The days seem to be numbered in Greece as the March bond redemption looms. The fear is now that Greece won’t get their second bailout package and that many investors are having doubts on the PSI deals. A Greek finance minister called it a choice between bad and something worse. It has been said that all this tussling between the politicians is simply the politicians trying to look ‘tough’ and are actually bluffing as they will meet troika’s demands as soon as they are re-elected.
THE LETTER: (http://online.wsj.com/article/BT-CO-20120215-705612.html) First thing this morning this was seen as a good thing but once it was actually read by market participants, it emerged that there was a typical Greek slippery underlying current. The part that caught much attention was the last paragraph where this is said: "policy modifications might be required to guarantee the full program's implementation. And, once again, we intend to bring these issues to discussion along with viable policy alternatives..." To me this says: “we’ll renegotiate a deal once we have got our money”. Some EU ‘sources’ I think have realised this and stated that they are considering hold back some or all of the bailout money, but will still avoid a default. Sounds to me like this whoooole thing is about to crumble in front of us.
BRIDGE LOAN: This would take the immediate risk off the table of a default in March. It would also allow a delay of a full bailout until after the election. Now that’s smart, for a change. Greek politicians would have to run on supporting the bailout or risk not getting it. Less chance for “adjustments” after the election under this scenario.
Guru’s thoughts: I’m not at all surprised that there are doubts, it is almost too typical for Greece to bite the hand that’s feeding them. What I think is happening here is due to the Greeks promising everything and delivering f*ck all, now the EU actually want evidence their money is attached to some results and this is going down too well. There is no way that a PSI deal will be made if there’s a chance the Greeks won’t get their money. A bridge loan will help the immediate threats but as I have said before; at the end of the day they are Greeks and they won’t live up to the terms of the bailout because the terms are unachievable if you don’t like working or paying tax. The Greeks are making it pretty obvious that they would rather be broke than be told what to do by the Germans, so will there be a point where one party says: “poke it up you’re a*se”?? I’m starting to doubt that the disease is actually worse than the cure. But I will warn that you should get you umbrellas out – the sh*t is about to hit the fan....
Funnily enough, the markets get another barrow load of cash in the Feb LTROs which will help smooth over any potential Greek problems. A coincidence or just good planning??
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