by Raj Udeshi
Seeking Alpha
January 6, 2011
Greek PM George Papandreou said this morning that the new debt-reduction schemes are working. The combination of Greece’s structural reforms and some serious EU/IMF financial bailouts means Greece should be in a good position to repay its private debt-holders.
Speaking at a conference in Paris, he was on a PR campaign really, not only to get people to trust Greece again, but also to push for support for the idea of Euro Zone bonds. These would be sovereign debt instruments that would be common to the Euro Zone, and would let the troubled PIIGS countries (e.g. Greece) borrow money more cheaply than if it used its own government bonds. This isn’t the greatest idea, it's just entangling Europe further. All these fissures have erupted within 10 years of the creation of the Euro, and I think the same will happen with Euro Zone bonds. Such bonds would encourage the same sort of underhanded and inept dealings that led to the current level of excessive debt in Greece. Also, Germany and France will have increased borrowing costs, again the losers.
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