The power of III

Summum ius summa iniuria--More law, less justice

13 June 2011

Euro crisis deepens; Greece credit rating cut again

Greece is screwed, and the Greek taxpayers are going to suffer greatly.  Why do we care? Issues of sovereignty of the Greek people, debt obligations with no way of paying for the obligations parallel the situation in the United States. 

Greece may be a telegraphed small version of what will happen here. 

The low income earners are used to government handouts;  they are really upset over government austerity measures and their entitlements being cut/threatened.  Their parallel in the US is the union people such as those seen in action in Wisconsin during the winter, and the SEIU.

Two relevant zerohedge posts today:

And there goes the EUR again. Furthermore, "Outlook Negative" on CCC means CC is next, then C, and lastly, D.

  • In our view Greece is increasingly likely to restructure its debt in a manner that, under the conditions of any package of additional funding provided by Greece's official creditors, would result in one or more defaults under our criteria.
  • We are also of the view that risks for the implementation of Greece's EU/IMF borrowing program are rising, given Greece's increased financing needs and ongoing internal political disagreements surrounding the policy conditions required by Greece's partners.
  • Accordingly, we have lowered Greece's long-term rating to 'CCC', while affirming its 'C' short-term rating and removing the ratings from CreditWatch. The outlook is negative.
  • The 'AAA' transfer and convertibility assessment for Greece, which applies to all members of the eurozone, is unchanged.
  • Our recovery rating of '4' for Greece also remains unchanged, indicating an estimated 30%-50% recovery of principal by bondholders. We have revised our recovery rating base case default scenario for Greece to incorporate two hypothetical restructurings: an extension of maturities, followed by principal "haircuts".

Last night's major anti-IMF rally at Athens Syntagma square was one of the largest peaceful protests in Greece to date. There was one notable highlight: the dubious distinction of Greece's George Papaconstantinou as Goldman's employee of the decade (speaking of Goldman, whatever happened to that Fed investigation into Goldman's use of "derivative arrangements" with Greece. Reminder: "We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece" Bernanke said in testimony before the Senate Banking Committee). Below is a photographic gallery of last night's events courtesy of


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