In the sovereign stare-down between Athens and Brussels, it looks like we have a winner:
IN Brussels policy circles, the question asked about a bailout of Greece used to be: are European Union governments willing to do this? Now, I can report, the question among top EU officials has changed to: how do we do this?
So there you have it. Less than 48 hours after the Financial Times ran a story about the Greeks trying to get the Chinese to buy up to €25bn of their sovereign debt (Greece denied this later on), Brussels is caving in. Any time a government is going on an investor road show to convince investors to buy their debt, you’ve got a problem. The Chinese weren’t interested, and you can see what the reaction was, courtesy of FT Alphaville:
And why would the Chinese buy them? Judging by their GDP growth (or lack thereof), you get a clear picture of how much faster debt is growing than GDP:
But that’s not the market’s issue anymore.
It’s Brussels’ and Frankfurt’s problem now. And the only outcome I can think of is Euro weakness in spades. Because this will get repeated with the rest of the PIIGS and will debase the Euro each time.