Thursday was the autumnal equinox – officially ending summer and introducing fall to the Northern Hemisphere. Can you believe we have so far gotten through the entire year without once talking about Greece? In fact, the last time Global Perspectives touched on Greece was in June 2015.
I thought it would be interesting to check in and see how that country is doing. As I imagine you have guessed, things are still difficult there. The country is still in recession and the unemployment rate is running over 23 percent.
The Athens stock market is down by double digits and borrowing costs are high. The country is still struggling with debt as it is in its third bailout program and owes 326 billion euros to its European neighbors and the International Monetary Fund.
A meeting of the eurozone finance ministers earlier this month had a familiar theme. The ministers complained that Greece is not doing enough reform – specifically the country has met just two of the 15 conditions needed for its next scheduled loan of 2.8 billion euros at the end of next month.
But interestingly, there is virtually no concern in the market that we are going to be facing another high noon showdown like we had in the first half of 2015. That is because both sides now really have a lot to lose if things came down to that.
For Greece, their ultimate goal is some form of debt relief that will help them see the light at the end of the tunnel, but the creditor groups loaning them money have made it clear that this will only be possible in a couple of years – after Greece lives up to its current obligations.
As the rest of Europe deals with Greece, it finds itself fighting the lingering effects of Brexit. Probably the No. 1 job of the European Union right now is to keep all the family in the fold. The last thing it wants is to deal with another Greek crisis that calls into question Greece’s membership in the eurozone.
My View: Greece is going to fly way under the radar for a while – at least through the end of 2016 – as the world is facing other, more critical issues for the rest of this year.
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