Back on Friday we shared a prediction that not only will Greece not leave the Eurozone, but what will happen after the weekend: "I'm convinced Greece is jealous that the portuguese got a much better deal. They want the same deal arguing that they have already suffered long enough... Monday they announce that Greece is getting better terms and we are off to the races... by early 2012 greece restructures debt." Once again, this was spot on. Reuters reports: "The European Union is looking to lower interest
rates on bailout loans to Greece and Ireland and is working on a second
rescue for Athens in a chaotic effort to prevent a disorderly debt
restructuring. The executive European Commission said on Monday it hoped to see a decision within weeks on reducing the rate charged to Ireland to make Dublin's debt more sustainable. "The Commission is clearly in favour of a rate
cut," a spokesman for EU Economic and Monetary Affairs Commissioner Olli
Rehn said. "The Commission is against debt restructuring."" Once again Europe looks the can in the mouth, and kicks it as far down the street as it possibly can. Next up: fully blown, uncontrolled restructuring in early 2012 as nothing will change in the interim, and more taxpayer revolts will continue taking Europe by storm until we have one that actually matters and puts the PIIGS out in the cold.
The new Irish government's bid for lower interest payments has so far been blocked by Germany and France, which want Dublin to drop its veto on harmonising the corporate tax base in Europe in exchange or raise its own low corporate tax rate.
In Germany, a senior lawmaker in Chancellor Angela Merkel's conservative party said a further cut in the rate on emergency loans to Greece, already reduced by one percentage point in March, would be justified if it carried out further reforms to reduce its debt risk.
Michael Meister, finance policy spokesman of Merkel's Christian Democrats, told German radio he opposed any idea that Athens should restructure its debt or that it should consider leaving the euro zone.
However, German Finance Ministry spokesman Martin Kotthaus told a news conference: "There is no discussion at the moment about extending the payment schedule or lowering the interest rates for Greece.
Other things we were right on:
A German government spokesman said Merkel would meet European Commission President Jose Manuel Barroso, head of the EU's executive arm, and European Council President Herman van Rompuy, who chairs the bloc's regular summits, on Wednesday to review the situation.
A Greek exit from the euro had never been under discussion and was not now, he told a news conference.
Euro zone and EU finance ministers are due to meet next week to approve Portugal's aid programme amid lingering uncertainty over whether Finland, which has a caretaker government and has not yet begun negotiations for a new coalition, will be in a position to give the required agreement.
Pressure is mounting for those meetings to deliver decisions on Ireland and Greece as well.
Responding to anger in some countries that were not invited to Friday's talks, a German Finance Ministry spokesman insisted there was no attempt to create a two-class euro zone.
Greek Finance Minister George Papaconstantinou, who attended the Luxembourg meeting, said investors did not believe his country could return to capital markets next year as envisaged in its EU/IMF plan, so it might need alternative funding.
Jean-Claude Juncker, chairman of the Eurogroup of finance ministers of the 17-nation euro area, said after Friday's talks there was a consensus that Athens would require a second rescue.
"We think that Greece does need a further adjustment programme," he said after meeting with ministers from Germany, France, Italy, Spain, the EU's Rehn and European Central Bank President Jean-Claude Trichet.
A further adjustment "programme" based on far lower interest rates: shades of AIG anyone? Next up, Greece will be buying back pieces of the Cyclades pledged to the New York Fed's Santorini Lane I programme in 2 years after Bernanke manages to blow the global credit bubble to fresh all time highs.