Tuesday, December 8, 2009
"A shakeout in Greek government bonds over the past week underscores recurring concerns over the country's public finances and its banks. ... The European Commission already has singled out Greece as the worst offender with wide budget deficits, and earlier this month ordered the Greek government to present regular progress on cutting red ink. ... The government acknowledged last month that its deficit will hit 12.7% of gross domestic product this year--the biggest in the euro zone and twice the previous forecasts from just two monhs ago. ... 'The concern is that the financial system overall might become overreliant on the central bank,' said Daniele Antonucci, an economist with Morgan Stanley in London. 'The biggest increase in borrowing from the ECB has been in Greece'," Geoffrey Smith at the WSJ, 18 November 2009, link: http://online.wsj.com/article/SB125849696847152687.html.
What's the problem? Isn't Greece's budget deficit comparable to Uncle Sam's? Could the ECB double its balance sheet in 2010? Why is that worse than what Zimbabwe Ben did recently?