Government of national cooperation in the spotlight once more

The Troika’s intense pressure on the government to proceed immediately with the implementation of the measures brings forth scenarios of political developments once again.

The lenders have asked for the voting on the budget for 2012, as well as the adoption of all measures upon which the government has made a commitment, to take place by the end of the month.

The Eurogroup postponement brings back the nightmare of interior payment stoppage. There are reports that even speak of a national cooperation government in light of the current situation, even with the tolerance of opposition.

The climate is exacerbated by reports in the German press, as the German edition of the Financial Times spoke of Papandreou’s resignation, a possibilty that was denied by Maximos Mansion, who called it "rubbish".

Meanwhile, Deutsche Welle speaks of a plan that provides for Greek bankruptcy if the State is unable to service its debt, while the Frankfurter Allgemeine argues that German finance minister Resler will discuss the possibility of controlled bankruptcy during his forthcoming visit to Greece.
 
Pressure

The Troika pressure began because the Eurozone and the IMF found that Ireland and Portugal are taking steps to address the fiscal problem, while Greece is very slow in making decisions with a political cost.

Thus, they are pushing for drastic cuts in spending, privatizations, divestiture of public property, etc. Simultaneously, the inability of Europe to effectively manage the debt crisis leads to the expansion of the latter, and the collapse of the markets is now apparent as the crisis - as illustrated by Dexia case - sweeps away the banks once again, bringing back memories of 2008.

Nobody is able to predict developments, but the most likely scenario is a change in the conditions of private sector involvement (PSI) under the Agreement of July 21. The prevailing version entails having a change in the PSI conditions, which will result in the haircut of Greek government bonds even at a rate higher than 30% instead of the current 21%.