Remember the dance called the Twist? Basically the twist is done swiveling around one’s hips, with feet pointing one way and shoulders the other. Watching the Euro zone action has been like watching a twist competition. One part of the Euro-body is moving towards a semi solution that the markets seem to like one day, while another part moves towards newly dismaying outcomes. “Hard” countries such as Austria are having trouble borrowing – a new development – and Spain is about to hit the magic 7% rate for government debt that signifies the beginning of the march towards a bailout. On the other hand, Greece and Italy have new governments, which the markets read as a positive sign.
New hopes rest with the European Central Bank, as investors and politicians have decided that it’s up to the ECB to save Europe by buying massive quantities of troubled country debt. But the ECB has other ideas, and those entail sticking to its edict to control inflation. We’ll see how long that lasts.
In the meantime, here are a couple of facts to chew on about Greece:
- The first recorded default dates to the fourth century BC, when ten Greek municipalities in the Attic Maritime Association defaulted on loans from the Delos Temple.
- In the last two hundred years, Greek has defaulted 51% of the time on its sovereign debt.
Makes you wonder why anyone would ever lend Greece money, eh?