“Greece” Needs Another Oil Change: The LRTOs stabilized most of Europe – except those pesky Greeks, who just can’t seem to get their act together. Once again, the ECB is dangling another bailout package (€130 billion loan facility) in front the Greek parliament in exchange for deeper austerity measures totaling €3 billion/year. The proposed cuts will come from government pension benefits, reducing the minimum wage by 22%, and ending permanent state-owned jobs and 150,000 public sector jobs by 2015.
Of course, we still believe all of this to be noise. It avoids the real structural issues Greece faces internally as well as the country’s adherence to the euro. The euro is simply too high in value for Greece to retain the jobs necessary to pay back its loans and/or provide the basic necessities of life for its now 20.9% unemployed (up 7% YoY). Since the beginning of 2010, Greece’s trade deficit has narrowed by about €1.5 billion – a step in the right direction, indeed, but at a pace that will take decades to pay off €100 billion in bad debts