Greece Has A Default Probability Of Up To 98%&Nbsp; Germany Has Proposed To Kick It Out Of The Euro Area.

　　 European debt As the crisis intensified, the market worried that Greece was kicked out of the European Union, the yield of Greek one-year bonds was easily broken, and the credit default swap (CDS) of many countries in the euro area rose sharply. According to Bloomberg data, yields on Greek one-year and two-year Treasury bonds reached a record high in September 12th. The five year treasury bond rose to a record high of 3950 points, while Italy CDS rose 38 points to 505 points in CDS. Bloomberg reported that Greece's debt default rate in the next five years is up to 98%.

The negative impact of Greece's possible default has spread to other countries in the eurozone, among which the yields on Italy's treasury bonds have reached a record high. German bond yields have continued to slide, driven by market risk aversion. According to Bloomberg data, in September 14th, the European Central Bank has implemented the plan to buy Italy's treasury bonds, and the yield of Italy's ten year treasury bonds fell by 8 basis points to 5.63%, which once touched 5.77%. According to Dow Jones newswires, Citigroup estimates that the ratings of Italy, Spain, Portugal and Ireland will be further lowered in the next 2 to 3 years.

"Once Greece is out of the euro zone, we expect that the market will focus on the next and even several countries that are leaving the euro area." Citigroup chief economist Willem Buiter warned that this would lead to economic and financial disasters, which would have serious economic and political implications for the entire European Union and the wider global economy.

The yield of one year treasury bonds soared to 117%.

Greece Default Anticipated warming

Philip Rosler, Germany's deputy prime minister and Minister of economic affairs, publicly stated in September 12th that in order to stabilize the euro, it would not rule out the orderly bankruptcy of Greece in a critical situation. It shows that the willingness of the euro zone, especially Germany, to help Greece at all costs is decreasing and its differences are increasing.

According to public figures, the yield of Greek one-year bonds surged to 117% in September 12th, a record high. Greek gateway website Ekathimerini reported that if Greek government funds could not be exhausted in October 17th at the latest, if it could not get the next 8 billion euros in aid, the country would face the fate of debt default. It is widely believed that Greece's default is inevitable.

"Although the euro zone government has repeatedly stressed that to avoid the spread of the European debt crisis, a series of measures are being taken to avoid Greek default, but at present, there is a lot of resistance to the Greek rescue plan, and the possibility of Greek default is very large." Tang Yunfei, chief economist at Fangzheng securities (6.98, -0.17, -2.38%) Research Institute, said that from an economic point of view, Greece's withdrawal from the euro zone is beneficial to its own economic development. But he warned that once Greece is out of the euro zone, it will have an immeasurable impact on Europe and the global economy.

Jon Jones, chief strategist at Fxdaily.com, said in an interview with China financial management that the market is always worried about the worst and that the eurozone has not collapsed. In his view, the withdrawal of Greece from the euro area is only a wishful thinking of the market.

Due to the escalation of the Greek debt crisis, the US credit rating agency Moodie Investors Service Inc lowered the credit rating of two commercial banks, 13.04,0.04,0.31% and Credit Agricole, on Wednesday afternoon, and decided to maintain the credit rating Aa2 of the French bank of Paris unchanged, but continued to include it in the list of possible downgrades.

"Germany and France, including the United Kingdom, hold a large proportion of Greek bonds. As the yields on Greek bonds continue to rise, the price of their treasuries is relatively lower, leading to the deterioration of the balance sheet of the banking industry. The French banking sector has been downgraded by the market in anticipation, and the next step is that the German banking industry is facing the possibility of great adjustment." Wang Xiaojun, a macroeconomic strategist at national securities, believes that the current situation of the European banking industry is similar to that of the Bank of America in 2008 and 2007, because it has many housing related mortgage bonds. In 2008, when the financial crisis happened, there was also a global distrust of mutual distrust.

Wang Xiaojun pointed out that Moodie's demotion to French banks brought great impact to the already fragile European financial market. The double squeeze of tightening policy and credit crisis made Europe's economic outlook dim.

