by Calculated Risk on 10/03/2011 12:50:00 AM

• An overview on Europe from the NY Times: Toil and Trouble Over the Caldron That Is Greece

In the short term, Greece remains the central problem. ... Europe’s strategy, to the extent it can be discerned, is to put off restructuring Greece’s debt as long as possible and build up enough backing for a bailout fund so that banks with large exposure to the sovereign debt of Greece and other troubled euro-zone countries, like Portugal, Ireland, Italy and Spain, can survive an all-but-inevitable Greek default.
...
When speaking privately, officials concede that Greece’s debt ... is unsustainable and that lenders will probably have to write some of it off. A “haircut” of 50 percent, followed by a recapitalization of banks if necessary, is the outcome most commonly mentioned.

Germany and France are not prepared to consider doing that yet, though, in part because relieving the pressure on Greece would remove its incentive to overhaul its finances and make its economy more competitive. ... Equally important, Germany and France want to delay any Greek default, orderly or not, until they have bolstered the rescue fund and taken other steps to protect Italy, the biggest economy in southern Europe.

What a mess.

The Asian markets are red tonight with the Nikkei down 2.6%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 is down about 8 points, and Dow futures are down about 65 points.

Oil: WTI futures are down to $78 and Brent is down under $102 per barrel.

Yesterday:
• Summary for Week Ending Sept 30th
• Schedule for Week of Oct 2nd