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Lend us money so we can repay our debts!

Published Tuesday, May 12th, 2015

With the UK election and US non-farm payroll data out of the way financial headline writers returned to Greece for inspiration. How many times can a country cry ‘default’ and be believed? If Greece were a company it would be insolvent and declared bankrupt. It is not and managed to raid the piggy bank again and meet its latest debt repayment to the IMF of €750 million yesterday.

We can last for two more weeks says the Greek Finance Minister. He wants the Brussels Group (aka the troika) to release the last €7.2 billion of loan monies in order to repay the next loan instalments due to the IMF in early June. Half of the 7.2 billion is due from the IMF itself but it is not allowed to lend to an insolvent country, so it has raised the forbidden subject of suggesting that the other two members of the troika consider indulging in a bit of debt forgiveness.

Debt and forgiveness are two words that must never appear in the same sentence in the presence of most eurozone members. In fact it is so provocative that Wolfgang Schauble went as far as to call Greece’s bluff yesterday and suggest that a referendum might be a good idea after all. The latest polls suggest that 70% of Greeks want to stay in the eurozone so let the new government ask them the question: ‘do they want to stay in if the price is Syriza having to renege on its electoral promises?’.

to read the rest of the report, please click here

Posted by David Hufton