All eyes are on Europe to see how it responds to the crisis in Greece. This provides a valuable opportunity for the Eurozone countries to act with solidarity especially since Greece is not asking for money from Germany but rather its political support. The Eurozone's sixteen countries are bound by a written pact, a common currency and central bank but above all a pact a solidarity.
Angela Merkel's challenge now is to manage German public opinion while helping Greece alter its behaviors. However if she does not accomplish this, the other Eurozone countries will not act. It is even more complicated given that much of Greece's debt is in the hands of European banks and default on this debt brings even more strain on these already battered banks. Disengagement with Greece is not an option. This leaves Germany and Greece only one path - forward.
On the market front, the $ 7 billion issue launched yesterday was well received. However it only represents a stabilization of the market perception: at 6.25%, Greece pays twice as much as Germany. Since only a few shorters try to spread the unrealistic rumor that Greece might be in default, the 3% spread is definitely a good remuneration for investors and the highest paid by Greece.
For the complete report: Georges Ugeux: Failure is Not an Option For Europe
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