Sunday 4 December 2016

Greek patient looks unlikely to survive as sickly euro weakens

Andreas Whittam Smith

Published 15/09/2011 | 05:00

A Greek debt default is close. It could come next week, or very soon anyway. Think of Greece as being in intensive care. You enter the eurozone hospital and go up to the ward where Greece is stretched out in agony. You peer through tubes and pumps at the screens recording the patient's progress. What do you find?

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That it could hardly be worse. The returns that investors demand for owning Greek debt have risen to such astronomical levels that the line goes off the scale. Bonds that are due to be repaid next March are priced at half their official value. This is like looking at a thermometer where the mercury has shot up to the top.

But more important are the dials that record the performance of the Greek economy. It is shrinking at 7pc per annum, making it ever less likely that the country can meet the promises it made to secure bailout funds. Greece is rapidly getting weaker and government revenues are shrinking.

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