By FX Empire.com
Greece Needs to Pray to Zeus
Up to the moment news…
The euro has continued to fall against the USD today; dropping from this morning’s high of 1.3291 and dropping to 1.3185 and continues to fall.
Yesterday the euro had broken the 1.33 barrier on news released by the Prime Minister’s office and confirmed by the ECB that a deal had been struck by political parties in Greece.
Today the Greek Finance Minister was sent packing back to Greece. The original news stated that the EU was demanding final legislation of the austerity measures before they would consider the approval of the bailout and that they did not want promises. Further news seemed to indicate that the political agreements were short, even with the ECB’s added contributions and agreements to reduce their asset valued.
Most recent reports said that Germany made it clear that Greece missed its debt target and must increase its austerity measures to qualify for the second economic bailout package.
German Finance Minister, Wolfgang Schaeuble stated that Greece is missing its debt cutting targets.
Schaeuble explained that two people who spoke on conditions of anonymity, who attended the Brussels meeting, stated that Greece’s austerity plan would leave its debt as high as 136% of gross domestic product by 2020.
The German Finance Ministry went on to state, “The Greek offer is not sufficient and they have to go away to come back with a revised plan.”
This should depress the euro farther and give added strength to the USD.
Greece was barely able to meet the austerity package as required earlier this month, as the increased gap between income and expenditure continues to grow under the recession and austerity measures. At some point, regardless of how deep you cut, there is no more to go. At this point, the ECB has moved all that it will. Germany and France will not allow the EU to give any additional funds and the Greeks themselves have nothing left to offer.
The only two possibilities at this point is to beg the IIF to renegotiate again to take a larger haircut, which will not go down easily, actually it won’t fly at all.. Leaving one single final choice, default. Chancellor Merkel said yesterday that a default would not be so bad. The forbidden word is being said a lot of late.
Something has to give and has to give within hours, not even days.
Originally posted here
