By Stephen McPhie, CA
Partner, RSD Solutions Inc.
Pete Townshend (of the band The Who fame) has done well out of the TV show CSI’s title songs. He could carry on in that vein with theme tunes for sovereign debt crises. Who’s Next, Who Came First, Who’s Last, …. and some others.
Seems that Greece is everyone’s favourite (sic) Who Came First candidate. When will a Greek default become official? Or how long can a fudge be maintained so that politicians can fool themselves into believing there will be no default? The market sees default with Greek debt yields climbing towards 20%. Nobody with some form of conventional content inside his or her head really believes that Greece will ever be able to repay its current debt load and most believe that some sort of restructuring is inevitable. The only question is when.
It seems that here will certainly be another bail out and possibly one after that. However, sooner or later reality must and will be faced.
And if Greece defaults, who'a next? Portugal? Ireland? Spain? Italy? And if Greek debt gets restructured and partly forgiven, will there be a line of countries wanting the same treatment?
And what does this mean for the Euro and how isolated would the effect be?
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