Photo: New York TImes Syndicate
With George Papandreou out and Lucas Papademos in as the new prime minister, a new Greek bailout approved, and a realistic bond swap deal moving forward, everything should be looking up in Greece.Right now, that is just not the case.
The focus is returning to Greece this morning after its central bank put out a statement warning that Greece is faced with a choice between staying in the euro and exiting the currency right now.
Without an “all-out effort within the euro area” and moves to restore political and economic confidence in Greece, the country will be faced with:
an uncontrolled downward trajectory that would undermine many of the achievements that have been attained in recent decades, drive the country out of the euro area and set Greece’s economy, standard of living, society and international standing back many decades.
Meanwhile, doubts remain that all is moving forward according to plan with Greece’s next tranche of $11 billion in troika (EC/ECB/IMF) aid that was guaranteed under Greece’s first bailout last year. According to a senior government official cited by WSJ, Greece needs money within 20 days so as not to default when €2.8 billion ($3.77 billion) in bonds payments come due in December.
Merkel is demanding that the Greek government sign written commitments to pass new austerity measures required by the second Greek bailout before the aid tranche is dispersed.
But despite the recent transition to a national unity government, conservative leader Antonis Samaras is threatening that his party will with withhold signatures from that written commitment, saying that its support for the unity government should be enough, according to CBS.
This looks like another repeat of the political battles that have delayed action up to this point, but if the statement from the Bank of Greece is any indication this really could be the breaking point for Greece.