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Old 07-24-2011, 10:20 PM   #14
duminyricky

Join Date
Oct 2005
Posts
464
Senior Member
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Well, as the WSJ comments itself :

"These are rough estimates based on an incomplete picture of what’s on the table".


What is getting lost is the political dimension. The countries of the Eurozone have not only effectively created an EMF ( European monetary fund), what is even more important is that they have very much reduced the incentives to speculate on further defaults after Greece. To do so is under the present circumstances a quite risky business for speculators and that is what the markets have ( among other things) responded to.
That Greece would be already defaulted without its EU lifebelt is clear without saying. That is also why the deal amounts to showing the rating agencies the midle finger (that have threatened to officially declare Greece bancrupt if the private sector is involved in debt reduction as is the case now)
We will see how that plays out. But the countries of the Eurozone have made a step forward, have confirmed that market speculation will not destroy the common currency and the Eurozone and have made a huge step towards correcting the construction errors in the common currency zone. While the deal is not perfect it is better than recent quarrels allowed to expect.
No country, nor group of countries, can vote to repeal the laws of economics.

If the numbers don't work for Ireland, Portugal, Spain, and Italy, then investors will lose money investing in their bonds, and other investors will profit from their demise. Trying to demonize those other investors by calling them "speculators" doesn't change the laws of economics any more than voting does.
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