Greek debt costs were bludgeoned on Thursday (15 April) after news filtered through markets that the German finance minister, Wolfgang Schaeuble, came out publicly saying that a restructuring of the Hellenic republic's debts may be required.

Separately, the European Central Bank has warned that such restructuring - default by another name - would threaten Greek democracy.

ECB board member Lorenzo Bini Smaghi warned on Thursday: "According to our analysis, a debt restructuring would result in the failure of a large part of Greece's banking system."

He did not mince his words, saying that Greek democracy would be threatened by such a move.

"The Greek economy would be on its knees, with devastating effects on social cohesion and the maintenance of democracy in that country," he told financial daily Il Sole 24 Ore.

He also subtly told Berlin to not push Athens into a corner.

"Ultimately it's up to Greece to decide the way forward, given that it will suffer the worst consequences. But other countries must avoid pushing it towards a catastrophe."

They are traitors.

- Jake

Friends come and go. Enemies accumulate.

One of the important functions of fascism, as typified by the Nazi system, was to remove capitalist objections to full employment.

The dislike of government spending policy as such is overcome under fascism by the fact that the state machinery is under the direct control of a partnership of big business with fascism.  The necessity for the myth of 'sound finance', which served to prevent the government from offsetting a confidence crisis by spending, is removed.  In a democracy, one does not know what the next government will be like.  Under fascism there is no next government.

The dislike of government spending, whether on public investment or consumption, is overcome by concentrating government expenditure on armaments.  Finally, 'discipline in the factories' and 'political stability' under full employment are maintained by the 'new order', which ranges from suppression of the trade unions to the concentration camp.  Political pressure replaces the economic pressure of unemployment.

Among the leading players in the Christian Democrat/Liberal coalition, there is not a single who believes that Greece can sustainably repay its debt without some form of debt restructuring. The debate inside Germany is how and when the restructuring should happen. Some officials have expressed the hope that a combination of interest rate cuts and maturity extension would suffice, and that a haircut would not be necessary. However, as one source put it, to solve the problem through an extension alone would have to involve a very substantial increase in maturities - we are talking significantly more than two or three years. In parallel, there is hope that the Greek government might be able to negotiate a voluntary debt restructuring with some of its creditors.

But Germany rejects a haircut, for now, out of a fear of a repeat of an Argentine-style situation, but most importantly, Angela Merkel has famously pledged to protect existing bondholders until 2013 - known also as the Deauville, a promise she feels she cannot easily abandon. There is concern that a forced haircut could trigger a financial earthquake with incalculable collateral damage, with similar, or worse, ramifications than the collapse of Lehman Brothers.

But German officials are significantly more open to the idea of a restructuring, than any ECB or EU officials. In particular, they disagree with Klaus Regling's assertion that the banks were pressing for a restructuring on the grounds that this would earn them significant fee income. While that may apply to a few individual institutions, such as Deutsche Bank, it does not apply to the financial sector at large. And even Deutsche Bank would suffer more from financial instability than it would gain in terms of fee income.

Today the far-left attacked with Molotov cocktails a police station in Exarchia, a radical neighborhood in central Athens with a long history of confrontation with the police. The result was that three people - from the nearby street market - were hospitalized with very severe burns.

So, we have violent crime, police violence, far-left violence and far-right violence. It's massive violence from all sides. It's nothing "usual" and it's difficult to explain to foreigners.

The situation here in Greece is very very severe. Beware, you could be next...

SOS SOS SOS

"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband