I wish that I had an "aha moment" to share with you today, but
instead all I have is an "ack moment" to share. As I was analyzing all
of the info coming out of Europe in recent days, I came to the following
realization: "Ack! They are actually going to let Greece default!" The
only question is whether it is going to be an orderly default or a
disorderly default. Of course the EU (led by Germany) could save Greece
financially if it wanted to. But Germany has decided against that
course of action. Many in the German government are sick and tired of
pouring bailouts into Greece and then watching Greek politicians fail to
fully implement the austerity measures that were agreed upon. At this
point a lot of German politicians are talking as if a Greek default is a
foregone conclusion. For example, Michael Fuchs, the deputy leader of
Angela Merkel's political party, recently made the following statement
"I don't think that Greece, in its current condition, can be saved." But that is not entirely accurate. Greece could be saved, but the
Germans don't want to make the deep financial sacrifices necessary to
save Greece. So instead they are going to let Greece default.
Many prominent voices in the financial world that have been watching
all of this play out are now openly declaring the Greece is about to
default. Moritz Kraemer, the head of S&P's European sovereign
ratings unit, made the following statement on Bloomberg Television on Monday:
"Greece will default very shortly. Whether there will be a solution at
the end of the current rocky negotiations I cannot say."
You might want to go back and read that again.