European Economic Uncertainty Looms Over The Market

(EU) Upcoming EU summit is going to be held on June 28/29. Top Greek government officials have been ruled out from attending as new PM Samaras is said to be recovering from eye surgery while Fin Min Rapanos is in the hospital since Friday due to stomach ailments. As a result, the return of the Troika inspectors is being delayed, giving European leadership some time to pour over the Greek coalition policy letter asking lenders to roll back some of the conditions of austerity. Specifically, the request would see:


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  1. The Greek Government renege on plans to cut 150K public sector jobs
  2. Stop the raise of sales taxes on restaurant and farming sectors
  3. Extending jobless benefits to 2 years as part of a 2-year extension to meet fiscal deadlines.

(DE) Over in Germany, Fin Min Schaeuble has hardened his rhetoric on Greece, suggesting Athens government needs to stop asking for help and do more than it has.

(ES) Spain Econ Min De Guindos: Formally sends letter to Eurogroup to request recapitalization aid for its banking sector (Note: No specific amount listed).

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  • Still to be decided which bailout fund would be used (EFSF or ESM)
  • Targets to complete the bailout MOU before the Eurogroup meeting set fo July 9th
  • The independent audit (stress test) and IMF report seen as a starting point

How to interpret these new developments?

I mean the old saying “Give someone an inch and he’ll take a mile” is true in this case, especially with the Greeks.  Just as the EU leaders were opening up for renegotiation just to avoid a “Grexit”, the new coalition Greek government drops a bomb and practically asking for the world, and in the process, prolonged the European Economic Uncertainty and drove the global market lower on risk aversion.  A 2 year extension on jobless benefits?  Who is going to pay for that? Do you think the Germans are going to be happy about that?  Well, apparently the Greeks don’t care, and we shall see a very interesting EU Summit this week.

All in all I believe uncertainty is back in Europe.  The situation has improved from an imminent Greek exit, but not for much better.  With the negotiation possibly hitting an impasse, Euro could suffer in the progress…  I’d be staying out of the Euro for the time being, waiting on more news… although I am still optimistic in the Euro as both Greece and Spain problems are solvable.



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About Henry Liu

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  1. Nice analysis. kudos.


  1. […] volatile, to say the least.  Greece’s new coalition government, led by Samaras, sent their policy letter to the EU Council a few weeks ago, requesting 2 years extension on the bailout terms on top of extending unemployment benefits for 2 […]

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