MARKET BRIEFING – LONDON OPEN 15.07.2015
The Greek Prime Minister Alexis Tsipras has overnight found an unlikely friendly voice in the form of the International Monetary Fund.
The IMF has voiced concern over the levels of the Greek Public debt and said the outstanding obligations had become “highly unsustainable”.
According to the IMF the level of Greek public debt would over the next two years reach an astronomical figure of some 200% of GDP.
The IMF went on further to say that the optimistic projections of achieving a budget surplus of 3.5% of GDP was not achievable.
The European Union has given the Greek Government a stark choice. Either pass draconian legislation or be forced to leave the Eurozone.
Although reforms are needed, the IMF claims that without any form of debt forgiveness it would be impossible for the Greek economy to grow sufficiently so as to drag the country out of what has become an economic downturn that can only be described as a tragic depression.
The German Government has insisted that the IMF oversee the implementation of these reforms. What is farcical is that the European Union’s enforcer has come out so vehemently against a plan which it says will do more harm than good.
The reforms need to happen as only through radical change can the Greek economy transform itself from the sick man of Europe into a thriving tiger of the Balkans.
What the European’s have proposed, however, is not a vision for future Greek growth but for financial slavery is.
The German Government all too well knows the consequences of the imposition of harsh economic and vindictive penalties on a country.
The German nation suffered horribly after the First World War due to the harsh terms of surrender imposed by the victorious allies. This wrong was only put right after a Second World War when the allies this time forgave the German debt.
Greece is located at the crossroads of Asia and Europe and the focal point of the Balkans. Does the German Government really believe that the imposition of such draconian measures on Greek people will add to political stability at a time when there are fires burning in North Africa, Middle East and the Ukraine?
Greece will eventually recover. The Greek people are a resilient bunch. Under the right conditions, their entrepreneurial spirit helps them excel in business. Greek immigrant populations in the United Kingdom, Germany, USA and Australia have created businesses and wealth. It can only be hoped that if the right conditions exist, the Greek nation will drag themselves out of this abyss into an era of new prosperity.
The road back however will be long and painful.
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