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It's bankrupt but hasn't said so. Soon enough others will. It's not a liquidity problem. It's a solvency crisis too far gone to fix.
All the bailouts and quick fixes piled on more of them won't put Greece back together again. And behind it comes Ireland, Portugal, Spain and Italy. It's just a matter of time.
In fact, Greek default alone is more serious than Lehman's 2008 collapse that triggered market mayhem. It's because Western banking and its entire financial system never recovered, so is much more vulnerable to economic shocks now than then.
Even though G-7 countries promised to save weak ones, who'll save them when they fail? Who'll save America, especially Main Street mired in Depression with baked in the cake austerity assuring worse ahead, not better?
Already credit is tight. Expect further tightening with interbank lending freezing up at any price. Private credit markets also with small and intermediate size businesses as well as consumers unable to get loans.
As bad as conditions are now, expect worse ahead. It doesn't matter how much money is printed. Job markets have collapsed with no effective policy initiatives to revive them. Rhetorical promises substitute for meaningful initiatives to stimulate growth. They're not forthcoming so expect decline.
In America, virtually everything points down, including business and consumer sentiment, production, retail sales, employment, housing, credit, and growth.
Rosenberg compares today's credit contraction crisis to the 1930s and Japan in 1990 when its equity and real estate bubbles collapsed. Subsequent downturns were protracted. Recoveries were "fragile and soon aborted."
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