Straight from Athens to a stockmarket near year you, a list of dates designed to keep you on the edge for a while long about whether Greece will go bust this year or next.
Having gotten through this week’s vote of confidence, there are a number of important milestones for the near-bankrupt country to surmount before we can relax for a moment or three.
Here’s that list, compiled from various news reports this week:
June 23/24 Heads of State meeting.
June 28 Greek parliament to vote on Medium Term Plan (AKA The Austerity Package).
July 3-4 Eurogroup special meeting (possible decision on the disbursement of the 5th tranche of the loan to Greece).
July 11-12 EU FinMins meet in Brussels.
July 15 Greece T-bill redemption for E2.4bln.
July 16 EU FinMin, Central Bankers meet in Poland.
August 20 Greece bond redemption of 3.90% 2011 GGB for E6.61bln.
See, nearly two months of worry, headlines and volatility: what a way to waste a northern summer!
The big test is next Tuesday night our time: the vote by the Greek parliament on the austerity package: all 28 billion euros of cuts, plus 50 billions more from selling off some of the Greek state, power and other companies, land, airports. You name it.
A new problem, a revenue black hole in the austerity plan of 3.8 billion euros over four years, emerged overnight which Greece agreed to fill after a day of talks with the EU and IMF.
Another problem is the domestic political split in Greece: The IMF and EU want cross-party support for the austerity plan, the opposition won’t give it (despite causing many of the problems).
Without that support, no aid, which will be an issue for the current EU leaders summit in Brussels. Greek Government and opposition leaders are attending that meeting. It could get bloody.
According to the Financial Times Friday, some 600 million euros of that black hole will happen this year and if it’s not fixed up, there won’t be 12 billion euros in loans from the EU and IMF to keep the country alive.
The 6.5 billion of ‘fiscal consolidation’ contained in the Medium Term Plan is actually 6.5 billion euros of cuts, which is double the existing measures which have created the uprising in public opposition, seen industrial production plunge more than 11% a year and helped boost unemployment past 15% and rising.
That’s produced a recession which is now in its third year.
Although there are claims the budget deficit will fall sharply this year, the reason why we have had the latest crisis is because of foot-dragging and delays by the government in cutting spending and selling assets (and giving out secret pay rises to political and other advisors).
The country has an estimated 355 billion euros of debt, 1.5 times its GDP, or 30,000 euros for each of the country’s 11.3 million people.
That debt will rise to 150%v of GDP, higher than it was when the whole problem started (around 125%).
That doesn’t include personal debts like mortgages, credit cards, etc which take the total to around 1.5 trillion.
And now they are going to load 150 billion of debt (which included the unspent money from the 2010 bailout) onto an economy whose tax base is shrinking, along with every other measure except unemployment.
On Monday, eurozone financial ministers agreed to extend an emergency loan package to Greece on condition that parliament approves new austerity measures, which is next Tuesday’s hurdle.
So should parliament reject it, Greece will be headed towards the edge, once again.
Fitch Ratings warned this week that it would regard a voluntary rollover of Greece’s sovereign bond maturities as a default and would cut the country’s credit rating appropriately (single C and default are as far as you can go).
A month ago Fitch downgraded Greece’s credit rating three notches to "B+" and warned it could cut the rating further into junk territory.
Standard & Poor’s cut Greece’s rating to "CCC" from "B" on June 13, and warned that any attempt to restructure the country’s debt would be considered a default.
Moody’s has a Caa1 rating to Greece’s sovereign debt, which implies a 50% chance of a default within three to five years.
