The European Central Bank is not permitted to provide direct assistance. Greece needs help from individual countries. Its quite possible that France and Germany will let Greece default. Those two countries, however, are the number one and two top foreign holders of Greek debt with $75 and $43 billion respectively, so this seems unlikely.
The situation is very complicated. If bigger countries bailout these smaller countries, who will bail them out when they need help as by helping the smaller countries they are weakening their own health? 7 states in USA are bankrupt, the FDIC is bankrupt and the UK has a similar sorry state.
Who is going to bailout USA?
In the short term, If Germany decides not to guarantee Greek debt, markets will probably crash. Positive news might cause a relief rally.
So expect volatility in the days ahead.
Thursday, February 11, 2010
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1 comment:
Isnt China effectively bailing the US out? By becoming the largest US bond holder they are funding the US deficit to a large extent
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