Greece is politically and economically bankrupt. Unemployment is 25% and destined to get much worse with the latest round of austerity measures.
Worse yet, Greece is still encumbered by massive layers of bureaucracy that makes it difficult to get anything done.
Yesterday, in a massive breach of security, Greek citizens stormed the defense ministry. This has German chancellor Angela Merkel willing to take a chance on a trip to Greece next week.
An internal Bundesbank document discovered by Der Spiegel states, in opposition to the comments by Germany's electioneering Chancellor Merkel, that Europe "will certainly agree to a new aid program for Greece" by early 2014 at the latest. As Reuters reports, Frau Merkel has repeatedly played down suggestions Greece will require more aid (or debt relief) in light of German voters major skepticism over moar of their money being flushed into the Mediterranean.
The world continues to believe that Europe’s woes are solved. The EU Crisis went into overdrive in the spring of 2012 when the Spanish banking system as a whole nearly collapsed. Having pumped €1 trillion into EU banks via its LTRO 1 and LTRO 2 programs in December 2011 and February 2012, the European Central Bank found itself facing a problem far greater than Greece (Spain’s banking system is over €3.7 trillion assets in size, compared to Greece’s €338 billion) and on the verge of losing control of the entire system.
Anyone who wants to get an inside look at both the European banking system and the politicians in charge of fixing it need to only look at Spain’s Bankia. Bankia was formed in December 2010 by merging seven totally bankrupt Spanish cajas (regional banks that were unregulated). The bank was heralded as a success story and an indication that European Governments could manage the risks in their banking systems.
Spain moves closer to the credit junk pile as Fitch slashes the country's rating by three notches and warns the likely cost of restructuring and recapitalising the Spanish banking sector could reach €100bn.