Spain feels debt heat, Greece way off bailout terms

[dipsydoodle]

Source: Reuters

(Reuters) - Spain paid the second highest yield on short-term debt since the birth of the euro at an auction on Tuesday, and EU officials said Greece had little hope of meeting the terms of its bailout, casting fresh doubt on its future in the euro zone.

>

It has become the recent focus for investors, but Greece - where the sovereign debt crisis began - remains a powder keg. If Athens were to default or exit the euro zone, the knock-on effects could push Spain and even Italy over the edge.

With inspectors from the EU, European Central Bank and International Monetary Fund returning to Greece to decide whether to keep it hooked up to a 130-billion-euro lifeline or let it go bust, three EU officials said they were likely to conclude Athens cannot repay what it owes, making a further debt restructuring necessary.

This time, the European Central Bank and euro zone governments would likely have to take a hit on some of the estimated 200 billion euros ($240 billion) of Greek government debt they own if Athens is to be put back on a sustainable footing.

Read more: http://uk.reuters.com/article/2012/07/25/uk-eurozone-idUKBRE86N0IC20120725

---

Ticking off by Troika heightens fears of Greek exit from euro.

Financial market fears over a possible Greek exit from the single currency were fanned on Tuesday by a gloomy assessment of the country's economic plight from international debt inspectors and evidence of a growing rift between Athens and Berlin.

Officials from the so-called troika – the IMF, the European Union and the European Central Bank – warned that Greece had failed to keep to the deficit reduction plan agreed earlier this year.

Arriving in Athens for talks with the coalition government, one official was quoted as saying: "Greece is hugely off track. The debt-sustainability analysis will be pretty terrible."

Another official pointed to the latest growth estimates from Athens, which show the economy contracting by 7% this year rather than the 5% previously forecast, meaning that the debt burden is only increasing in relation to GDP.

http://www.guardian.co.uk/business/2012/jul/24/greek-exit-from-euro-fears-heighten

[Javaman]

1. I read last night that Spains interest on their bonds was 7.6%

that's game over.

It will be very interesting to see how the EU and Germany spin this.

[4th law of robotics]

2. I think Greece may prove to be the first first-world nation

to revert to third world status without suffering through some horrific defeat in a war.

[cstanleytech]

3. They should just take the hit then I guess *shrug*

Like many investors who invest know there is always a chance you could lose the money and imo the loss of the money is minor to the chaos a complete breakup of the EU would cause.
The other option I suppose is that they redo the repayment schedule and delay it by 20 - 30 years which should allow those countries time enough to rebuild their economies.