The Eurozone finance ministers are talking tonight on two issues: providing Greek with further finance and dispelling a possible 'contagion effect' across the markets if this fails. The argument is compressed into the next two days as poltical and financial effects combine. The Papandreou government in Greece is facing a vote of confidence which, if positive, will ensure parliamentary support for the austerity measures. To sweeten the pill and assuage the street, Papandreou is offering to curb some of the perks enjoyed by the political classes (ministerial immunity, political financing, gouging the taxpayer). In tandem, the Eurozone will make a bridging loan, to keep Papandreou's government afloat, although the IMF portion can only be disbursed if they are confident Greek finance is on a medium term foundation.
If these two hurdles are overcome, then the play will enter a new scene: to climax on July 11th. There, the ministerial jugglers will attempt a voluntary restructuring of debt (including private sector participants) without setting off a default event. Since the whole tiresome process hinges on Greek co-operation, I hope that the Parliament puts PASOK out of its misery and faces economic truths: your austerity program will not resolve your debt trap.
If there is a 'contagion effect', this may be viewed as a self-fulfilling prophecy. Market participants expect the dominos to fall, and act accordingly. Another blinding performance from Juncker and the Debt Junkies
