Thirteen years after the advent of the European common currency, the Eurozone has seen its first credit default by a member. The long-term and short-term debt of Greece was downgraded to “selective default” by Standard & Poor's Ratings Services today.
Angela Merkel warned the German parliament that putting Greece in a position where it must leave the euro would have “incalculable” consequences, prior to her vote today on a second Greek rescue package alongside a restructuring of Athens’ sovereign debt.
American fund managers, specifically those who successfully called the bottom of their home credit market in 2008, are starting to put money back into Europe.
For the most part, Australia has skated through the global financial crisis unscathed, with its banks propped up by a strong resource sector. Until recently, the country has been a sort of antipodean Canada.
Greece has narrowly escaped the possibility of bankruptcy this spring, when it faces the repayment of €14.5 billion of debt. The reprieve comes from an agreement on a new bailout package reached Tuesday.
A split has emerged in the German government over whether to grant Greece a second bail-out package.
The eurozone took two steps back in the final quarter of 2011, with five members sliding back into recession.
In the next week, the Greek government plans to present its debt relief proposal to bondholders, and if European leaders have their way, it will be the last proposal for a long time.
The Greek government finally reached a deal on spending cuts, paving the way for a €130 billion bailout from the ECB. But the country is still broke.
European governments are not the only players struggling with debt. With European banks reluctant to lend to businesses in need, a majority of the region’s companies are also scrambling to pay their bills.