With the IMF/ECB/EU troika set to resume talks with the Greek government about the next round of bailout funds, this could be a hugely important day for Greece.
Although European Central Bank president Jean-Claude Trichet has promised that Greece will indeed receive these funds, a formal announcement by troika inspectors could reassure both markets and sovereigns anxious that Greece is not sticking to its side of the reform bargain.
Also reassuring markets (a little bit) is comments from Sarkozy about doing “everything” to save the country. The euro surged on the news and Greek yields are a shade lower.
But there’s still a lot more going on:
– First of all, a collateral deal with Finland must be reached for the bailout agreement announced in July to move forward. Markets appeared to gain some steam after German Chancellor Angela Merkel said she was “very optimistic” about a solution to the collateral dispute. Even so, any deal reached by Finland and Greece has to also be approved by the remaining 15 euro states, many of which have expressed interest in getting in on earlier deals. Progress on this needs to be made quickly so that the eurozone can actually approve a finalised plan.
– Let’s not forget about other hurdles that must be overcome before this plan to expand the European Financial Stability Facility passes. On the positive side, the lower house of Belgium’s parliament rubber-stamped the plan yesterday. Yet debate about the plan still rages on in Slovakia and Germany, where legislatures are divided on the wisdom of the move.
– As this huge political debate rages on, Greeks are taking to the streets to protest austerity measures. Yesterday, Citi’s Willem Buiter remarked that forcing Greece to adopt unfeasible austerity could amount to kicking the country out of the euro.
Other than the troika-Greece meeting, also be on the look out for announcements after a conference call between Merkel, French President Nicolas Sarkozy, and Greek PM George Papandreou.
A conference of financial ministers on Friday — where US Treasury Secretary Timothy Geithner — is also getting a lot of press already, and could generate new speculation on the future of the bailout.
The reception of a new tranche of $11 billion in troika aid could change the timeframe on this, but otherwise we’re looking at a Greek default in October.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.