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If you’re just waking up, or perhaps just tuning into the Greek story, here’s a quick refresher of what’s going on right now…The bottom line is that Greece is about to run out of money. Officials told Reuters today that it can only last until October without receiving its next bailout.
Will it get that bailout? Right now the market is answering that question with a resounding “no.” The easiest way to see that is to look at the yield on short-term Greek debt, which is exploding. What’s more, if you look at the headlines out of Germany, you’re seeing a lot about preparations for default, and the desire to see an orderly default. It’s as if the non-default outcome isn’t even being talked about.
Still, officially, the plan is for Greece to get bailed out.
This weekend Prime Minister George Papandreou gave a speech on economic reforms that certainly sounded like it was coming from the head of a country determined to stay in the Eurozone and avoid default. At the same time, the country’s finance minister outlined brand new emergency taxes to make its budget goals.
So what’s next? Officially, the Troika (inspectors from the EU, IMF, and ECB) are in the process of determining whether Greece is making its promised reforms. If it finds that Greece isn’t in compliance, then that’s endgame. No aid (probably). If it is in compliance, then theoretically the rest of Europe can go ahead and vote on expansion of the EFSF and aid to Greece, but again, even that’s not a sure thing.
And in the meantime, European bank stocks are getting killed due to all of the above.
UPDATE: It sounds like Greece probably WILL get approval from the Troika for its next bailout tranche.
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