Eurozone: Germany vs Greece: 1 – 0 (overtime)

Posted: February 25, 2015 in Uncategorized

As the market expected Germany won.

It was a Europe versus Greece battle, as none of the PIIGS state dared to oppose Germany (it could be different by the end of 2015 if the anti Euro parties in Spain and Portugal win the elections)

In reality we are like in an overtime as today (European time) the Greece Government has to sell the “extended loan” to the Parliament and submit some clauses that are attached to the loan extension (good luck to it) to the Germans

Then Tuesday (or later if they do not agree) Germany (Europe) has to accept it.

Let’s dig in.

The extension is only for 4 months, not 6 as requested.

Why? In end of June/July there is a second mega tranche of Greek debt to be renegotiated so again the Germans will have a lot of pressure to apply.

But the second round will restart by end of April when Greece will have to submit a document assessing how they can exit the structural crisis.

In reality, for what we know, they could have just bought time to create a seamless “low risk” Greece exit.

Anyway that are the terms of Greece capitulation:

The request of bonds to be kept in a special Hellenic Financial Stabilization Fund has been denied.

The Troika now it does not supervise any more – but a new entity governed by the same three institutions (that is marketing!)

Greece cannot take any roll back measures that impact previous bailout conditions

Only 4 months extensions as Greece has to repay over Euro 6.7 billion in July/August 2015.

Any victory for Greece?

– The loan now is called bridge loan

– there is a word statement that says that Greece could have some fiscal leeway in achieving the surplus target (nothing specific).

Now we need to see the Syriza Government surviving.

Syriza capitulation really did not impress the left within the party- which holds 30 seats (the Syriza Government has 162 seats on 300…so the 30 are needed – unless the “right” Syriza allies itself with someone else like To Potami a center pro Euro party that holds 17 seats).

If it was not enough the promises to the “European Masters” have to be legislated and new solutions drafted by the end of April.

In this confusion – we wait for the second half of the match in June when the 4 months extensions expires.


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