Greek Deal: Unmet Expectations?

Greek Deal: Unmet Expectations?
Justin Burkhardt |

The long awaited Greek deal has finally come to fruition, or has it? The old adage that history has a way of repeating itself is something to consider here. Over the last 3 years talks of a Greek bailout have been continuous, yet without finality. Today it sounds like a decision has been made as Euro-leaders have unanimously decided to reduce Greece’s debt and recapitalize its banks via easing packages that will be broken down into four tranches.
December 16th is set to be the “target” release date for the initial bailout tranche of $44 billion, but historically how many times have targets like this one been set and then pushed back and promptly ignored?
I am not implying that this deal will not get done, just that we should expect the unexpected when it comes to government promises.
Greece is obviously a major concern for the EU, but the markets are clearly more concerned with the bigger picture (the fiscal viability of the Euro-Zone). The Euro rallied this morning after EU-leaders came to terms with a new Greek deal but the optimism quickly shifted as concerns of the broader picture began to weigh in.
Just maybe the Greek bailout saga is drawing to a close. While markets set expectations, we now move towards the true impact of what this final deal will do for both Greece and the EU as a whole. Moral hazard is set to be released again, and we get a chance to glimpse the true impact…


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Your currency analyst,

Justin Burkhardt   



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