If Europe caves and gives in to Greek demands, however, a new set of challenges to the austerity agenda will arise. How long would it be before the people of Spain or Italy or Portugal or Ireland realize that they too have much more leverage than they ever imagined. Can the Troika cave to Greece while remaining credible with other troubled economies? I doubt it - which I think increases the risk that the core of Europe will believe it necessary to create a moral hazard example out of Greece.Read it at Tim Duy's Fed Watch
Of course, this worked so well with Lehman Brothers. We will just foget about that little detail for the moment.
Closer to Colliding
by Tim Duy
Is Greece Europe's Lehman, or the contemporary rendition of Credit Anstalt?