The International Monetary Fund has warned that Greece’s debt crisis risks spinning out of control, threatening to spill over across the region unless action is taken soon to restore confidence.
Consider the secondary effects that concerns over debt default are having on that country's equity markets:
Greek stocks declined for a second day today with the benchmark ASE Index falling 3.9 percent to 1,860.76, leaving it down 15 percent on the year. At 10 percent, Greece’s two-year bonds now yield more than the 10-year debt, indicating investors don’t believe the EU bailout plan will be enough to sustain Greece. Credit-default swaps to insure against a default in the coming year leaped 104 basis points to a record 744.7.
The lesson for American investors is that they should expect the same stock market reaction here when investors in our own government bonds eventually figure out that our social Security and Medicare programs are Ponzis that require more funds than the U.S. taxpayer can mathematically provide.
Just get this over with already!
