Is Greece the Next Mike Tyson?

In the mid-to-late 1980s, no one was as unstoppable as Mike Tyson. He became an iconic figure of boxing practically overnight, and in his career would amass more than $300 million in earnings. But what became of Mike Tyson? After spending more than six years in prison, after multiple attempts by his friends and colleagues to get him back on his feet, his career spiraled out of control. He wound up bankrupt and a shadow of his former self just years after holding the heavyweight title.

What does this have to do with Greece? Well ... everything!

Financially assaulting the EU
The two might as well be looking in a mirror at one another. Sure, Greece isn't an economic powerhouse, but the country was consistently outpacing its eurozone rivals in GDP growth from 1996 through 2006. Then in 2007 Humpty Dumpty fell off the wall and never quite recovered.

Struggling under $490 billion in overall debt, Greece is stuck between a rock and a hard place. It's attempting to turn around its swooning economy and please its eurozone partners at the same time. Greece, which accepted a $158 billion bailout package last year, was soon to begin repaying the first portion of these European Central Bank loans, but that now seems like a dream. As bond rates in the troubled EU country continue to bubble higher, it appears Greece may have bit off more than it can chew.

Ten-year bond rates now stand at a staggering 15.4%, while two-year bond rates are at a blistering 25%. In other words, either Greece raises money by putting itself into a deeper hole than it's already in, or it seeks further financial help from the ECB.

It appears, though, that any further help from the ECB won't come without an earful from the other EU countries, most of which are reluctant to lend Greece another penny. Greece may be forced into accepting further austerity measures if more money is needed, further crippling any chance of an economic recovery and one-two punching this country closer to bankruptcy.

Checking the scorecard
Standard & Poor's
downgraded Greece's debt further into junk status yesterday on debt worries, while ratings agencies Fitch and Moody's warned of possible downgrades.

Instead of Greece setting the example, it appears that it's on the fast track to bankruptcy. As if the pressure on companies situated within struggling euro nations wasn't enough, they just got exacerbated even more yesterday by this news. National Bank of Greece (NYSE: NBG  ) , Allied Irish Banks (NYSE: AIB  ) and Bank of Ireland (NYSE: IRE  ) continue to face uncertain futures as this crisis unfolds.

The 10 count
As I see it, there are only two feasible solutions: Either Greece is booted out of the EU, upon which the lending countries will likely lose all of their investment, or Greece partially defaults on its debt, stays within the eurozone, and continues to bite the hand or ear that feeds it. There's really no easy fix to this, and the likelihood of these problems dragging out for years is growing. Someone get Greece an "easy button" from Staples, will ya?

What's your solution to the Greece mess? Give us your thoughts in the poll below and then scroll down to elaborate on your choice in the comments box. 

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He would like to remind you not to forget about our friends in Japan who could still use a helping hand. You can follow him on CAPS under the screen name TMFUltraLong. Moody's and Staples are Motley Fool Stock Advisor recommendations. The Fool owns shares of National Bank of Greece and Moody's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that is strictly vegetarian and frowns upon cannibalism.


Read/Post Comments (4) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 12, 2011, at 2:10 PM, jimmy4040 wrote:

    There's a third solution. Germany is likely to throw good money after bad and lend more to Greece. If Greece defaults, so will Ireland. The crashing sound you hear will be the euro. So most likely more money will be lent to avoid default, to push the issue off to some other vague time frame.

  • Report this Comment On May 12, 2011, at 2:19 PM, Momentum22 wrote:

    Yes, I agree with Jimmy. The Germans and French need more time because they have much at stake here...the third solution.

  • Report this Comment On May 12, 2011, at 3:06 PM, ems52082 wrote:

    It feels like the media is constantly fishing this story it doesnt make any damn sense. Who the hell does a restructure benefit besides no one? The EU goes belly up and greek banks get pounded. Who is paying S&P and Moodys to keep doing this to Greece and peripherial nations. Last time I checked the ratings agencies dont hold any credit in my eyes. What a bunch of morons. Greece will be fine, so goes greece so goes the euro, so goes europe as a peaceful partner. Would people rather see europe collapse, we all saw what can happen when that occurs. Something tells me goldman is behind this all. You can be damn well sure they will be profiting no matter which way this goes.

  • Report this Comment On May 21, 2011, at 12:36 PM, IntristicValue wrote:

    I just voted my shares for the Bank of Ireland... They are adding shares to sell to the treasury to raise capital

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7/25/2014 2:15 PM
AIBYY $1.29 Down +0.00 +0.00%
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