I was going through my archives to figure out when I first started saying Greece would default and it made for interesting reading as a chronology of the sovereign debt crisis. For me, the pivotal post that signalled default was inevitable was the one entitled “Video: Stiglitz and Hendry debate the Greek bailout” from 10 February 2010. It was from a broadcast the night we learned of the debt concealment in Greece.
One of the larger problems in the unfolding meltdown in Greece is the fraud apparently perpetrated by past Greek governments to conceal their true levels of debt. This is having a very adverse effect on Greek credit spreads to (German) Bunds. 10-year Greek bonds are trading at 6.67%, while German 10-years are at 3.14%, a full 353 basis points lower. The increasing spread owes not to inflation, but to sovereign credit risk – and the hidden debt is front and center in this fiasco. Take a look at the video from that post below. I’ll follow it with a brief chronology.