Reuters is now carrying a story saying that German government sources are saying that reports about a decision on aid for Greece are “unfounded.”
I’d like to note that this story and stories from an hour ago, which reported a decision in principle by European governments to help Greece and about the German government preparing a plan to help Greece, are not in fact necessarily contradictory.
The most likely explanation is that plans are under discussion but no decision has been made on the specifics of any bailout plan.
Do I need to say that the Reuters story sent stocks into reverse?
Stay tuned. Aren’t rumors wonderful?
Stop worrying about Greece, and even Portugal and Ireland combined. The big headache is Spain and the euro’s future. Please read:
http://krugman.blogs.nytimes.com/2010/02/08/euro-perspective/
georic,
Isn’t that like giving an alcoholic a drink to save his liver? At some point, people (whether they are Greek or just bank executives) need to learn that excessive debt will burn them. Giving them more only teaches them that you’ll happily pay for their mistakes. Based on the strikes going on in Greece, I’d say they haven’t learned that lesson yet.
EdMcGon, I am not an economist. But, if they were to go under, it would probably entail lot of bankruptcies among banks etc. It would bring down the Euro and endanger the whole of Europe, not to mention Spain, Ireland…as I feel we are not in great shape.
Don’t forget, also, that Greece is where our culture and civilization originated.
Better prevent than try to stop a tsunami in progress.
georic,
Are you saying a Greek bailout is a good idea? If so, on what do you base that?
EdMc, principles are fine.
You might have some spare time to read a book which I loved, Lords of Finance, all about the Great Depression.
Particularly interesting is that the then Governor of the Bank of England, almost ruined his country, and the Western world, because he would not budge from principles which are now considered as wrong.
By the way, they say that it took something like 6 years to get back to “normal” employment: some lagging indicator!
mopama,
Thanks for bringing up the bailout aspect of this. Irresponsibility by countries as well as companies should NOT lead to a bailout. Failure IS an option, and a very valid one. Without failure, nothing changes, because the people who fail will never change the behaviors that caused the failure in the first place.
To the best of my knowledge, which is very limited, it looks like EU Members are realizing that they could bail out a big Company but not a member Country if needed. They are discussing how to make those changes. It looks like that the creation of new supranational entity will manage the other EU Members borrowed liquidity tided with strict policies to be followed by the Country in need.
Amen to that!
EdMc: I think the markets will start to wory even before the ink is dry. If Germany bails out Greece, why not Portugal or … As precedents go this would be pretty terrible.
Jim,
Keep in mind, that even an aid plan for Greece will not necessarily be good for the European markets overall. Any aid plan will be of the “rob Peter to pay Paul” variety, which won’t solve the underlying problems in Greece, and will actually create a problem somewhere else in the EU.