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Europe Cluster&uck-- Zero Hedge Comment today

..(I)t seems that more of the Eurozone is starting to get cold feet over how to proceed with this classical defection from a game theory set up. As a result, the entire EU has delayed the December tranche of the Greek payment until January. Presumably this is to teach Greece a lesson, although it is unclear what it will actually end up achieving. As Greece can not fund itself outside of the ECB framework, as its banks are insolvent, and as it does not have the capital to exist in isolation, this action is comparable to the EU pointing a gun at its head and telling itself it has to stop lying or else.


So the clock has been set -- Greece goes down in December unless Europe changes its tune.  the problem is the first sentence; Austria has thrown the gauntlet (As has Finland vis-a-vis Ireland), who will be next?    


On related news today Obama, at the request of the Republicans, has agreed to delay a November 19th meeting on the Bush tax cuts to November 30th (it could be delayed further).  making the whole tax cut more problematic is Moodys' comment of yesterday -- prolongation of the Bush tax cuts would lead to a downgrading of U.S. debt.


The odds of the Bush tax cuts being renewed:


November 2:  100%
November 10:  85%
November 17:  50%
November 18:  40%


If the two sides cannot even sit down to talk, there is high likelihood that the tax cuts will die in the reconciliation -- furthermore, since the Republicans will refuse to raise the debt ceiling this is going to be difficult.

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