Greek “Deal” on Paper Not a “Fait Accompli”

Posted: February 20, 2012 in Eurozone Default

As American Endgame discussed yesterday, several sources around the world, from The Slog’s secret, highly-placed sources to The London Telegraph discussed the very real possibility that–despite ALL PUBLIC COMMENTS TO THE CONTRARY–the Eurozone, led by Germany and Chancellor Angela Merkel, are preparing to allow Greece to default on its debts and be shepherded out of the common currency.  The argument goes that chasing good money after bad–when Greece will still be above the all-important 120% Debt-to-GDP Ratio in 2020 and when it appears by all measures that Greece will simply default in 2 years anyway–is not in the Eurozone’s best inerests.  Fair enough…

So, what are we to make of the “pending bailout deal,” an agreement that is allegedly going to hand Greece the $170 billion it needs to stay afloat after March 20?  Is the AE story from yesterday a clear example of alternate journalism gone wrong?  Not necessarily…  This from ZeroHedge today:

“According to a just released update on the website of the European Council, the much anticipated press conference “to end all press conferences” will take place at 23:00 CET, or 5 pm Eastern. What will then likely happen is another delay until midnight, then later, then finally when Europe is sleeping a few finance ministers will say that the Deal is virtually done, the terms of the PSI are agreed upon (except that “some” creditors, those who have a blocking stake, will vote no and force the use of CACs and thus trigger a default before March 20) with the exception of a few minor outstanding items, such as whose debt is cut to bring total Debt/GDP to 120% by 2020, which they hope to get resolved shortly. And so this latest and greatest meeting will come and go, and anyone who shorted the Belgian caterers will be broke when the market opens up tomorrow, when Belgian catering ETFs all go limit up.”

And this from The Slog itself:

“[F]rom what I’ve seen or been told about the additional savings package being imposed on Greece (and they’re still arguing about it as I write) it contains a large number of potential deal-breakers before the 130 billion is actually handed over. My hunch is that Schäuble will use these to derail the process and keep his own plan on track. If a deal is announced today, then the MSM will of course all shout “Crisis Over!” in one Stepford tone. They will be wrong: default will only be avoided when the bailout cash goes into the Athens government’s bank account. Even  with an agreement today, this is not a done deal: riots alone over the next few weeks could blow it off course.”

In other words, as another famous Greek once quipped, don’t count your chickens before they’re hatched.  Until the Euros are in Greek coffers, this whole issue may still drag out until the March 20 hard default deadline, or the alleged March 23 planned default.  And in the meantime, until this press conference goes off, hold off on assuming Greece is back on track.  It seems we may have a way to go…

~DS

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