Today, May 11, the Greek government is reporting that it will make a 750 million euro payment due to the International Monetary Fund tomorrow, May 12, by the deadline. That leaves Greece facing a terrifying payment schedule of another 1.5 billion euros to the IMF in June, 3 billion euros to the European Central Bank in July, and another 3 billion euros to the ECB in August.
Today, May 6, the European Central Bank threw Greece a very thin lifeline by extending an extra 2 billion euros in emergency liquidity to Greek banks
Germany and its austerity allies in the Netherlands and Finland have fired warning shots designed to head off any effort by the new Greek government of Alex Tsipras to reverse budget cuts and other measures initially put in place to win the 240 billion euro ($270 billion) bailout program for Greece.
Today’s vote in the Greek parliament ended with the government short of the votes it needed to avoid elections in January. The opposition Syriza party, which wants to renegotiate the bailout, leads in opinion polls.
Which is important since Syriza opposes the austerity measures imposed by the country’s creditors in exchange for a $305 billion bailout package.
Thanks to really terrible economic numbers out of France and Italy it was easy for troubles at one Portuguese bank to revive fears about slumping economic growth for pretty much every EuroZone country outside of Germany. For France industrial output fell 1.7% in May from April. In Italy industrial output dropped 1.2%
Today U.S. and EuroZone stocks and EuroZone bonds are down on a report that the parent company of Portugal’s Banco Espirito Santo, the country’s second largest lender, had missed a debt payment. Those reports have revived fears about growth and debt levels for Portugal and other troubled EuroZone countries
Now that EuroZone finance ministers have finally approved the next payout to Greece, it looks like the Greek crisis is about to be replaced by the French crisis with an Italian crisis just offstage—and a renewal of the Greek crisis quite possible this summer.
Between this morning’s two surprises, the rate cut by the ECB is a bigger deal than stronger U.S. GDP
Surprise. Actually two of them. First, the U.S. economy grew at a faster than expected 2.8% year over year pace in the third quarter. That’s up from the 2.5% rate for the second quarter. Second, the European Central Bank cut its benchmark interest rate to 0.25% this morning from 0.5%. That takes the benchmark rate to a new historic low.