European debt crisis threatens the world Economics

Moderate recession is as high as 25%.

The European debt crisis continues to ferment, the banking industry in Europe is in jeopardy, and Greece's default or even exit from the euro area remains the focus of the market. The impact of the European debt crisis on the global economy and financial markets is growing.

President Obama said at the moment that the leaders of the eurozone should shoulder the responsibility of the European debt crisis. Only when the European debt crisis is lifted, will the global economy get rid of the depressing situation.

The debt crisis has yet to be resolved, coupled with the economic weakness. Goldman Sachs, Citigroup, UBS, Societe Generale and other institutions have also lowered world economic growth expectations. Credit Suisse, the investment bank, raised the chance of a moderate recession in the global economy from 20% to 25%. As the economic downturn has reduced operating income, the banking sector in the US and Europe is facing a plight of the industry. Under pressure to raise shareholder returns and reduce costs, Bank of America is forced to lay off 30 thousand people. In the first half of this year, Bank of America paid $12 billion 700 million for lawsuits against bad mortgage securities, according to public figures. Eurozone banks also face downgrading because of their exposure to heavily indebted countries.

Xu Yang, an overseas market analyst at Hongyuan securities (14.35, -0.13, -0.90%), pointed out that the current bail-out for Greece has not been resolved, and that the exposure of the three largest banks in France is huge. This may drag down the real economy of the euro area and further drag the global economy down.

"The continued escalation of the European debt crisis will not only impact the banking sector, but also the emerging economies such as China." Xu Yang pointed out. According to the financial times, the government of Italy is seeking help from China, hoping that China will buy Italy treasury bonds and invest heavily in Italy to help Italy get out of debt crisis at an early date. Tang Yunfei believes that the euro zone is facing potential pressure, which is fundamentally a matter of economic structure. The euro zone economic stability can effectively reduce the probability of the global economy entering the two recession, which is beneficial to all emerging market countries including Brazil and China.

Comment immediately

If there is no next round of rescue, there will be a disorderly breach or within a month.

Former Goldman Sachs banker and economic adviser Gavin Davis

Greece's debt crisis seems to have entered its final stage. If there is no next round of rescue, disorderly default will inevitably take place in a month. Greece's withdrawal from the euro area will also be on the agenda.

Merkel hinted in September 13th that she still preferred a deferred and orderly default rather than a sudden and disorderly default. Unfortunately, the two option is not what the market wants to see.

At present, Germany's first option is to postpone the Greek default until 2013. There are two problems in the scheme: first, under the current tightening policy, Greece will have difficulty sticking to 2013. In the current year, its gross domestic product will drop by about 7%, the budget deficit will be worse and worse, and public debt will account for 200% of GDP. How long is the Greek government and people going on the road of austerity?

Second, if the Greek debt problem is still not resolved, the sovereign debt and other banking sectors of the euro area will be threatened, and the problem will get worse. So far, the European Central Bank has retained the control of liquidity for the eurozone banks. Once the crisis is over, the sudden financial crisis sweeping across the euro area will be real.

Therefore, it is not surprising that the Merkel administration's rumour will review the alternatives, including the early Greek default. The Central Bank of Argentina said Greece should immediately default, and Argentina had defaulted in 2002 and depreciated rapidly by 60%. After experiencing the pain of the early stage of policy transformation, Argentina began to grow for several years with high GDP.

Greece's default is the right choice for Greece itself and the eurozone, which will be a difficult choice for either side. If Greece default, it will need to recapitalise the European banking system immediately. Germany and France can pay their banks to recapitalise through domestic budgets, but other countries may need foreign aid, especially Greece, which has led to rising bond spreads.

Greece's default will bring challenges to its banking sector and long-term economic recovery prospects, and for the euro area, the consequences may be even more serious. Greece's withdrawal from the euro zone has led to an uncontrollable crisis spreading to other marginal countries, which could eventually lead to the collapse of the euro.

In short, the option of early Greek default and exit from the eurozone is full of resistance, which is why Merkel still seems to decide the last chance for the Greeks. (