Just six short months ago (before GGBs rallied 119% and the Athens Stock Index 53%), the EU and IMF agreed on Greek Debt/GDP targets [5], pronounced the nation "fixed", and went on winter vacation. Well, surprise, the hockey-stick of expected GDP has not come to pass and now, as Der Spiegel reports, the IMF is refusing to participate in further rescue programs for Greece unless financing for the nation is secured for the next 12 months - in other words - a new haircut for Greece will be required to cover the EUR4.6 billion funding shortfall.
[6]
Christine Lagarde's 'fund' is putting pressure on EUR members, after their mea culpa last week at the biliousness of their previous efforts to save the troubled PIIG nation [7], to agree to these new haircuts. This will not be a pretty dance - as with Merkel now a few short months away from a general election (and Germany owed EUR15 billion in KfW loans and a further EUR35 billion contributions to ESM/EFSF mechanisms), any agreement on her part would solidify opposition parties' proof that taxpayer money was lost (and the good money after bad argument).
Perhaps that is why GGB prices have dropped over 10% in the last week?