Dr. Doom Predicts Same Over Europe

Coming hot on the heels of the two-pronged news segment that Greece has been downgraded to junk bond status and is now offering record yields comes the quote from the biggest name in doomer finance, Nouriel Roubini. How does he feel about the PIGS issue? Well, try this quote:

"...in a few days' time, there might not be a Eurozone for us to discuss."

Whoa.

With Greece offering bond yields up over ten percent on certain notes, it does seem to be a bad situation. Money is now EXTREMELY expensive for them to borrow at a time when they need it most. Basically, Roubini's looking at the situation and saying it's a no-win--Greece needs to cut its spending ten percent across the board in order to meet its debt service needs. And if they actually DID do that, it would likely take the whole economy down with it. That's the projection we're getting, anyway.

Do I necessarily agree with that? Actually, I don't like the projections any more than Roubini does. Greece needs cash. Greece's costs to borrow are now massive. Greece's chances of cutting spending are slim at best. So when you combine all those factors together, you've got what sounds like the ticking of a time bomb. Especially considering the weakness of the overall economy and the rest of the SUKPIG nations. (I made that term up and I plan to use it until I hear it on CNN!)

Either way, this is a bad situation for Greece, and despite the massive yield their bonds are offering, there are serious doubts about their ability to repay.