How the world sees Greece
ECB endorses Greek bank recap terms Reuters ATHENS Nov 21 (Reuters) - The European Central Bank said on Wednesday it was satisfied with a plan to recapitalise Greek banks, a key part of the debt-laden country's international bailout. Athens unveiled earlier this month long-awaited details of the ... |
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 CBC.ca | EURO GOVT-Bunds slip as euro zone allays Greece fears Reuters Wed Nov 21, 2012 11:57am EST. * Greek aid tranche delayed again, Eurogroup meets Monday. * Germany sells 3.25 billion euros of bonds. * Demand for safe-haven assets remains strong. By Kirsten Donovan and Marius Zaharia. LONDON, Nov 21 ... Another Greece decision delayed – a new pattern here? Eurozone politicians striving for the impossible on Greece Greece crisis: International lenders fail again to reach a deal |
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 BBC News | Another Greece decision delayed – a new pattern here? MarketWatch (blog) Just as the euro-zone finance ministers had the chance to finally give the go ahead for disbursing the next tranche of bailout money to Greece, the group decided to call it a day after an almost 12-hour marathon meeting and push back negotiations until ... UPDATE 4-Greece's lenders fail again to clinch debt deal Greece "humiliated" after Eurogroup fails to reach agreement on aid Greece: Lack of deal 'threatens euro' |
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 FXstreet.com | Forex Flash: Vaunted Greek deal fails to provide splash – BTMU NASDAQ FXstreet.com (Barcelona) - The USD has strengthened against the euro during European trading Wednesday after the much-anticipated deal on Greece debt came to nothing. According to the BTMU Research Team, "There is a clear disagreement over how ... German Fin Min Schaeuble: Oustanding Greek aid will be paid in steps |
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Greece, Retail Issues Ahead of Turkey Day - Analyst Blog NASDAQ Greece needs more funds to keep its bailout on track and European leaders couldn't agree today how to provide the beleaguered nation with more money. On the home front, the weekly Jobless Claims data dropped, but remained elevated due to lingering ... |
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 Business Recorder | GLOBAL MARKETS: Stocks, Euro Mixed; Oil Jumps on Bus Blast Wall Street Journal European stocks and the euro were mixed Wednesday as investors assessed what impact the delay in a decision on Greece's next tranche of financial aid would have, while oil futures jumped on news of an explosion on a bus in central Tel Aviv. It was hoped ... Euro regains footing as Greek saga continues FOREX-Euro touches 6-1/2 month peak vs yen, cuts losses vs dollar Yen Sinks to 7-Month Low Against Dollar on Posting Trade Deficit |
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Eurozone power group wants financing package small enough to maintain pretence last bailout is proceeding swimmingly – but they also want to make Greek debt sustainable – it can't be done
By now we should have grown used to thumb-twiddling in euroland. Even so, the failure of the eurogroup and the International Monetary Fund to reach a deal on Greece's finances is disgraceful.
The basic problem is that the eurozone power group is groping for something that doesn't exist. It wants a financing package that is small enough to maintain the pretence that the last bailout arrangements are proceeding swimmingly; but the ministers also want to make Greek debt sustainable.
It can't be done. The stock of Greek debt is simply too high – as a ratio of GDP, it is forecast to pass 190% in 2014 as recession takes its toll.
The measures under contemplation are essentially tweaks, such as an interest holiday and a €10bn voluntary buy-back at a discount of IOUs held by the private sector. Such actions would chip a few percentage points off the debt-to-GDP ratio but the tower of borrowings would still be daunting. Few people would believe seriously that Greece's debt ratio would fall to 120% by 2020, as originally envisaged, or even by 2022, as EU ministers are now prepared to accept.
The IMF got the correct remedy at the outset of these talks: it's time for so-called official lenders, which would include eurozone countries and the European Central Bank, to accept a haircut on their loans. That's the only way to achieve debt sustainability in Greece definitively.
The IMF's stance provoked an outbreak of heebie-jeebies among EU politicians, who complain variously that a debt write-off would be illegal and would encourage the electorates of Ireland, Spain and Portugal to expect similar relief.
Well, yes, but the risk in failing to confront the Greek crisis is probably worse. As Marc Ostwald of Monument Securities puts it, there are no solutions other than outright default: "This will not change today, on 26 November or any other date, though the longer the various parties involved fail to face up to this reality, the higher the probability of a very disorderly default."
Unfortunately, next Monday (26 November) will probably produce some form of compromise that delays resolution for another year, when Germany's elections are out of the way. But the eurogroup is playing with fire. Every chapter of the eurozone crisis has carried a similar theme: when politicians don't present themselves as serious, markets react badly.
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