The People Have Spoken – Latest on the Greek Debt Crisis

The people of Greece have spoken … and the banks remain closed, until Thursday at least. The only thing that keeps the ATM’s dispensing €60 a day is the emergency liquidity assistance still being offered by the European Central Bank (ECB). How long this will continue for is hard to tell – central banks can only lend money against high quality collateral, which is becoming harder to find in Greece these days. Overnight the ECB increased its requirements for collateral in exchange for continuing to support Greek banks. It’s not the ECB’s role to bail out any bank – this situation needs to be solved at the political level.

On that note, the resignation of finance minister Varoufakis is seen as a positive step, sources close to the last round of negotiations have been reported as saying that his abrasive nature was unhelpful at the very least.

Chancellor Merkel and President Hollande held a joint press conference overnight before the emergency summit in Brussels, asking the Greek prime minister to come back with an offer to break the current impasse. It is reported that France, Italy and Spain are impatient for a deal, whilst Germany and other Northern European nations are more content to let Greece suffer the realities of bank closures, cash shortages and isolation.

Prime minister Tsipras has met with other Greek political leaders and reached consensus on a negotiating strategy committed to debt restructuring. It will be interesting to see the response he receives in Brussels in light of the differing attitudes mentioned above.

Our share market fell yesterday, but by less than most commentators expected and this theme played out in European exchanges overnight also. Our market is tipped to open higher today, erasing all of yesterday’s losses. Short term speculation must be tiring.

One thing we know for sure is that the Greek situation still has a lot of uncertainty and will continue to capture news media attention as it unfolds.

Domestically, the ANZ job adverts index rose 1.3% month on month, which is considerably more than estimates and a sign that a more constructive federal budget might be translating into an increased level of labour demand. Hopefully this news will capture some positive media attention.