Monday, April 12, 2010

The Greek Bailout Package Just Gives "Smart Money" Time to Get Out

I'm not sure how "smart" money can be if it is holding Greek debt in the first place, but Peter Boone and Simon Johnson are generally correct when they write on the Greek bailout:
Often assistance packages of this nature just help “smart money” to get out ahead of a default. This could be the case here; 40-45 billion euros total money could last roughly one year. Both Russia and Argentina got large packages in the late 1990s but never regained access to private markets, so eventually everything fell apart.

Sunday’s package should make it possible for Greece to borrow short-term but it takes courage to lend for 5 or 10 years to the Greeks unless there is much more fundamental change.
The Portuguese are likely next in line for problems in the market, but the biggie remains Spain in July.

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