Yesterday saw the world's largest ever sovereign debt default, when Greece finally carried through a €206bn ($272bn) restructuring. Yet only the eurozone leaders believe this will solve Greece's problems and those of the other PIIGS (Portugal, Ireland, Italy and Spain).
Greece is still left with a debt too large to be repaid. Its economy is now in the 5th year of recession, with more austerity measures to come.
Even worse, the process of trying to avoid the inevitable has left the European Central Bank with a record $3.9tn of loans on its balance sheet. As Bloomberg notes, this is "more than a third bigger than the US Federal Reserve's $2.9tn, and eclipses the Germany's €2.3tn GDP".
And, of course, all this money has been spent just on Greece. Little has been done to solve the underlying problems in the other PIGGS. As the chart shows, their interest rates today (red line) are all above the level of May 2010, when Greece received its first 'rescue package':
• Portugal's 14% rate means it is probably the next to default
• Ireland's 7% rate and €122bn debt burden is also unsustainable
• Spain and Italy appear to be in better shape, with their rates back at 5%. But this is only due to the ECB's lending spree. Now Germany (as the ECB's paymaster) has the problem, as and when the loans go bad.
Meanwhile, the decline in rates for the JUUGS (Japan, UK, USA, Germany, Switzerland) shows no sign of ending. Investors remain focused on return of capital, rather than return on capital. Average rates in the JUUGS are now just 1.5%, down from 2.7% in May 2010.
The blog thus fears that Greece's default marks the 'end of the beginning' of the Eurozone debt crisis, and not the end of the crisis itself.