The Europeans have come up with a solution to the Euro crisis: threaten S&P and Moody’s. After all, if no one is allowed to point out that the emperor has no clothes, who’s going to notice?
Meanwhile, everyone with any sense is dumping Greek and now Portuguese debt as fast as they can. Hint to traders: now is the time to dump all of your Icelandic, Irish, Italian, and Spanish bonds, assuming you can find anyone foolish enough to buy them. Fools are quickly becoming harder to find. If someone offered me that junk at $0.10 on the dollar, I’d flee screaming.
To give you an idea of the scale of the problem, Greece, which is about the size and population of Ohio, is now close to $600 billion in debt. But the situation is actually much worse than those figures indicate. Ohio has a robust economy. Greece has no economy to speak of, and no prospect of developing one. Think of Greece as Ohio with a Soviet-style economy and you won’t be far off the mark. And Portugal, Iceland, Ireland, Italy, and Spain aren’t much better.
People are now talking about “partial default” and “temporary default”. There’s nothing partial or temporary about it. We’re looking at default default. One morning in the not-too-distant future, we’ll awaken to news that the dominoes are toppling and the Euro has gone down the tubes. Count on it.
