were possible.

The downgrades, announced near the end of trading in Europe, came amid rising political tensions across the Continent that had already punished Greek bonds and sent stock prices down sharply from London to Paris to New York. The Dow Jones industrial average slumped by 213.04 points to close at 10,991.99, a fall of 1.9 percent for the day; major indexes in Western Europe fell by 2.5 percent or more. Investors, worried about shock waves in the broader European economy, also migrated away from the euro and pushed the dollar and Treasury bonds higher. The euro slid to $1.3316 in afternoon trading in New York from $1.3382 late Tuesday.

“This is a signal to the markets that the situation is deteriorating rapidly, and it’s not clear who’s in a position to stop the Greeks from going into a default situation,” said Edward Yardeni, president of Yardeni Research. “That creates a spillover effect into Portugal and Spain and raises the whole sovereign debt issue.”

George wrote:

this failing model just as its disintegration begins in Europe.

I think this is of the order of beliefs, George.

And you know how I hold beliefs in low-esteem..

(ok, we are doomed )

As the European Union and the I.M.F. debate the politics of Greece’s laying off civil servants or persuading its doctors to pay income tax, it is becoming apparent that the international community may need to come up with a much larger sum to backstop not just Greece, but also Portugal and Spain.

“The number would be huge,” said Piero Ghezzi, an economist at Barclays Capital. “Ninety billion euros for Greece, 40 billion for Portugal and 350 billion for Spain " now we are talking real money.”

Mr. Rogoff says that the I.M.F. could commit as much as $200 billion to aid Greece, Portugal and Spain, but acknowledges that sum alone would not be enough.

In fact, analysts at Goldman Sachs suggest that Greece will need 150 billion euros over a three-year period.

What a growing number of investors suggest is really needed is a “shock and awe” figure, enough to convince the markets that peripheral European economies will not be left to fail " something similar to the Bush administration’s decision to provide $700 billion to shore up America’s financial institutions in the peak of the 2008 crisis.

so the Germans and the French now face the choice of coming up with big money to hand over to the rest of Europe, or else let the Euro die..and maybe the EU with it.