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More delays in the decision to send the next rescue payment to Greece; no approval likely at November 12 meeting, sources say
11/08/2012 3:19 pm EST
What’s behind the continued drift lower?
More statements, still from unnamed officials, saying that European finance ministers won’t be ready at their Monday, November 12 meeting to vote on approving the release of the next 31.5 billion euro rescue fund payment to Greece. The final report from the Troika—the European Commission, the International Monetary Fund, and the European Central Bank—won’t be ready by the meeting date and the ministers, the unnamed source said, won’t approve the payout from the preliminary version of the report. Unnamed sources continue to insist that Greece will be able to find the cash to fund the government and banks through the end of November and maybe even through the first week of December. These sources also say that the next date that finance ministers could approve the payout for Greece would be November 26.
To me that seems like cutting it awfully close.
Meanwhile the Greek economy continues its not-so-jolly trip to hell. Unemployment was reported at 25.4% today and is still climbing.
Financial markets were also mildly disappointed that today’s meeting of the European Central Bank didn’t produce any action to lower interest rates. The bank kept its benchmark rate at 0.75%. The next chance that bank will have to lower rates comes in December but the likelihood, in my opinion, is that the bank will wait until early 2013 to move. European economies do continue to slow, but the bank doesn’t have a whole lot of room left for cutting rates. Reduce them to 0.5% or 0.25% too quickly and the central bank will leave itself without any interest rate ammunition if economic growth slows even more than current dismal projections.
If you’ve got a couple of European stocks on your potential buy list, this whole delay and more delay thing might be setting up a good entry point not too much further down the road. If, of course, you think European markets will rally for a few weeks on news that Greece will actually get the cash before the country is unable to function.
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