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Euro crisis: “This time it’s really, really serious…”

Thu 26 July 2012, 2:55pm

European Commission President José Manuel Barroso is off to Greece for “a regular meeting” with Prime Minister Antonis Samaras.  His first visit to Athens since June 2009.  Meanwhile, the rising cost of Spanish and Italian Government borrowing has prompted a declaration of intent from European Central Bank president Mario Draghi.

“To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate,” Mr Draghi said in a speech at the Global Investment Conference in London today.

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he said, adding: “believe me, it will be enough.”

[Whatever that means - Ed]  And whether or not you believe him is another matter…

In the Irish Times Arthur Beesley suggests “the final chapter of the saga is about to unfold”.

All of this feeds into a markedly downbeat atmosphere in Brussels over the prospects for the country. Amongst weary officials involved in the rescue effort, the thinking goes that Greece has but one last shot this summer to prove to its sponsors that it can implement the astringent reform programme. At the same time, it is readily acknowledged in private that quite a few finance ministries elsewhere in the euro zone have already given up hope of the country ever coming good within the single currency.

This helps explain the present unease, although the holiday exodus leaves an empty Brussels feeling something like a ghost city. An assortment of reports cite increased talk about a “Grexit” from the euro. Reports also refer to the International Monetary Fund’s supposed refusal to provide any more money to the country and to another round of debt restructuring.

Although soothing words from official sources insist nothing is preordained in advance of the troika’s ultimate findings, it all points to high tension. The Commission’s spokesman would not say what message Barroso will deliver to Samaras. Still, close observers of the Greek saga expect the prime minister will be told to up the ante considerably with a new swathe of unforgiving cutbacks.

The problem remains that earnest Greek announcements don’t necessarily lead to action.

Read the whole thing.

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Comments (3)

  1. tyrone_taggart (profile) says:

    You should see what they are saying in Germany:

    “Angela Merkel’s coalition partners are lining up to demand a Greek exit from the euro”
    http://uk.reuters.com/article/2012/07/24/uk-germany-greece-coalition-idUKBRE86N0K820120724

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  2. Greenflag (profile) says:

    Greece has been in recession for almost 5 years now since the Lehman’s Brothers collapse and the ensuing meltdown of the world economy . The stage is being set for an orderly Grexit and the sooner the better for the Greeks and the rest of the Eurozone

    There is no political will in Greece for any further cutbacks and at this stage they have nothing to lose except their chains .They should never have been permitted entry to the Eurozone anyway and it was only by the skullduggery and national accounts book fixing painted on the Greek application by Goldman Sachs and the unhealthy speed with which the German and French Euro Ministers looked the other way that Greek gained entry .

    Greece is listed in 80th position on the world’s list of least corrupt countries . There are Sub Saharan African and former Eastern European states who are rated as less corrupt in their public sectors and economies than either Greece or Italy :(

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  3. Zig70 (profile) says:

    Really serious but not as serious as before and a bit of a story without a lot of details or facts. You would think the market is manipulating the media to talk it up and down similar to libor or just too easy to lead with a hint of a story. Lots of money to be made from the volatility.
    http://articles.marketwatch.com/2012-07-26/markets/32857868_1_earnings-outlook-financial-stocks-share

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