By Dr. Mike Larson
All hell broke loose in Europe this morning: European stocks plummeted. The euro plunged. Greek bond prices crashed again and gold rocketed higher.
Meanwhile, Greek Prime Minister Papandreou suddenly and unexpectedly cancelled his visit to the U.S. while en route! After receiving a telephone call from his finance minister on a stopover in London, Papandreou hurriedly returned to Greece.
Why? Nobody knows for sure — but today, International Monetary Fund (IMF) monitors will announce whether or not Greece is living up to the agreement it signed in order to receive bail outs — and the stakes could NOT be higher!
If IMF monitors are not pleased with Greece’s progress, next month’s 8-billion-euro bailout payment could be cancelled. And without that money, Greece will certainly default on its debt.
Plus, after today’s conference call with IMF regulators, Papandreou’s finance minister will announce plans to accelerate state asset sales and spending cuts.
Those new cuts include deep reductions in the pensions of Greek sailors and employees of the state telecommunication company OTE … PLUS the immediate merger or abolition of 65 government agencies … AND the freezing of state workers’ pensions through 2015.
Nobody expects Greek unions to take that news lying down. Widespread rioting, looting and the firebombing of banks and government buildings have followed similar announcements in the past!
And to make matters worse, German Chancellor Angela Merkel received a stern rebuke from voters over the weekend.
German voters are furious over Merkel’s handling of bailouts for Greece and other PIIGS nations. As a result, her party was roundly defeated in a Berlin state election. Her coalition ally lost all its seats.
Now, it seems, Merkel has two choices: She can continue trying to save Greece — by approving new bailouts — or she can try to save her own party and her own career by simply letting Greece default.
No wonder former IMF head Dominique Strauss-Kahn is warning that a Greek default is now inevitable!
“They can’t pay,” Strauss-Kahn said yesterday. “The efforts of European leaders have been too little, or too late, or often both