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Greece Returns to the Front Page

Posted by WorldWideMarkets . on Aug 13, 2013 3:38:00 AM
Greece returns to the front of investor focus on two fronts. The first was Monday’s data that showed that the Greek economy, facing its sixth straight year of recession, had shrunk 4.6 percent in the second quarter. The number was slightly less than the 5 percent expected and the best, if there is a relative best in six years of recession, since 2011 but it was still a contraction. The pace of contraction for the first half was 5.1 percent annualized with the expectations for the year now at 4.2 percent, not nearly good enough to boost tax revenues to levels the government needs to meet its bailout targets.
     The second mention of Greece came in German news magazine Der Spiegel which reported on Sunday the Bundesbank said Greece will need additional loans by the start of 2014.The euro weakened as a result but it is the longer term impact that is more important. The article further raises the question of whether German Chancellor Angela Merkel is attempting to keep a lid on the issue before the September 22 election where she is likely to be returned a third time. It also raises the issue of how much one can believe Germany and the troika, the European Central Bank, European Commission and IMF, when most are insisting no more aid is needed. Note, the IMF as been saying for some time that more aid will be needed. If the Der Spiegel report proves correct and the Bundesbank is calling it as it sees it, expect at least volatility in the euro if not weakness in the months ahead. Not only from the dollar trading stronger but also as Greece once again takes center stage. The latest economic data from Greece hardly points to the long awaited turnaround.  greece trading

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