What is the real problem?

German Chancellor Angela Merkel on Tuesday evening blasted Greece and demanded that Athens raise the retirement age and reduce vacation days. Germany will help, she said, but only if indebted countries help themselves.(Der Spiegel).

The real European problem is that German banks have a huge exposure to Greece, Portugal, Spain, and Ireland -- directly or indirectly.

The main issue is not to save Europe or the Euro. The main issue is to make sure the banks do not go under. Similar to what happened in the US.

The people of Greece will have to pay for the generosity and incompetence of their leaders. They have to give back the money/benefits they received to pay for the interest to the bondholders.

Exactly the same as it is happening in the US. The coming cut in entitlements is going to be painful. As in Greece.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

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