Playing Chicken again? How long can Greece go without cash?

11/05/2012 6:33 pm EST


Jim Jubak

Founder and Editor,

Ahh, the never-ending road that is the Greek debt crisis. Just when you think you’ve got the time line down, somebody opens it up again.

So today, November 5, with signatures from all government ministers finally appended, the Greek government has sent the 13.5 billion euro austerity package agreed to with the Troika (European Commission, International Monetary Fund, and the European Central Bank) representing the country’s rescuers to the parliament in Athens. Tomorrow parliamentary committees will study the package and then it will move to a full vote in parliament on Wednesday. The odds are that the package will squeak by. The junior partner in the government coalition, the Democratic Left, has decided to abstain from the vote rather than to vote against the austerity package.

Is that the end of parliamentary voting in Greece? Not a chance. On Sunday parliament will vote on an actual budget for 2013. That’s expected to pass with more of a margin since the Democratic Left has said it will vote for the actual budget. (Its objections are, apparently, to the local “reform” measures in the 13.5 billion euro austerity package.)

And then it’s on to a vote at the November 12 meeting of EuroZone finance ministers, right?

Well, maybe not.

An unnamed EuroZone official, in Mexico City for the meeting of the G20, has told Reuters that there’s no guarantee of a decision on November 12. Apparently, according to this official, some countries aren’t sure that the current austerity program puts Greece on a path to a sustainable ratio of debt to GDP. (Well, duh, it doesn’t. We all know that.) Some countries might require approval from their own parliaments before they can sign on to any deal that gave Greece more time to meet its targets.

This source also pooh-poohed worries that Greece would run out of money on November 16 when 4 billion euros in bonds mature. Greece can hang on a bit longer without getting the next 31 billion payout in rescue funds, the source opined. Greece can meet its obligations until the end of November or even early December, the source told Reuters. “We’re not so much under the gun as it may seem.”

Without knowing the identity of Reuters’ source, it’s impossible to say how much weight to give these comments. European financial markets, by and large, don’t seem to be amused, however. The German DAX index closed down 0.5% today; the French CAC was down 1.3%, Spain’s IBEX was off 1.9%. Oddly, the Greek FTSE/ASE 20 Index climbed 3.9%. Maybe their subscriptions to Reuters have lapsed.
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