Filled with portents of disaster and the promise of rejuvenation. Lucas Papademos takes charge as the new Greek Prime Minister, knowing very well that the path ahead is not just perilous for his country, but for the Eurozone itself. Silvio Berlusconi who resigned as the Italian Prime Minister, leaves behind a disastrous legacy as a modern day Nero who fiddled (or, to wit, fondled) while Rome burdened itself with new debt issuances and paid higher interest rates. Pakistan, meanwhile, granted India the most favoured nation status, thus allowing the possibility of increased trade and economic integration in the decades ahead. In similar ways these are three variations on the same theme: the economics and politics of a trading zone.
By July 2011, outstanding Greek debt in nominal terms was ¤366 billion. Domestic Greek institutions, like banks and asset managers, hold €104 billion of these debts. Any reduction in value of these bonds held by them would mean that these asset managers (such as pension funds) would need to be recapitalised in order to provide for regular citizens.
The ensuing chaos is unchartered waters that no politician wants to sail in. Supranational entities like the IMF, ECB and others hold another €118 billion of debt. As Papademos has clarified, it is "inconceivable" that Greece will default on such obligations since the ramifications extend well beyond Greece's credit worthiness and will effect the public finances of the rest Europe. So, this remainder is €144 billion held by foreign non-sovereign institutions.