As if a Moody’s downgrade and the Eurostat numbers/revision were not bad enough.
Here via Erik Nielsen — Goldman’s chief European economist — is something else Greece could do without.
[Goldman economist] Dirk Schumacher reports from the road: The finance minister has failed to convince Conservative MPs to approve his chosen tactic to get the financial help package for Greece fast through parliament. The finance minister had planned to “attach” the financial help to a draft law that had already passed most of the usual parliamentary hurdles.
This plan, however, has now been rejected by the Conservative MPs who demanded a specific stand alone law. This may significantly delay the whole process of parliamentary approval. There is the possibility of fast track legislation that would take only about two weeks but the opposition would need to approve this. All this does not imply that the financial help will not be approved by parliament in the end, but it has significantly increased the possibility that the German part of the package will be disbursed only later.
(H/T Zero Hedge)
Recall that Germany is supposed to contribute the most money (almost €8.4bn) to the EU’s €30bn Greek bailout fund. But as Nielsen says, it isn’t clear when that cash will become available.
Perhaps it never will, if the political sentiment in Germany is any indication.
The Free Democrats who share power with Angela Merkel’s conservatives are now calling for Greece to take further austerity measures or leave the eurozone.
From Reuters:
A finance expert from German Chancellor Angela Merkel’s junior coalition partners was reported as saying Greece needed to intensify its austerity plan or leave the euro zone currency union.
Frank Schaeffler, of the business-friendly Free Democrats (FDP) who share power with Merkel’s conservatives, told Handelsblatt business daily that Greece’s debt situation was worsening and that further savings measures were needed.
“If Greece cannot push through these austerity measures, it must opt out of the euro zone voluntarily,” he said in an advance copy of an article to run in the paper’s Friday edition.
This really isn’t looking very good.
The Greek/German government bond yield spread has just hit 600bps – a level last seen in February 1998.
Related link:
Greek debt costs get higher and higher – FT Alphaville