For now, the most interesting aspect of the Greek bailout has been President Obama’s audacious lobbying in favor of it. He has become deeply involved in what is essentially an internal matter of the EU – demanding bailouts from Germany and lecturing Greece on fiscal responsibility. Aside from a penchant for irony, the President of the most indebted government on Earth is likely motivated by fear of a real-life sovereign default making headlines. By encouraging Europe to bail out holders of Greek and Portuguese debt, Obama hopes our creditors will sleep soundly as well.
Had Greece been allowed to restructure, bondholders would have been forced to absorb real losses from a developed country for the first time in recent memory. That would have accelerated the current debate on sovereign debt, and led some investors to reevaluate all of their holdings. The last thing Washington wants is for holders of Treasuries to start taking a critical eye to its balance sheet. Under such scrutiny, global creditors might correctly conclude that it’s all Greek to them, and rerate our debt accordingly.
Related: ProShares UltraShort 20+ Year Trea (ETF) (Public, NYSE:TBT) and iShares Lehman 20+ Year Treas.Bond (ETF) (Public, NYSE:TLT)
Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.
- Gold: The Rally Will Gather Momentum As The Year Progresses
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- What Is Full Employment To Janet Yellen?
- Momentum Stocks Are Having Trouble
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- Video: The Bullish Case For Gold
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- The Problems That I See For Europe
- European Market Update
- Getting Back To The Principles This Country Was Fo...
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- The Economic Situation In The US
- What Is Surprising Is That Gold Is Still As Low As...
- How an Economy Grows and Why It Crashes: Editorial...
- Currencies Debasement
- Why Is President Obama So Worried About Greece
- America Is On The Verge Of An Economic Catastrophe...
- The Euro Remains More Reliable Than The Dollar
- A Short-Term Rally In The Euro Should Ensue – Espe...
- Many Are Mistaking This Euro Weakness For Dollar S...
- How an Economy Grows and Why It Crashes (Video)
- Federal Reserve, Interest Rates And The Housing Bu...
- If We Don`t Stop Spending: The Bond Market Will Co...
- We Need To Get Government Out Of Our Pocketbooks
- New Book: How an Economy Grows and Why It Crashes
- We Are In Worse Shape Than Europe
- European Bailout, American Style
- Consumers Need To Be Protected From Government
- I Have Been Bullish On Gold For 10 Years
- Gold Is Going To 10,000
- A Time for Gold
- What Happened To Laissez-Fair Economics?
- THe Housing Bubble Burst Because The Fed Inflated ...
- Is Sovereign Debt Crisis Contained to Subprime?
- There Will Be Runaway Inflation And Unemployment
- We Have A Phony Economy Based On Consumption And D...
- The Similarities Between Greece And The US
- The Next Financial Crisis Will be Much Worse
- Max Keiser Interviews Peter Schiff
- The Congress, Housing Bubble And Goldman Sachs (GS...
- Rather Than Resolving The Crisis, We Dug Ourselves...
- How An Economy Grows And Why It Crashes (Video)
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