The big worry in the Greek debt crisis—today—is what seems to be a genuine split in the German government between Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble. Schaeuble has become the leading voice for those skeptics who doubt that the Greece government can be trusted to deliver on its promises once it has the next rescue payout in its hands.
Yesterday, when European finance ministers called off their emergency meeting, the ostensible reason was Greece’s failure to specify the sources of a last 325 million euros in budget cuts and the need to have the leaders of the country’s two biggest parties, New Democracy and Pasok, sign pledges to abide by the deal after the country’s April elections. This morning Athens delivered on both those fronts. Turns out that’s not enough—because those two items weren’t the real problem at all.
European finance ministers have cancelled tomorrow’s meeting and will hold a teleconference instead. That’s not going to produce a vote on the package. Instead it seems intended to extract “better” promises from Greek politicians.
Some day EuroZone leaders will have to decide either to approve a second rescue package for Greece or not. But maybe not this week. A new neither here nor there alternative has started to gain traction in the run-up to Wednesday’s meeting of European finance ministers.
Yesterday’s meeting of European finance ministers adjourned without action on the plan to rescue Greece, because the finance ministers wanted to see 1) more details on the last 430 million euros in cuts and 2) actual legislation to turn Greek promises into Greek laws.
Inflation jumps in China, growth turns negative in Germany, but the U.S. economy looks genuinely stronger in today’s numbers
The last major structural obstacle was—apparently–negotiated away today when the European Central Bank—reportedly—agreed to participate in a write down of its holdings of Greek government bonds. That leaves it up to Greek politicians to sign or not.
The more deadlines that Greece misses in the short term, the higher the odds that the country will default and leave the euro in the longer run. Today Citibank raised its estimate of the odds of a Greek default and departure from the euro in the next 18 months to 50%
