Adding more confusion to the Greek discussion, *EU’S REHN SAYS POSSIBLE GREEK DEFAULT NOT PLAUSIBLE SCENARIO. I’m not sure what he thinks the alternative is at this point.

Category: MacroNotes

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5 Responses to “Rehn doesn’t want Greek bankruptcy. When will this end?”

  1. Jo says:

    Rehn will never work again after this – what do we think he’s gonna say.

    More importantly, do we care anymore?

    Seems not.

  2. Gaucho says:

    the alternative is the Germans pay the bill as soon as other people in europe start reminding the Germans of their shameful past and the message that the Germans are “doing” it again, this time not with guns but with suffocating policies. with unemployment at over 20%, firing govt employees and cutting wages and pensions, the social unrest will be unsustainable. do you think the Greek will blame themselves for their situation? it´s always somebody else´s fault. In Argentina, they blamed the IMF and the US. the Greeks will blame the Germans. it´s a shame, but that´s the way it is.

  3. endorendil says:

    It is no different from the Fed voicing confidence in US debt. If they do anything else, they simply make it come true. That does not mean that Greece or the US (which has a much higher federal debt to federal income ratio) can avoid default.

    Ok fine, in principle default can be postponed for several decades, as Japan shows. You just can’t ever go back to a normal business cycle, and you can never actually recover. But you probably need to have almost all that debt held domestically. So in the end, Greece or the US are unlikely to be able to follow Japan’s example. They will both default. Greece will quickly, because it is too small. The US can hold out longer (because so much of the financial system is tied up in its debt), but in the end its choice is permanent recession or default.

  4. tweetie_2011 says:

    The quote I read on the net is slightly different:
    “European Union Monetary Affairs Commissioner Olli Rehn said Thursday that the 16-member eurozone bloc will not abandon Greece or allow the crisis-stricken nation to default UNCONTROLLABLY”.

    So first preparations and then default.

  5. klhoughton says:

    Jo is an optimist.

    I don’t see anything wrong with Rehn’s statement: “POSSIBLE GREEK DEFAULT NOT PLAUSIBLE SCENARIO” is unarguable.

    The legitimately plausible scenarios are PROBABLE and INEVITABLE, not in that order.