Bloomberg has announced that the worst is yet to come for the euro, thanks to ongoing Greek woes.
The last time I discussed Greece was in this post last November:
The unfolding events in Dubai bring into question the stability of the global recovery, which has largely been fueled by extraordinary government support mechanisms. The combination of the Dubai government abandoning the liabilities of its own company, along with Abu Dhabi's reluctance to get involved, shows that government support cannot always be assured, even when capital for a bailout can be easily secured.
If Abu Dhabi, home of the world's largest sovereign wealth fund (and a very small population), is unwilling to bail out its own compatriot, can it be guaranteed that Germany will bail our Greece (or Ireland, or Spain)? Or Sweden will bail out Latvia? Or Austria will protect its banks' exposure to Eastern Europe? Or that Washington will bail out California?
Abu Dhabi based newspaper The National has now made a Greece-Dubai analogy of its own:
The Abu Dhabi Government intervened in the Dubai World situation last December with an injection of $10bn of bonds that enabled Nakheel to pay a $4.1bn bill for a sukuk Islamic bond. Some $4.9bn of that total sum has been spent, the person said, with the balance still available for the DFSF. “The $10bn will be enough because it has to be enough,” he said.
“It is akin to Greece. If the EU just bailed out Greece, it would be like throwing good money after bad."
The question now is, will Germany be willing to follow in the footsteps of Abu Dhabi?
(H/T: Fistful of Euros)
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