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Sovereign Debt Crisis Alert: Greece Default Risk Rises Astronomically

April 9th, 2010

With Greek long term bonds generating a spread in excess of 400 basis points above German sovereign debt, it is no surprise that  ratings agency Fitch has again downgraded Athens, posting a miserable BBB minus. This comes after weeks of verbal gymnastics by the European Union, attempting to fool the markets into believing in its ambiguous, meaningless assurance of a bailout for Greece.

Despite the pontificating of reassurance being offered by a legion of European politicos, it is becoming increasingly evident that Greece is heading towards sovereign debt default at warp speed.  In my view, either sooner or later (and much more likely sooner) Greece is fiscally doomed…and that is only the beginning of an irreversible sovereign debt chain reaction that will strike virtually all advanced and major economies, and plunge our planet into a synchronized global depression.

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