New York Times
July 9, 2011
Without outside help, Greece is probably insolvent right now. In evaluating the country’s prospects, it’s worth asking what it would take for Greece to pay all of its bills and what kind of damage we might expect along the way.

To put matters in perspective, the Greek economy is less than 2 percent of the overall economy of the European Union. That seems a manageable size for an aid-based solution; estimates in the neighborhood of 200 billion euros in aid (close to $300 billion) are common. The real difficulty is in maintaining global financial confidence while the losses are distributed in an orderly manner.
That isn’t as easy as it may sound. About 30 percent of the Greek debt is held by Greek sources, including the banks and the Greek government, in its social security funds. A default on the latter assets would mean that the Greek government was defaulting on itself. It would still have to come up with much of that money or face a total political and economic meltdown.
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