GREECE (3)

Greece is in real trouble. Last year it got a Euro110 billion bail-out from other E.U. countries and the IMF, but it was not enough. The economy is still shrinking, so tax revenues are falling. Yields on Government bonds are well over 10% and still rising. Today's protests against further Government austerity measures turned to riots, with tear gas from the police and injured demonstrators.

There is talk of restructuring the country's huge debt, of the E.U.'s giving them more money, of Greece's leaving the Euro, and of a combination of all three. My take on this is that the third is unlikely, the second is certain, and the first is possible (though it will probably be dressed up as something else). Supporting all three is my judgement that Germany has too much invested in the whole Euro project to let it fail. Lending money to those profligate southerners will be painful, but the alternative would be worse.

The financial crisis is not over, not by any means.

Walter Blotscher