EuroCrisis: Greece to Collapse in November

By Roger Baettig | October 07 2012 6:23 AM

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Greece to run out of cash by November without next bailout tranche

Greece will run out of money by November if the next tranche of international aid does not arrive, Greek Prime Minister Antonis Samaras said in an interview with a German newspaper published on Friday.

“Until the end of November. Then the coffers are empty,” Samaras told the business daily Handelsblatt, answering the question of how long the struggling country can hold on without the next credit tranche.

Greece has been dependent on international bailout aid on condition of drastic austerity measures, including pay cuts and higher retirement ages.

Samaras said he is confident that the next tranche of aid will arrive on time, but added that it is very difficult to make further cuts to pensions and wages.

Inspectors from the so-called “Troika,” the International Monetary Fund (IMF), the European Commission and the European Central Bank (ECB), are currently in Greece to assess the country’s progress in fulfilling austerity promises before receiving the aid.

The troika’s approval is vital to unlock the next installment of aid, urgently needed to avoid bankruptcy of the debt-ridden country.

Greece needs to gain access to EUR31.5-B or US$40.6-B, in loans from a second EU-IMF bailout program that has been held up for several months.

This week, the government presented additional budget cuts worth EUR7.8-B (US$10.1-B) for Y 2013 to get the country’s troubled fiscal overhaul back on track.

Samaras admitted that there are difficulties in negotiations with the troika, which demands further cuts to pensions and wages.

“That is very difficult,” he said. “We are at the limit of what we can expect of our population.”

On Thursday, German Finance Minister Wolfgang Schaeuble said that all crisis-hit Eurozone countries have made progress on economic reforms except Greece. He praised the reform and budget consolidation efforts undertaken by Italy and Spain.

Earlier this week, Greek Finance Minister Yannis Stournaras estimated the Greek economy will contract by 3.8% next year, down from 6.5% in Y 2012, remaining in recession for a sixth consecutive year.

Paul A. Ebeling, Jnr.Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.