May 30, 2011
Equities, commodity prices and the euro edged lower in quiet, holiday-subdued trading as fears about a Greek sovereign debt default kept investors’ nerves on edge.
Rumours over the weekend that Greece had failed to meet any of the fiscal targets set at the time of its first bail-out were followed up with reports that European Union leaders were considering imposing harsh conditions on Athens in order for it to secure further assistance. These were said to include international involvement in tax collection and the privatisation of state assets.
“The new conditions – if they are implemented – would be far more practical in nature than the mere ‘targets’ that were agreed during the negotiations for the first bail-out,” said Kathleen Brooks, research director at Forex.com.
“This type of ‘help’ is exactly what Greece needs at this stage of its financial rehabilitation; however, it would be a big step that could jeopardise the economic sovereignty of Greece. This would be a fundamental change to the way the eurozone operates and would mean closer political and economic ties as well as the prospect of fiscal union.”