Seeking Alpha
June 23, 2011
With respect to the Greek sovereign debt situation, two statements reported Thursday morning stand out. First, Simon Tilford, chief economist at the Center for European Reform in London is quoted as saying: “The Greeks have been told to accept more of the medicine that has already failed to treat the disease.” The consequence of this is that Greece has already entered a “death trap.”
The other statement deals with how the European banks will deal with some of the cost of a second bailout of Greece: “The trick will be for the private sector to take losses on Greek bonds, without Greece being declared in default.”
The problem: “If the banks are forced to accept losses, ratings companies likely will declare a default. Even if the banks act voluntarily, Greece could still be considered in default on some of its debts.”
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