April 22 (Bloomberg) -- The European Union said Greece’s budget deficit last year was worse than previously forecast and may top 14 percent of gross domestic product, fueling investor concern about a default and sending its bond yields soaring.
The EU’s statistics office said Greece’s deficit was 13.6 percent of GDP last year, topping the government’s two-week-old forecast of 12.9 percent and the EU’s November prediction of 12.7 percent. “Uncertainties” about the quality of the Greek data may lead to a further revision of as much of 0.5 percentage point, Luxembourg-based Eurostat said.
Greece’s benchmark 10-year bond yield rose to 8.49 percent, the highest since 1998 and more than twice the comparable German rate. The cost of insuring government debt against default climbed to a record today.
Greece’s widening deficit and questions about the accuracy of its economic data have undermined the credibility and enforcement of the EU’s budget rules and contributed to the 6.9 percent slide in the euro this year. The EU and the International Monetary Fund offered Greece as much as 45 billion euros ($60 billion) in emergency loans to assure investors the country can make its debt payments and shore up the euro...--
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Comment: In order to understand the fix Europeans are in, one must remember that the euro was created not as a consequence of a political union, but as a means of promoting it. The European Monetary Union is a means towards the end of a European Political Union. That is why it is so hard for the euro club to simply through out Greece. Keeping Greece in therefore has a high priority but this aim collides with the promise of making the euro a hard currency which in turn requires the maintenance of the "no bailout clause".
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