Last week was dominated by one main theme. The ongoing train wreck that is the Greek economy, and the extension on their bailout from European creditors took precedence over everything else. As early as Friday AEST, there was still a stalemate as to whether a deal would be struck and Greece would be given more time to meet it bailout obligations. I guess the ramifications over giving Greece more time versus them defaulting on their debt and possibly leaving the Euro Zone weighed heavily on creditor’s minds as they agreed to an extension that would buy Greece four more months to meets its obligations and receive its next instalment of the 240 billion Euro bailout package.
If the above interpretation of the Greek economy seems harsh, let bring to light a few facts. An economy that has a little over 25% unemployment, that’s right, over ¼ of every able bodied man and woman, is out of work. The Greek economy is one that needs a 240 billion Euro rescue package as a result of Fiscal irresponsibility and corruption by previous Governments and mass tax evasion by the Greek people. A Government that agreed to a bailout to save itself from insolvency, agreed to reforms, tax hikes and other such austerity measures to receive the bailout in the first place, but is now unwilling to uphold its side of the bargain.
In the words of several financial reporters, further bailouts are merely kicking the proverbial can down the road; nothing of substance was fixed on Friday. The Euro found a little bit of relief from the selling it has endured against most trading partners, but still remains firmly entrenched in a downtrend. Paired against the Aussie dollar it closed a fraction over 1.45 market rate.
Looking forward to this week, it seems once again we have a calendar heavily focused on the Euro Zone and the U.K. Germany, the one shining light in the Euro, has a slew of high-level data set to be released over the course of the week. Monday sees business IFO, Tuesday GDP and inflation data by way of CPI, and Wednesday sees unemployment change and the unemployment rate along with retail sales. Any slowdown seen in the German economy this week could derail any feel good factor after the striking of a deal with Greece for an extension on its loans on Friday night AEST. The U.K. weighs in with the head of the Bank of England (BOE), Mark Carney, testifying to the Commons Treasury Committee on Tuesday night and U.K GDP set to be released on Thursday night AEST.