Europe Postpones Day of Reckoning – Again

Emergency talks are still ongoing in Brussels among the Eurogroup as the parties try to hammer out an agreement that will keep Greece in the Euro. Although it had been expected that the question of a “Grexit” would be settled one way or another tonight, it is becoming clear that no resolution can be found at present. The parties now are simply trying to find a formula for emergency funding that will maintain the solvency of the Greek banks, plus enough liquidity to ensure that the ATMs do not run dry – even with the current capital controls being maintained in place.

More Suffering for Greece

The Greek people can now expect some more weeks of the same: waiting to see whether a deal will be reached while lining up at the ATM for €50 or €60 per day maximum. The Greek people will be anxiously asking themselves how businesses are supposed to stay afloat for any longer and how exactly they are supposed to meet their liabilities and outgoings. It is not clear by what mechanism any emergency bridging mechanism will address this.

Stalemate

It seems that the Eurogroup is effectively split into two blocks regarding a potential third bailout for Greece. Finland, Germany, the Netherlands are seen as leading the camp that is hostile to the bailout request, while France, Spain and Italy are leading the pro-bailout bloc.

Upcoming Greek Liabilities Falling Due

Greece must pay the European Central Bank €7 billion on 20^th July. A further payment of €12 billion falls due in the middle of August. It has been estimated that the Greek banking system requires an immediate injection of €25 billion just to remain solvent and liquid. This adds up to a total that is almost the same size as the formal bailout that Greece is requesting!

Hidden Agenda?

It is impossible not to wonder whether the anti-bailout faction is just sitting tight and hoping that Greece will just decide as a nation that it simply cannot take this suffering any more, or consider the draconian and un-sovereign measures that look to be arriving quite soon, and exit the Euro of its own accord.