Rumors that a deal will be reached "soon" have gone on for weeks. Indeed announcements of an expected agreement today have already hit new snags.
For the sake of argument, let's assume a deal does go through and crunch the latest numbers to see what the situation looks like from the point of view of Greece before and after the deal.
Please consider Greece Needs EU145 Billion in Second Aid Package
The US bug, whereby the worse the economy, the higher the stock market and bond prices must have shifted to Greece, because while the Greek stock market was the best performing "asset" class in October, and Greek bond yields are plunging just because the greater fool stock posse has now moved to the insolvent nation if only for a few months, the economic reality just gets worse by the minute. Case in point - Greek corporations, or what's left of them, and what Greece needs more than anything - taxes.
Well that didn't last long. It seems - just as earlier in the week - the ability for either side in this Euro-system death match game of chicken to find any common ground to even start negotiations remains lost: GREEK GOVT OFFICIAL SAYS THAT "IN THESE CIRCUMSTANCES, THERE CANNOT BE A DEAL TODAY" EUROGROUP DISCUSSED "UNREASONABLE", "UNACCEPTABLE" DRAFT TEXT INSISTING ON EXTENDING BAILOUT EURUSD is tumbling and S&P Futures are falling fast.
Via email I received an interesting set of facts from Barclays regarding banking exposures to Greece.
Greece: Euro area official sector exposures in excess of EUR290bn
Euro area official sector exposure
On January 9, 2015 I posted Another Run on Greek Banks Begins; Get Out While You Still Can; Buy Gold.On the same day, Greek finance minister Gikas Hardouvelis said "Probability of a Bank Run is Small and Deposits are Safe".I propose Hardouvelis' statement was one of those "lie when it's serious moments".
There was the usual dollop of confusion yesterday, when the dispatch of the Greek list of reform proposals was delayed from Monday to Tuesday, after what in retrospect was the Troika throwing up all over the preliminary, very "broad terms" 3-pager (much like Congress did to the original Hank Paulson 3-page term sheet).
The rhetoric, threats, and promises continue to increase as Greece, its international creditors (i.e. Troika), and its potential pivot partners from Russia to China to Iran all vie for attention. Greek FinMin Varoufakis 'promised' Christine Lagarde this morning that Greece will repay the IMF loan on April 9th (though was unable to explain how)...
The Greek government's ongoing crisis isn't looking much better at the start of the week. The government and representatives from the European Commission, European Central Bank and International Monetary Fund were locked in negotiations over the weekend, with little progress reported.
The bailout of Greece was bungled because it was an attempt to save the single currency rather than the debt-stricken country, according to a highly critical report by the International Monetary Fund.
The internal report on the handling of the Greek crisis has detailed a catalogue of errors, which led to the IMF breaking three out of four of its own rules relating to lending money to bankrupt countries.
A central bank official, according to The FT, said that Greece has repaid the €450m it owed the International Monetary Fund today. Bond yields have fallen across the Greek curve with 10Y GGBs now at 11.1% (down 70bps from Tuesday's highs). Greek stocks are not as impressed and are giving back their gains.