MARKET BRIEFING – LONDON OPEN 13.07.2015
Talks between European leaders lasted some 15 hours as an attempt was made to solve the Gordian Knot that is the Greek Financial crisis.
The Greek Prime Minister is making desperate attempts to stave off his countries bankruptcy, however, the group of countries led by Germany and Finland have adopted a very harsh bargaining position. The Greek Government is being told to either ditch its principles or leaves the Euro.
Alexis Tsipras must be feeling a great deal of strain this morning and it is obvious that this kind of pressure would make the best of us buckle under the pressure.
The referendum victory of the “No” campaign did give the Greek Government a positive momentum. However, the mood soon changed as the hard line that the Europeans took left the Greek Government split and the Greek public deflated.
With the German Chancellor telling reporters that she simply does not trust this Greek Government to stick to any agreement, it is hard to see how Alexis Tsipras can keep his job. Especially as back home in Greece he called an unnecessary referendum on austerity but then promptly decided to ignore the people’s vote. As for the SYRIZA party, there is a high probability that the internal conflict that was generated by the ongoing discussions between Greece and the countries creditors could see this alliance of the radical left fracture and break up.
From a backdrop of haemorrhaging support at home and outright opposition from abroad, the Greek Prime Minister now has to push through one of the most contentious pieces of legislation that has ever been passed by the Greek Parliament.
What the Europeans are asking from the Greek Government is a total surrender. Only by agreeing to the European demands can Alexis Tsipras hope to receive some Euro 80 to 85 billion from the Europeans. Without this new third bailout, the Greek Government will be cut adrift and have no choice but to leave the Euro area.
Unfortunately for a long time successive Greek Governments have shied away from taking the harsh decisions which were needed to reform the country’s economy. It is very ironic that the Europeans and the IMF will now call upon a Greek Prime Minister who belongs to the radical left of the political spectrum to be their instrument to inflict austerity and with it misery and pain onto the citizens of his country.
The Europeans and namely the German Chancellor Angela Merkel has shown no mercy to the Greece. Not only does the German and European Governments want legislation passed by Wednesday but they also require constant oversight that the Greeks are sticking to the word of the law.
To drive home their message, the Europeans have also told the SYRIZA Government to reverse legislation that it passed on the outset of taking power. This includes once again closing down the state-run Greek national television station and the sacking of 4,000 public workers. The most notable symbol of these sackings would be state cleaners that had been made redundant by the previous administration.
As I come the end of this it is now reported that a deal on Greece has been agreed. Is this a good deal for Greece and Europe. Only time will tell.
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