Greece's Budgetary Disaster..New Figures Shock

Greece's Budgetary Disaster..New Figures Shock

On Tuesday, the Financial Times reported that Greece Officials had finalized an agreement to deliver the government pledge of budget reductions to meet the demands set forth by the Trioka, to receive the additional funding as agreed last year.

Although final agreements have not been reached with the credits and the IIF representing the largest of those, Greek negotiators have assured the EU that they have a final understanding.

One of the largest problems has been closing the gap between what was agreed last year and Greeks current budget deficit that has grown much wider then expected. Bondholders have been pushed to their limits and the Greek people have been pushed to theirs. The EU, the CB and the IMF will not budge from their original commitments. It is in the hands of the Greek Government and People to find solutions. The gap was close to 1 billion euros, which has been very hard to closed.

Yesterday, government offices released more current figures, showing that revenues posted a 7 percent decline compared with January 2011, while the target that had been set in the budget provided for an 8.9 percent annual increase.

Even worse, VAT receipts dropped 18.7 percent last month from the prior year as the economy continues to tread the path of recession: VAT receipts onlyadded up to 1.85 billion euros in January compared to 2.29 billion in 2011. When your taxpayers have no jobs they have no money to spend.

The VAT income data signals a particular worrying sign regarding the depth of recession for 2012, while even more painful measures are expected to lead to a reduction in salaries and therefore a further drop in consumption. This is the vicious cycle that the government will have to tackle by way of additional fiscal measures this summer. A lot of this has been compounded by the fact that the Greek government did not institute all of the earlier austerity agreements as detailed in the original bailout.

Also harsh austerity measures have proved not to work as forecasts and destroys growth.

According to the current data, the 2012 budget will certainly have to be revised soon, given that the original estimate for a contraction of 2.8 percent is now raised to 3.5-4 percent of gross domestic product.

Now we are starting to realize the problems behind the negotiations in Greece. No one wants to admit, that they need more then a bailout they need a handout or a default. There are no measures that can be implemented to meet these budgetary shortfalls and no way under these circumstances can Greece see growth in the near future.

If this was a business, we would be closing the doors and boarding up the windows.

EUR/CHF Pivot Points (Time Frame: 1 Day)

 Name  S3  S2  S1  Pivot  R1  R2  R3

 Classic
1.2020
1.2042
1.2084
1.2106
1.2148
1.2170
1.2212

 Fibonacci
1.2042
1.2067
1.2082
1.2106
1.2131
1.2146
1.2170

 Camarilla
1.2107
1.2113
1.2119
1.2106
1.2131
1.2137
1.2143

 Woodie's
-
1.2047
1.2093
1.2111
1.2157
1.2175
-

 DeMark's
-
-
1.2159
1.2112
1.2095
-
-