Greek Deal Done – But Is That It As Documents are Leaked

As markets come back to earth after the initial euphoria of the headlines of a “Greek Deal Being Reached”. The real blow comes via an FT.com exclusive where Peter Spiegel has obtained a “strictly confidential” 10 page report that was distributed to EU officials. In this report it highlights that the second bailout of €136bn in fact may not be the end of it and Greece may need another €50bn in top up by the end of the decade this is their “baseline” best case scenario.

The report also discusses a scenario where debt to GDP only falls to 160% that would mean Greece needs €245bn in bailout aid. The “baseline” assumption is that the Debt ratio falls to 120%.

FT’s Peter Spiegel writes that the austerity measures being imposed on Greece risk pushing them into a deeper recession. This means that the “baseline” scenario is not achievable forcing Greece to require further bailouts above the €170bn

This leaked information could well be that the handy work of those so called supporting EU nations. Bottom line EU Nations want an outcome that they are not on the hook indefinitely for bailouts. The viability of an EU or any monetary union will again be talking points. Speculation will be that Germany again may well be thinking of EU alternatives.

Does this look like Equity markets that believe Greek Deal?

Markets attention will quickly be focused on these new developments as even the “baseline” scenario means there is possibility of another 8 years to this Greek Tragedy any market rallies may well be faded once the initial euphoria dies. EUR forex markets may see some short covering and equity markets look to be largely unmoved by the news of the deal.

Good Trading. CF

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