News is coming in from Athens that, in a sudden decision, the Syriza Cabinet Council meeting scheduled for 7pm Greek time has been moved forward to 4pm – roughly one hour from now CET.
There is no shortage of clues as to why this has happened.
Eighteen ‘reform’ proposals were dispatched to Troika2 last Friday, at which time Syriza’s international economic affairs minister, Euclid Tsakalotos warned that – while Greece wanted an accord – it was prepared to go it alone “in the event of a bad scenario”. Tsakalotos told the UK’s Guardian newspaper that “We are working in the spirit of compromise, we want a solution, but if things don’t go well you have to bear the bad scenario in mind as well. That is the nature of negotiations.”
But within hours of the submission – designed to release €8bn to Greece – the Eurogoupe was leaking like an ocean-going sieve….all of it negative. First eight, then ten, and finally Saturday late afternoon fourteen of the Leftist Syriza proposals were dubbed variously unsatisfactory and irrelevant. Initial feedback from Athens this lunchtime suggests the Syriza Cabinet Council timing change is in response to a negative communication from Brussels relating to the Greek Government’s latest ‘reform’ proposals.
Two days ago, ratings agency Fitch downgraded Greece’s sovereign rating from B to CCC, blaming uncertainty over the EC provision of bailout loan payments to avoid default. That’s beneath accepted ‘safe investment grades’ and not much up from junk. It is hard to see such a swingeing cut as anything other than a Draghi-orchestrated ploy to push Syriza further into a corner.
Equally, it is probably significant that world-leading investment fund PIMCO chose this moment to assert that the eurozone is “untenable” in its current form and cannot survive unless countries are prepared to cede sovereignty and become a “United States of Europe”. Or put another way, become a USE subservient to the USA by replacing the euro with a ‘Dolleuro’ – not to be confused with the eurodollar that already exists….but a real currency backed by the world’s greatest power.
PIMCO added ‘the rise of populist parties demonstrates how uneasy some people have become about the euro’. If I may make so bold, that is utter rot: popular national Parties of both Left and Right have arisen because their citizens are sick to death of Brussels-am-Berlin ordering them about while driving them into an austerity that makes no sense whatsoever.
NB>> The $US is now at 92% of the euro. I have posted several times previously to say I think Draghi is working towards a Dolleuro at parity.