April 19, 2011
These are the adjectives Bank of Greece (BoG) governor George Provopoulos used yesterday to describe what has quite evidently become unavoidable. As we noted here last week, the 'debt restructuring' (euphemism for default) of Greece's sovereign debt has lately moved from being 'discussed behind closed doors' to being openly discussed, even if some in the eurocracy continue to cling to the notion that it must be avoided at all costs.
The fact that the BoG governor speaks out against a default is probably a function of the fact that the national central banks are all part of the 'euro-system' these days, and hence represent the long arms of the ECB. The ECB in turn remains dead set against anything that could expose the banking system and/or its own balance sheet to potentially grievous losses. More grievous, that is, than they already are. On Monday Greece's two year note yield vaulted above 20% for the first time, to 20.34% in a huge 1.832% single day move.
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