Greece Is Still The Eurozone's Achilles Heel

14/12/2014

By  Stephen Pope

It had seemed as this tired year ran out that the only immediate concern for the Eurozone was when the ECB would start sovereign bond QE, however, that old perennial problem, Greece is back on centre stage.

The fragile Greek coalition was set to nominate a new candidate for the role of President early in 2015. Given the structure of the Greek parliament it would certainly stretch the government to secure three fifths of all MP’s as the main opposition Syriza would be highly likely to block the vote and consequently force a General Election.

In what can only be described as a grab for glory, the Prime Minister, Antonis Samaras saw a political opportunity in that if he could take Greece out of the bailout programme and see the back of the overbearing troika, then it was possible he could win enough seats to block a Syriza led left wing coalition forming a government.

This decision has proved to be a tragedy for the Prime Minister as Greece has missed the required targets on its budget measures. Consequently  Eurozone finance ministers decided to grant  a two month extension to its current loan programme, which was due to run out at the end of December and is worth EUR245 Billion.

Once again to those outside of the Eurozone, it is baffling how a sovereign nation that should never have been allowed into the Euro in the first place…which should have left the Euro in 2010…has again been rewarded for failing to deliver its side of the bailout bargain by being allowed more time to comply.

This decision was a unsubtle attempt to give Greece time to meet the outstanding demands of the troika as the Eurozone elite are terrified of what may happen if Syriza do indeed form the next government.

Deep Debts:

The country escaped a six year long recession in Q3 2014 and grew at the fastest pace of all Eurozone countries. However, that is far from the complete picture.  Unemployment is still at 25.7 percent and youth unemployment an eye watering 49.3 percent. Debt levels relative to GDP stand at 174.1 percent so making Greece the most indebted nation in the Eurozone, according to Greek daily Ekathimerini and Eurostat.

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