Here it is:
April 9 (Bloomberg) – Greece may need to seek emergency aid from the International Monetary Fund within days as a surge in its financing costs makes funding its budget deficit unsustainable, UBS AG economists said.
“The recent market action means that an external intervention may be unavoidable and could happen very soon as the situation is untenable,” UBS economists including Stephane Deo wrote in a note to investors late yesterday. “We think an intervention over the weekend is a distinct possibility.”
While European leaders agreed last month on an aid mechanism for Greece, the lack of detail and the speed at which the situation is deteriorating mean IMF participation is “unavoidable,” they wrote.
The IMF would likely impose further austerity on the Greek government, deepening a recession and leading to an economic contraction of as much as 5 percent this year and between 10 percent and 15 percent over the next two years, the report said.
Greece will need to seek emergency funding to make bond payments and cover debt refinancing of more than 20 billion euros ($27 billion) in the next two months, the report said. The premium investors demand to buy Greek 10-year bonds instead of German bunds jumped to 442 basis points yesterday, the highest since the introduction of the euro.
An outright default is “extremely unlikely” and Greece’s financing emergency isn’t likely to spread to other European countries, the report said.
Dr. Pinna says:
On the contrary, an outright default is highly likely. And other countries will follow suit.
You can’t make money out of thin air.