Even More European Terrible News: Greece's GDP To Drop Deeply

As if Europeans needed more bad news. Here comes Greece again today announcing terrible GDP forecatss. What did the marekts expect with draconinn cuts?

Evangelos Venizelos, Greece's finance minister said on Friday that Greece's economy will shrink by over 4.5 percent this year, adding that a new bailout deal for the troubled euro zone member would not be completed before mid-October.

And a little side note to the "bailout": Finland secured a collateral on loans to Greece. Austria, the Netherlands and Slovakia said they wanted the same!

This severely complicates finalizing the bailout as the finance Minister said all bilateral decisions are up for approval by the other euro zone members and that "it would be a while before the new bailout negotiations are completed".

"We should not expect to be finished before the first or second week of October, because parliaments need to vote and banks to complete their own processes,"

Goldman Sachs O'Neill: Eurozone Will Not Absorb Italy's Crisis

The problems of the eurozone are growing and the region can not afford to absorb a broad impact of a crisis in the bond market in Italy, said Jim O'Neill, chairman of Goldman Sachs Asset Management, a report this  weekend. O'Neill coined the acronym BRIC (Brazil, Russia, India and China).

Concerns with the results of stress tests of European banks to be released next Friday and doubts about the cohesion of Italian fiscal tightening measures are putting Italy under the spotlight, said O'Neill.
Bonds in Italy have retreated sharply in recent sessions because of concerns about the health of the banking system and the intensification of public friction between the prime minister, Silvio Berlusconi and Finance Minister Giulio Tremonti.

Investors may be selling Italy to hedge its exposure to other countries in the euro zone, said O'Neill. But he added that if it continues, this sale will put the crisis in the region at a more problematic level .

"I found it fairly easy to not get too concerned with the dynamics of the debt of Ireland, Portugal or Greece, but Italy is a different topic," O'Neill wrote, citing the size of the Italian economy.

At 120% of Gross Domestic Product (GDP), Italy's debt already amounts to about 25% of GDP in the euro zone, he said. "Neither the euro zone, or possibly the rest of the world can afford a full-scale crisis in the Italian bond market,"