AP - Eurozone finance ministers opened the door to using the currency union's bailout fund to buy up distressed Greek bonds, thereby cutting the country's overall debt load as they scrambled to stop the region's debt crisis from spreading to larger economies like Italy and Spain.
Eurozone finance ministers opened the door to using the currency union's bailout fund to buy up distressed Greek bonds, thereby cutting the country's overall debt load as they scrambled to stop the debt crisis from spreading to Italy and Spain.
Even as the probability of a Greek exit from the euro approaches even money, credit markets have, like the children of Hamelin, been hypnotized by the sweet sound of the ECB’s printing press which Pied Piper Draghi has promised to keep humming until at least a trillion new euros have been minted.
A small dose of reality has set in for a group of European central bankers: Euro Officials Begin to Weigh Greek Exit as Euro Weakens.
Greece’s possible exit from the euro moved to the center of Europe’s financial-crisis debate, rattling markets as authorities in Athens struggled to form a government.
BRUSSELS — The eurozone must decide on Monday how to keep Greece on a lifeline but is divided over whether to delay aid payments to Athens to force through unpopular reforms ranging from sacking public workers to selling state assets.
A split in Greece’s governing coalition over how to shrink the country’s public sector has cast doubt upon Athens’ ability to meet the demands of its bailout programme. International creditors said on Monday that “the outlook remains uncertain.”
The technocratic governments in Italy and Greece are not off to a smooth start judging from the action in the bond market. A quick glance at the 10-Year note in Italy shows the yield is up 25 basis points to 6.70% and the Spanish 10-year note is up 24 basis points, soaring through the 6% mark to 6.09%.Meanwhile, Greek 1-year bonds are trading at a mere 250%. Any bets on when they exceed 300%?
Tomorrow, Friday, April 24th, the finance ministers of Europe will again meet to discuss the fate of Greece’s bailout program. Although no definitive course of action is expected to come out of this meeting, it is yet another chance to assess the potential consequences if indeed the Greek government defaults on its loans.
France has encouraged Spain to apply for aid as soon as possible. In Germany, Wolfgang Schäuble wants anything but a timely application.
Note that unless a country requests a bailout, and agrees to terms set by the IMF (something Spain does not want to do), the entire OMT plan of Draghi is useless.
Finally, at the latest EU finance meeting on Saturday, battles between eurozone and non-eurozone countries erupted over the banking union.