Why Greece Fears Are Overblown

Conservative Nicos Anastasiades will face leftwing independent after failing to sec

Those looking for a bit of humor in the European debacle can find it in statements from Jean-Claude Juncker, head of the eurozone finance ministers. Juncker says "I don’t envisage, not even for one second, Greece leaving the euro area. This is nonsense. This is propaganda. We have to respect Greek democracy." Bear in mind this statement comes from the same man who said "When it becomes serious, you have to lie."

The technocratic governments in Italy and Greece are not off to a smooth start judging from the action in the bond market. A quick glance at the 10-Year note in Italy shows the yield is up 25 basis points to 6.70% and the Spanish 10-year note is up 24 basis points, soaring through the 6% mark to 6.09%.Meanwhile, Greek 1-year bonds are trading at a mere 250%. Any bets on when they exceed 300%?

A half-baked editorial on Bloomberg, full of one-sided distortion, warns Greek Voters Need to Look Beyond Syriza’s Dangerous Lies.

By Simon Johnson; for more on related issues, see my new Bloomberg column on the IMF succession.  For more background on the IMF, see Tuesday’s Planet Money Podcast. Greece has no good options. Without question, Greece brought debt problems on itself – this is the consequence of politicians using irresponsible fiscal policy to win elections.

A small dose of reality has set in for a group of European central bankers: Euro Officials Begin to Weigh Greek Exit as Euro Weakens. Greece’s possible exit from the euro moved to the center of Europe’s financial-crisis debate, rattling markets as authorities in Athens struggled to form a government.

AS WE argue in our briefing this week, a Greek exit from the euro zone would not just be chaotic for Greece itself but would also invite questions about the status of Portugal, Ireland and others. So what would policymakers have to do at the moment of a Greek exit to persuade investors and depositors that Greece really was the exception proving the rule of euro unity?

Greek default drama is much like the movie Groundhog Day. If you prefer a quote from Yogi Berra instead, then please consider It's déjà vu all over again. Every day for weeks we have heard a "deal is close". Moreover, on multiple occasions at the end of the week we were informed Greece "had" to reach agreement over the weekend or Greece would default. Let's hope this time someone really means it.