Today, massive protests in Athens are targeting the government’s push for more austerity measures. Last night, European Union leaders failed to come to a deal on the next bailout for Greece. That bailout has now been pushed back to July, at the earliest.The problem amongst European Union leadership is the division between the ECB and some of the region’s political leadership (Germany, Finland, and Austria) over what burden banks should bear. Last night, we found out what Moody’s thinks of that burden, with their outlook downgrade of French banks (hence, why France opposes private sector involvement).
But as more time goes by, and Greece’s domestic political situation looks more and more unstable, it is unlikely the leaders of these Central European countries will be more willing to dole out the cash.
From Societe Generale:
With Greek unions calling for another general strike in Greece today, it would be staggeringly embarrassing for European Leaders to agree a new package for Greece later this month, only to have to concede that Greece needs even more money later in the year if Greek slips further behind on its programme targets. Hence, while the politicians argue, time may be beginning to slip away from them.
By pushing off the decision date on the next Greek bailout until July, leaders in Central Europe are testing the Greek government’s resolve. If they can’t pass another round of austerity measures, and can’t organise the privatization of state owned assets, then leaders in Germany, Austria, and Finland may simply say no to a bailout come July. Or, at least, they’ll have stronger incentive to push for the private sector to take a harder hit.
Right now, it all comes down to what happens in Athens. And today, things do not look good.
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