Greece Update No. 4,327 (b) , and it's not looking good ......

Friday 24th April 2015

Greece Update No. 4,327 (b) , and it's not looking good ......

"On the Gredge" , The Economist p.11, see also "Greece and the markets" p.71 and "Free exchange" p.76

Eurozone finance ministers get together today in Riga. Although this meeting represents one of the last remaining chances for Greece and her creditors to hammer out a deal, few are expecting tangible progress to be made. Indeed, the possibility of a Greek default is growing stronger by the day. Why such pessimism ? To recap just three of the reasons :

1. A complete loss of trust on behalf Greece's creditors .... the antics of her inexperienced government has only served to antagonize opposing negotiators. Greece has not only failed to even come close to drawing up the reforms required for further assistance to be released, but has not even put forward any realistic alternatives.

 2. Both sides have political considerations to take into account. The Greek government was elected with a left-wing, anti-austerity agenda that would preclude acceptance of most of the conditions required by the ECB and IMF. On the wider European side, some of the most hawkish nations such as Spain are those who have taken the austerity medicine and emerged the other side. They would not take kindly now to any special dispensations being given to Greece.

3. The Eurozone is becoming more sanguine about the possibility of Grexit. Europe's banks have little exposure to Greece and are better insulated from the risks than they were. As the fear of financial contagion diminishes, so does the will to compromise. Interestingly, many senior traders are openly suggesting that rather than Grexit being the biggest threat to the Eurozone, a much bigger danger would be to give in to Greece. Such an error, they argue, would open the door for others to follow suit in the future and terminally damage the credibility of the Euro.