On Friday, Greece admitted it could no longer pay down its massive debts. Athens is seeking the emergency loans before it must make additional payments on its debt next month.
The cost of insuring Greek government debt against default recently surpassed Ukraine to become the most expensive in Europe. On Monday, the spread hit another unwelcome milestone by widening at one point beyond 700 basis points (meaning it would cost $700,000 a year for five years to insure $10 million of government debt against default), making Greece more risky than Pakistan, noted Timothy Ash of Royal Bank of Scotland, in a research note. While that may seem extreme, Pakistan does have some advantages, Ash said in a tongue-in-cheek note to clients, including a debt-to-GDP ratio of 55%, roughly half that of Greece, and a 2009 budget defict of 4% of GDP, less than a third of Greece’s level. Pakistan managed to grow by around 3% in 2009, while Greece’s economy shrank by around 2% and shows little prospect for growth any time soon.
Picture: German magazine Focus showed the famous armless classical statue, now at the Louvre, raising her middle finger under the headline “Cheats in the euro family” – suggesting that Greece had deliberately misled EU peers to cheat its way into the eurozone.