Outgoing ECB chief economist Stark says the ongoing bailouts of euro zone countries does not solve problems per se. It is just mean to buy time.

The question is, buy time until what?

EUR/USD is trading fairly quietly at 1.3780.

Stark continues:

  • Some Greeks do not understand how grave the situation is; country has lived beyond its means for years
  • ECB cannot accept collateral bonds of a country in partial or full default (do if Greece defaults, Greek banks blow-up and European banks with exposure to Greek banks could follow)
  • Renewed money market tensions but not as bad as post-Lehman