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 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.
The Greek support package has not yet failed. But you can hardly call it a success. Investors have little more confidence in Greek debt than they had last week.
And - it seems - little confidence in the eurozone either. The euro today sank to a one year low, and markets shuddered across Europe.
Why? Apparently, even bond market vigilantes think you can ask a government to do too much.
The Greek economy is in total shambles. Unemployment is 26.9% and youth unemployment is 57.5%. Round after round of bond haircuts have not done a thing for the economy.
Der Spiegel now reports Greece on the Brink: Athens May Need 10 Billion More