The Greek middle is not holding.
The Deputy Finance Minister Valavani resigned this morning. In an open letter to Prime Minister Tsipras, Valavani says it’s not about debt restructuring, it’s about Greeks being able to stay alive after the government passes the measure.
Christine Legarde said Wednesday that the IMF will not be able to participate in this refunding bailout of Greece because the organization cannot participate in loan sharking operations, per its charter.
Lagarde is saying what I have said all along. Greece had debts no honest man can pay, and therefore needs a Marine-style haircut on its debt, before the IMF can become involved. There has to be a possibility of repayment and to be able to grow its economy.
I cannot see how the Greek parliament can pass these draconian measures to enslave their people for decades, with no viable escape from the debt.
One government estimate has the payment on the debt in 2020 will amount to over 300% of estimate GDP. No this can’t work and it should be voted down.
It’s not like re-opening the banks depends on the vote, because there are reports that regardless of the vote outcome, the banks will be closed until August at the earliest.
China released three key economic reports on Wednesday, that all beat the consensus estimates.
- Retail Sales was up 10.6 percent over last year with expectations of a 10.2 percent gain.
- Industrial Production rose 6.8 percent beating expectations of a 6.0 percent rise.
- GDP rose rise 7.0 percent eking past 6.8 percent estimate. It’s the lowest since beginning of 2009.
Chinese equities took data with a large grain of salt and closed lower on the day, somehow perhaps not believing in the numbers.
So once again the slowing Chinese economy — the biggest fear on the globe — will be pushed aside for the time being as the government numbers have to be accepted until they aren’t.