25 May 2015
Greece crisis continues to hang over the market – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team comments on the key developments surrounding the Greece funding crisis.
Key Quotes
“The unresolved Greek crisis continues to hang over the market. No doubt it will be a point of discussion at the G7 meeting being held in Dresden on May 27-29. Just like there has been greater progress since Greek Prime Minister Tsipras reigned in his finance minister, is it really beyond the pale to suspect that if Merkel would reign in her finance minister (who has recently appeared to advocate referendum and a parallel currency for Greece), it would also be helpful? What Europe has to convince its G7 partners of is that is it not turning a broken state into a failed state.”
“The immediate problem is that Greece owes the IMF about 1.6 bln euros spread out over four payments in June. Recall that the last payment to the IMF was made possible only because the Greek government borrowed from a reserve account held by the IMF itself. If that reserve account is not repaid in a few weeks, the IMF will begin another set of procedures against Greece.”
“It is true that Greece has cried wolf many times, saying it would not make a debt payment, but then somehow, miraculously, found the means to make the payment. Greece was the proverbial canary in the coal mine in 2010 and Syriza is performing a similar function five years later. The political push back against austerity is not isolated to Athens.”
Key Quotes
“The unresolved Greek crisis continues to hang over the market. No doubt it will be a point of discussion at the G7 meeting being held in Dresden on May 27-29. Just like there has been greater progress since Greek Prime Minister Tsipras reigned in his finance minister, is it really beyond the pale to suspect that if Merkel would reign in her finance minister (who has recently appeared to advocate referendum and a parallel currency for Greece), it would also be helpful? What Europe has to convince its G7 partners of is that is it not turning a broken state into a failed state.”
“The immediate problem is that Greece owes the IMF about 1.6 bln euros spread out over four payments in June. Recall that the last payment to the IMF was made possible only because the Greek government borrowed from a reserve account held by the IMF itself. If that reserve account is not repaid in a few weeks, the IMF will begin another set of procedures against Greece.”
“It is true that Greece has cried wolf many times, saying it would not make a debt payment, but then somehow, miraculously, found the means to make the payment. Greece was the proverbial canary in the coal mine in 2010 and Syriza is performing a similar function five years later. The political push back against austerity is not isolated to Athens.”