Monday, 7 November 2011

Eurozone: Credible Greece?

Each of the Europan finance ministers fights a war for stability (and sustainable growth propects) on the home front, intrinsically linked with the efforts in the other EU member states, at European Union (eurozone) level and globally.

The ministers meet in the Economic and Financial Affairs Council (Ecofin) Tuesday 8 November 2011, after the meeting of the Euro Group this evening, to take stock of developments and to chart a route to safety.

Yesterday, we looked at the background and gaps and filled the Ecofin file with recent EU and eurozone declarations.

There is more drama in the air than most of the ministers, market players and ordinary people would care for. We are all anxiously following Greece.


Greece

According to Bloomberg, the main party leaders George Papandreou and Antonis Samaras have finally agreed to hold talks on a new government, a first step.

A new administration would be sworn in and a confidence vote held within a week if all went well, BBC News Europe reports, quoting a Greek government spokesman. - The cliffhanger is not over yet.

The Greek political leadership has unsettled nerves globally, and trust levels are low. Reuters Canada reports that Asian markets were falling this morning, despite the announcement on coalition talks.

In yet another enexpected move, the Greek government had terminated the contract with the three banks advising on the 50 per cent write-down of Greek public debt (euphemistically called Private Sector Involvement PSI), as reported by Market Watch.

***

From a promise of talks, the Greek population and the world expect a deal on the leader and the composition of a new government, certainty about the ratification and implementation (or not) of the rescue deal and knowledge about the early election.

The caretaker or interim government did not appear before the markets opened.

With or without bankruptcy and with hardships set to continue, the Greek people have to settle on a course of political and economic stability, as well as competitiveness for sustainable growth in the real world of the global economy.

For the time being, most of us – inside and outside - continue to be unwilling passengers on a Greek bus racing along mountain roads with competing drivers.



Ralf Grahn