This will be the final comment on my Greek trilogy before I move back to covering pensions. Greg Bryanski of the Globe and Mail reports that Putin calms Greece, says U.S. debt big too:
Russian Prime Minister Vladimir Putin played down Greece's economic woes on Tuesday, telling his visiting Greek counterpart that the United States were no better than Greece in handling its debt and fiscal deficit.
“As we all know, the global economic crisis started neither in Greece, nor in Russia, nor in Europe,” Mr. Putin told a news conference after talks with George Papandreou. “It came to us from across the ocean,” he said in a clear reference to the United States.
“There (in the U.S.) we can see similar problems - massive external debt, budget deficit,” Mr. Putin added, suggesting Russia and Greece should concentrate on the “real economy” to weather the economic crisis.
Mr. Papandreou arrived in Moscow amid rumours that the cash-strapped euro zone member may turn to Moscow, still running the world's third biggest foreign exchange reserves and eager to boost its political clout, for financial assistance.
Iceland began loan talks with Russia in October, 2008, after its main banks and currency collapsed. The tiny NATO member eventually secured funding from the International Monetary Fund
and Nordic neighbours and the Russian loan never materialized.
On Tuesday European ministers told Greece it may need to take further steps to bring a swollen debt under control, with Germany saying Greece should imitate Ireland and Latvia, both of which are slashing spending and wages savagely.
Both Greek and Russian officials denied financial aid was on the agenda during talks in Moscow, while President Dmitry Medvedev said he had told Papandreou to turn to the International Monetary Fund and the World Bank for help.
“This is not the end of the world. I believe that we will come out of this situation much stronger than we are today,” Mr. Papandreou told the news conference.
Love him or hate him, Putin is right. While the media's attention remains on the Greek fiscal crisis, the bigger debt crisis is in the US, and the world is starting to take notice. It's high time the Obama administration also looks into bolstering the real economy instead of the Big Giveaway to the Wall Street sharks who thrive on volatility (generates more fees).
Of course, Putin also knows how to generate fees, the old fashion way. BusinessWeek reports that under Putin's rule, Russian arms exports more than doubled over the last decade to $8.6 billion last year.
Back to Greece. Dan McCrum, a columnist for the FT, was on Tech Ticker today telling people Relax, Greece Will Be Bailed Out. And So Will The Rest Of The PIIGS:
For the past couple of weeks, the global markets have lurched between a state of bliss that bankrupt Greece will be bailed out to a state of panic that it won't.
According to our guest Dan McCrum, a columnist for the Financial Times, the latter fears are overblown.
Of course Greece will be bailed out, McCrum says. The bailout won't be called a bailout (because people don't like bailouts), but it will be a bailout.
And what about the other troubled European countries in the group known as the "PIIGS"? (Portugal, Ireland, Italy, Greece, and Spain.). If Greece gets bailed out, won't these countries immediately come begging with their own hands out?
Yes, says McCrum. And they'll get bailed out, too. Basically, German citizens will have to pick up the tab for their less-productive Euro brethren.
One thing that won't happen, McCrum says, is that the EU will fall apart. This project (the EU) has been too long in the making, and Europe isn't going to give it up over a few annoying bailouts.
And, the silver lining: A weaker euro currency will be met with applause by Europe's exporting nations.
Judging by the market's reaction today, most participants also feel a big, fat Greek bailout is in the offing and Europe won't fall apart.
Finally, watch this Russia Today interview below with financial blogger, Megan Carpentier of The Washington Independent, where she explains the derivatives fiasco that hit Greece and what the fallout from this debacle will likely be. Will those giant squid tentacles finally be revealed and what will be the ultimate fallout from this mess? Right now, it's anyone's guess.
Paul Kedrosky has an excellent insider's account, Greece: Our Debt, Your Problem (HT: exportbank).