Secretary General of OECD: Greek Contagion Already "Like Ebola"
Since Greece’s 2-year debt hit a new record-high yield of 26 percent stock markets around the world have been struggling. Likewise, the euro, now at about $1.3213, recently had its worse one-day decline against the dollar in about 12 months.
How bad is it really? According to Bloomberg:
“The yield on Greece’s two-year note has risen almost fivefold this month on concern euro-region support for the country will come too late to prevent a default. The yield soared almost 600 basis points at one stage today. Ireland’s jumped 90 basis points to 4.64 percent, Portugal’s increased 93 basis points to 6.24 percent and Spain’s rose 20 basis points to 2.26 percent.
“Credit-default swaps on Greece, Portugal and Spain advanced to records, according to CMA DataVision. Contracts on Greece climbed 42 basis points to 865.5, Portugal jumped 20 to 406 and Spain increased 2 basis points to 211, CMA prices show.
“’It’s not a question of the danger of contagion. Contagion has already happened,’ Angel Gurria, secretary general for the Organization for Economic Cooperation and Development [OECD], said in a Bloomberg television interview today in Berlin. ‘This is like Ebola. When you realize you have it you have to cut your leg off in order to survive.’”
It’s never been just Greece on the hot seat, but it is becoming increasingly clear that the situation no longer threatens to deteriorate the rest of the eurozone, it already is. As described above, Ireland, Portugal, and Spain continue to get punished for the error of Greek ways in addition, of course, to their own.
They are also being punished for the inability of the European Union to restore financial order… before it’s time to “cut [an EU] leg off in order to survive.” When compared to the option of this ongoing and messy sovereign bailout, a state amputation could be just what the doctor ordered.
The full details are available in Bloomberg’s coverage of how stocks drop as Greek bonds slump and the sovereign-debt crisis spreads.