Tim Geithner's carefully scripted plan to avoid European "reality" until the US election is unraveling. While previously Greece was not supposed to be an issue until after November 6, the recent escalation with the Greek FinMin openly lying about a Troika interim bailout outcome (which may or may not happen, but only following yet another MoU which would see Greece fully transitioning to a German vassal state in exchange for what is now seen as a €30 billion shortfall over the next 4 years, and which would send Syriza soaring in the polls in the process ensuring that a Grexit is merely a matter of time) has forced a retaliation. According to the Greek press, the Troika now demands that Greece resolve its objections to labor reforms (which as reported earlier [6]have forced the ruling coalition to split) by Sunday night, or else...
The implication, it appears, is that absent a compromise, the next Troika tranche of €31.5 billion is not coming, and Greece is out. And while the market is sanguine about this outcome, we are once again at the bargaining table, where nobody knows just who has the upper hand in Mutually Assured and quite Destructive bailout negotiations: Greece or Germany. From Kathimerini [7]: "The government is facing a Sunday deadline for a full agreement on the package of measures that will see it cash in the next bailout tranche of 31.5 billion euros. The three-day extension it got in order to get maximum backing within the three-party coalition will be necessary as minor partner Democratic Left insists on an improvement in the terms concerning labor reforms that it staunchly opposes." Will Greece come through in the clutch? And if not, just what happens with the EURUSD on Sunday night as Greece calls the Troika's bluff? Deja vu shades of early summer, and plunging European risk come to mind...
More [7]:
The Euro Working Group (EWG) of eurozone finance ministry officials will convene again on Monday to discuss whatever conclusions Athens has come to and prepare the blueprint that the Eurogroup of euro area finance ministers may discuss on Wednesday through a video conference that sources from Brussels say is likely to take place in order to discuss Greece.
The prime minister appears determined to have the measures passed immediately through Parliament, either in one or in two draft laws, ordering on Thursday the preparation of the bills required.
At the same time there are also disagreements within PASOK, the other minor coalition partner, as a number of deputies are threatening to vote against a Finance Ministry measure regarding privatizations.