FXStreet (Guatemala) – At time of writing Greece appears to have capitulated to its creditors in embracing a EUR13bn package of immediate tax increases and spending cuts.
Key Quotes:
“That is after having had exactly that austerity package roundly rejected by voters in January, and again in Sunday’s referendum. Let’s be clear, for an economy already in depression that kind of austerity will cause another huge downturn even if banks reopen: indeed, the goal of a primary fiscal surplus against such a backdrop is not even “voodoo economics”, it is the economics of the madhouse; and even if this is politically palatable – and enforceable – in a population that has just soundly rejected it twice, it will still see Greece’s debt-to-GDP ratio continue to rise, as has been the case almost everywhere austerity has been tried. In short, if this deal is signed off on we have, at best: a crisis postponed, not averted.”
(Market News Provided by FXstreet)