Investing

Greece Finally Gets Unanimity For Financial Backing, Maybe

German Chancellor Angela Merkel and French President Nicolas Sarkozy have finally decided, after bilateral talks, to allow the IMF to join any bailout of Greece. Dow Jones Newswires reports “The support of France is crucial for Merkel, who has been lobbied for this solution for several days. Sarkozy has in the past opposed involving the IMF in bailing out a euro zone member.”

The trouble with the agreement is that it is no agreement at all. What the capital markets have to assess now is a promise that a structure to help Greece will be created. However, it will only be created if Greece needs one, and the government of the southern European nation has not be decisive in it comments about a need for capital. Over $50 billion of its sovereign debt is due between now and the end of the year. Greece’s debt is about 13% of GDP. Several economist say that there is no chance the nation can cut enough costs and raise enough tax revenue to avoid insolvency.

Greece has no credibility with the capital markets both because its estimates of its own financial position has been so badly off the mark and because labor unrest and strikes in the nation threatens to undermine tax revenue. One of the major reasons that EU nations have been leery about Greece is this instability.

That handshake between France and Germany is actually nearly meaningless. The IMF has not made it clear on what basis it would be involved in a Greek bailout or whether the Greek government would accept IMF conditions.

The EU summit has turned out to be nothing more for senior Greek government officials than a spring vacation.

Douglas A. McIntyre

Want to Retire Early? Start Here (Sponsor)

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

 

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.