The finance minister of Slovakia said that the euro zone should prepare for a scenario of a coordinated default of Greece in order to prevent contagion. He awaits the report of the troika regarding Greece. The report might show that Greece’s debt is unsustainable.
The voices speaking about a default are becoming louder as the troika and Greece find it hard to a agree on measures for the next tranche of aid.
Slovak finmin Ivan Miklos spoke with a Czech newspaper Lidove Noviny and was quoted:
“In case we draw a conclusion that the situation in Athens is not sustainable, we must say how are we prepared for a coordinated bankruptcy and how will we prevent further contagionâ€.
Slovakia still hasn’t approved the new powers for the European bailout fund (EFSF). Slovak officials have admitted that the government currently lacks a majority in parliament to pass these measures.
Job Cuts Stuck
The ECB /EU / IMF “troika†wants Greece to cut 30,000 immediately, as part of a plan to cut 100K jobs in the next few years. While the government in Athens agreed to these fresh austerity measures, there may be constitutional measures that may prevent these job cuts, or putting these people on “reserve status†for a year, before laying them off.
The troika may find other ways and may be more forgiving in the report. Time is running out. Greece may run out of money by October 17th. So, the troika could close its eyes, approve the next tranche of aid, and in the meantime prepare for a default.The Greek government did manage to pass a new property tax law in parliament. This was also aimed at meeting the commitments that Greece took in the bailout program.
According to some reports, the timing of the Greek default is set for the first week of November when G-20 leaders meet. .
In the meantime, its preparation time, but the markets continue rolling and the euro may extend its falls against the dollar.
For all the events and technical analysis, see the euro dollar forecast.
