From Bloomberg:
As European Union leaders haggle over their second plan to stem the financial crisis, traders are betting Greece won’t be able to pay its debts.
Greek 10-year bond yields rose to a record this week and it costs more than ever to insure against a default, even though the nation received a 110 billion euro ($153 billion) bailout from the EU and the International Monetary Fund last year. Two- year yields exceed 10-year levels, suggesting a restructuring may come before the three-year aid program expires…
My bet is that those who bought Greek bonds at the time of the bail out are now looking for the exits – my personal feeling about that is: serves ’em right. What kind of idiot would buy a Greek bond when demographics ensure that the Greek debt cannot ever be paid off? Greece’s population is going in to terminal decline – there will be, year after year, fewer and fewer Greeks around earning any income with which to pay off bonded debt.
It is to be hoped that Greece will default – and swiftly be followed by the rest of the PIIGS (Portugal, Ireland, Italy, Greece and Spain). The debt cannot be repaid – profligate governments, short-sighted and/or lazy populations, ossified socialism and declining birth rates ensure that any money lent to such nations is so much cash down the drain. The European model has failed – even thus-far strong Germany still has the massive, structural problem of too much welfare and too few children being born. They are weathering the storm better than the rest of Europe because they have been far more sensible…but a people not reproducing itself while providing lavish welfare is doomed.
Default is the only way out of the economic mess – it will clear the decks and at least allow economic life to resume. They’ll be poorer, but perhaps a bit wiser. And with the loss of the European dream – socialism plus hedonism – perhaps the European people will also recover their sanity. Perhaps they’ll start working, saving and, who knows?, maybe even going back to Church and experiencing faith…and having children. Anything is better than just continuing on, hoping that one more bout of fiat money and one more chop at the tree or morality will do the trick…
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