A week ago our post announcing that the Greek deficit target was going to be revised higher once again, from 7.6% to 8.5%, started with the following sentence: "As the Greek parliament meets to finalize huge public sector job cuts, Reuters is reporting that Greece will miss the deficit targets set in its EU/IMF bailout this year and next... We would say "again" but at this point "as usual" makes far more sense." Guess what: it is time to "as usual" re-re-revise it once again.
While one short week ago the projected debt as a % of GDP was hiked from 7.6% to 8.5%, Kathimerini now reports that the final number may actually be just a little bit higher once again. From Bloomberg: "Greece’s 2011 budget deficit may be 9.1 percent of gross domestic product, according to a European Union, European Central Bank and International Monetary Fund mission, Kathimerini said. The so-called troika, which completed its fifth review of the country’s economy, found Greece will miss the original target of 7.5 percent of GDP as well as a revised target of 8.5 percent for this year in the 2012 budget draft, the Athens-based daily reported, without citing anyone. Greece has enough cash reserves to last to the end of the year and possibly the start of next year, in part due to revenue from extraordinary levies, the newspaper said." Why is the timing of this conspicuous? Because the EU announced it expects a statement by the Troika this afternoon which is a virtual thumbs up/down on Greece. We wonder just how, in its praise of Greek "reforms", the Troika is prepared for the realization that it was just fooled once again. Unless, of course, this is all part of the masterplan to have enough of a validation to finally cut Greece loose by not disbursing the €8 billion in cash needed, without which Greece is kaput. The only question is whether or not German and France believe they have enough "firewalls" in place to prevent a Greek contagion. While this speculation is fast and furious, the fact that 1 Year Greek bonds hit just under 160% in yield earlier, is an indication we may be on to something.
Lastly, the fact that the country could barely auction off 6 month bonds hardly inspires confidence: from Reuters "Tuesday's 1.3 billion euro issue, which included 300 million euros in non-competitive bids, was priced to yield 4.86 percent, up six basis points from last month and above the roughly 4.2 percent Greece pays on its EU/IMF bailout loans. Tuesday's auction attracted lower demand and the bid-cover ratio dropped to 2.73 from 3.02 at the Sept. 6 sale. "