Monday, May 18, 2015

“The darkest hour is just before the dawn” | Greece at make or break

There is a lot of talk on the wires this morning about the perceived imminence of a Greek default on its payments to its creditors, most notably the IMF. €1.5 billion is due for repayment in June, and considering that the only way that a mere €750 million could be catered for recently was to raid a reserve fund that was already on deposit with the IMF, the prospects of making this hurdle look increasingly slim. The brinkmanship that has characterised the new government of Mr. Tsipras, and indeed the attitude of the EU itself over the crisis, seems to coming to a head. It will either be a case of “The darkest hour being just before the dawn”, or we really will see a default.

Greece at make or break

In the meantime Greek two-year bonds have now reached a yield of 23.68%. This is nosebleed territory and reminiscent of the worst days of the Euro crisis.

Over in the IMF, a leaked memo, publicised by Channel 4 in the UK, has staff stating that “there will be no possibility for the Greek authorities to repay the whole amount [in June] unless agreement is reached with international partners”.

Crunch time is coming. In the meantime the markets just hate uncertainty and this bout of it is bound to affect the Euro against its major counterparts.


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