The Guardian reports that Greece has done an about-face and agreed to impose a two-year, $2.7 billion property tax in order to reassure European creditors and secure new aid to avoid a debt default. But that doesn't mean that that the most troubled state in the European Union isn't about to default.
Bloomberg reports that Germany is about to give up on Greece. "After almost two years of fighting to contain the region's debt crisis and providing the biggest share of three European bailouts, Chancellor Angela Merkel is laying the ground for what markets say is almost a sure thing: a Greek default. 'It feels like Germany is preparing itself for a debt default,' Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London, said in an interview. 'Fatigue is setting in. Germany could be a first mover or other countries could be preparing too.' Officials in Merkel's government are debating how to shore up German banks in the event that Greece fails to meet the budget-cutting terms of its aid package and is unable to get a bailout-loan payment.
This is why European banks are now getting hammered in the market and that's killing stock markets around the world.
That leaves us with three big questions: can the banks avoid a big hit that will cripple them, and will a Greek default create a crisis of confidence in Italy, Spain, and anywhere else in Europe? And what will that do for share prices around the world?
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