What Act of the Greek Tragedy?

It looks like the markets don’t really buy the “end of the Greek tragedy”. At the same time the eurozone member Slovakia will only vote on financial aid for Greece after the June national election.

Meanwhile the New Democracy party in Greece (the opposition to the left PASOK government) has obviously decided NOT to support the austerity measures.

So what is going on??? I am not sure.

Martin Wolf says that it is hard to believe that Greece can avoid debt restructuring. He also notes that several eurozone Member States have unsustainable fiscal deficits and rapidly rising debt ratios. Wolfgang Münchau says that the bilateral loans will have the so-called junior status, meaning that they will be repaid only after the repayment of existing Greek government bonds. He believes that this represents a real financial transfer from eurozone members (and particularly Germany) to Greece. He calls this „an absolute scandal“ and believes that the Bundestag could block a junior loan agreement.

This may mean a contagion, especially if the Greek situation is not resolved quickly. Spanish Prime Minister Zapatero has denied rumours that he’s preparing an aid package for Spain.

There is too much information being withheld, I think.

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