Greece needs money by next month. The troika makes demands it has to meet. Greek leaders resist and make some bold moves, fearing the domestic backlash to austerity. EU leaders bear down on their demands, and Greece grudgingly laments.
Sound familiar? If the fallout from former PM George Papandreou’s referendum proposal in November is any indication, then this is the exact series of events we’re seeing playing out in Greece right now.
And in fact, changes in the price of the euro versus the dollar would suggest that the Greek budget drama really is just a repeat of what we saw a few months ago—eerily so in fact. A few months ago, the euro gained steadily against the dollar after a crucial EU summit, but tanked sharply after Papandreou announced that Greece would hold a referendum on unpopular austerity measures. Papandreou finally gave into European demands, withdrew the referendum proposal, and said he would step down as prime minister, but it took a long time for the euro to recover after that.
While there are many reasons the euro might have been on the rise since early January, is that rally about to come to a close? See the striking similarities between September-November (red) and December to now (green):