Econintersect: It appears the European Monetary Union (EMU) has no real solution yet for Greece’s continuing financing woes. The Wall Street Journal (Europe) reports:
European finance ministers meeting Sunday in Luxembourg moved toward approving a fresh quarterly installment of Greece’s €110 billion ($157 billion) bailout loan, but they remained divided over the details of a far harder task—extending Greece a giant new package that would support it for years to come.
Like an onion, new layers are exposed hourly. Reuters reports:
Euro zone finance ministers applied intense pressure on Greece on Monday, saying it had to approve stricter austerity measures before a final decision is made on a further 12 billion euros in loans.
Before launching a second day of meetings on Greece, ministers indicated that the next tranche of EU/IMF aid would be paid by mid-July, allowing Athens to avoid default, but said the country had to show progress first on plans to cut spending, raise taxes and generate other revenue streams.
Econintersect reported earlier:
Mohamed El-Erian, the CEO of PIMCO (Pacific Investment Management Company LLC), says that Europe faces a dismal decade as bail-out countries (Greece, Ireland and Portugal and possibly Spain) might spread solvency issues throughout the Euro zone. He says that the problem is being brought to a head because liquidity is being used to try to address a solvency problem.
The Greek crisis is not likely to go away without major restructuring within Greece. The political will to bring the budget under control has not been evident to date making lenders reluctant to extend further credit. Even if the will existed, the crisis may be beyond the point where the debt can every be paid off. All actions to date are simply “kicking the can down the road”, and no permanent solutions have yet to be agreed.
This uncertainty is weighing on the global markets with most in the red. USA markets opened down but are currently mixed.