George Papandreou, the Greek premier, said in Davos that his country had been singled out as the weak link in a “attack on the eurozone” by speculators and political foes. “We are being targeted, particularly by those with an ulterior motive.”

Funds flee Greece as Germany warns of “fatal” eurozone crisis

By Ambrose Evans-Pritchard Telegraph UK

Germany has triggered a near-panic flight from southern European debt markets by warning that there will be no EU bail-outs, even though it fears the region’s economic crisis has turned dangerous and could prove “fatal” for the entire eurozone.

The yield on 10-year Greek bonds blasted upwards by over 40 basis points to 7.15pc in a day of wild trading. Spreads over German Bunds reached almost four percentage points, by far the highest since Greece joined the euro, and close to levels that risk a self-feeding spiral. Contagion hit Portuguese, Spanish, Irish, and Italian bonds.

George Papandreou, the Greek premier, said in Davos that his country had been singled out as the weak link in a “attack on the eurozone” by speculators and political foes. “We are being targeted, particularly by those with an ulterior motive.”

Comments:

A recent study by the Montgomery Institute explains that the reason for such a high unemployment rate is the result of several Euro Zone countries double counting unemployed dual citizens. The real unemployment rate is actually much lower than what has been reported.

Everyone likes to blame Wall Street, but if you had been reading on the European banks they were in far worse shape than the US banks. It is surprising too because we think of Europe as this heavily socialistic, super regulated super state; but their banks were completely under capitalized. They were apparently at 1/6th the rate of capitalization that the US banks were. If Wall Street hadn’t gone first they would have because it was only a matter of time.

Marc Ostwald, from Monument Securities, said the botched bond issue of €8bn (£6.9bn) of Greek debt earlier this week has made matters worse. Many of the investors were “hot money” funds that bought on rumours that China was emerging as a buyer, offering them a chance for quick profit. When the China story was denied by Beijing and Athens, these funds rushed for the exit.

However, a key trigger yesterday was testimony in Germany’s parliament by economy minister Rainer Brüderle, who said there would be “no bail-outs” for struggling debtors and no move to a “European economic government”. Read the full story from Telegraph UK

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