FXStreet (Barcelona) – The Brown Brothers Harriman Team notes that there is much determination at the highest levels to preserve the integrity of the Eurozone monetary union, hence sees the possibility of a Greece deal ahead.
Key Quotes
“We suspect that many misunderstand the incentive structure, and under-estimate the political will to ensure EMU remains irreversible. In 2011-2012, the betting odds that Greece was going to leave EMU were reportedly as high as 70%. We argued then and continue to believe that key considerations may be outside the financial and economic calculus investors are so familiar with.”
“Many observers do not appreciate Draghi’s insight that monetary union is first and foremost a political union. There is much determination at the highest levels of Europe to preserve the integrity of the monetary union. Of course, there are dissenting voices in nearly every country, and many are exasperated with the Greek drama.”
“However, the commitment toward the European Project, for the lack of a better name, is palpable. There is no Plan B. There is either continued progress toward integration or European nationalism returns threatening a return to pre-modern times. It is, as we are fond of noting, as Benjamin Franklin told the thirteen colonies on the eastern seaboard of North America as they fought the world’s greatest empire of the day: “We hang together or we hang separately”.”
“On that note, the headline of the day was the IMF and the US the increasing pressure on the EU to grant debt relief to Greece. This lends credibility to Tsipras’ arguments, but we are not sure it helps very much. In fact, it may even be counterproductive if it means that Germany is seen as capitulating not only to Greece but also to the US.”
(Market News Provided by FXstreet)