Quick post – just saw this article on BBC that relates to my post “Unease” from June ‘11.
Greece prime minister makes plea for German support
Greek Prime Minister George Papandreou has delivered an impassioned plea to German business leaders to help his country out of its current debt crisis.
Mr Papandreou said German funding would not be an investment in past failures, but in future successes.
He also hailed Greece's "superhuman" efforts to cut its debt levels.
The prime minister is in Germany for talks with German Chancellor Angela Merkel to discuss his country's progress in cutting its budget deficit.
Will they help? My initial thoughts in June ‘11 was a resounding “NO!”. This will be fun to follow, and I believe this will be a key factor in the markets. My thought process is that the conclusion of the German government (which by the way, is more conservative than the US government) will be similar to what the US government did with Lehman: if they help Greece, they’ll have to help the other countries in trouble, e.g. Italy, Ireland, Spain. In two words: Moral Hazard.
On the other hand, do recall what happened to the markets after Lehman failed.
What do you think? Do people learn from history (especially history from only 3 years ago)?
