Sunday, February 5, 2012

Greece's Tragedy:Is This the Final Act?

After seven months of discussions and missed deadlines by Greece and its creditors, a resolution, perhaps a default, may be close at hand. Yesterday, Greek Finance Minister Evangelos Venizelos said “There are still open issues” and "the moment is very crucial. Everything should be concluded by tomorrow night. We are on a knife-edge”. As Greece seeks significant forgiveness on its sovereign debt obligations, as well as additional funding from Eurozone participants, it has been resistant to demands for lowering its costs, eliminating holiday bonuses and reducing its minimum wage.

At this point, the protracted negotiations seems less about Greece and more about avoiding the potential shock wave a Greek default may unleash – resolution of this uncertainty may occur within days. Against this backdrop, economist Kenneth Rogoff shared the following comment in yesterday’s  Financial Times related to deleveraging and controlling the debt crisis:  “the U.S . still has a few years to go – and the EU could have a decade.”

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