The Greek Charity Continues

Let me sum the situation up in a nutshell. Lenders have agreed to bail Greece out, for the second time with a further 109 billion euros. There is the potential that Ireland and Portugal will require something similar; and the debt crisis could quite easily spread to Spain and Italy. In monetary terms, the overall cost to each Greek citizen equates to 31,000 euros. However, all this aside, the euro has made strong advances against the majority of its major counterparts amid renewed confidence in the markets. Take from this what you will, the sticking point remains; will Greece be able to afford the repayments?

Pound Sterling – UK Markets

I take back all the negativity I placed on retail figures yesterday. It appears that retail sales recovered ever so slightly in June. This occurred because stores began their ‘summer’ sales early to attract consumers that are beginning to spend less across the board – even on food. Compared with June 2010, sales for June 2011 were up 0.2 percent.

US Dollar – US Markets

It appears that Greece has managed to come out unscathed by the recent debt crisis. However, talks in the US continue as President Barack Obama summoned top Democrats to the White House last night in an attempt to resolve the current saga. Democrats are now accusing the Republicans of “running from a real solution”, stating that there is no real pressure on them to resolve this. The bottom line in talks is that the Republicans are not accepting tax increases as part of any debt-reduction scheme.

Euro – European Markets

Following a ‘successful’ conclusion to the Greek debt crisis, the European stock markets have made continuous strides forward. Private lenders are being forced to contribute to the package, which will essentially allow Greece decades more to repay its debts. European leaders continue to state that Greece was a ‘special case’ and that the bailout was a clear signal of their determination to stem the crisis spreading throughout Europe. However, the argument remains; if you cant repay debts, Europe will simply throw more money at the problem – they haven’t done much to ease my long term fears, let’s put it that way. Unfortunately for Greece, whilst their economic woes may have been solved by this lifeline, severe tax cuts will not be taken well by the Greek public. It is expected that instead of languishing in the sun, the majority will take to the streets for a summer of rioting. It remains an underlying question as to whether the majority decide to boycott paying taxes. I ask the simple question; what then?

Other Currencies – Highlights

Whilst its US counterpart continues to struggle, the Canadian Dollar appreciated to the strongest in more than three years versus the greenback after murmurs this week from the Bank of Canada led investors to believe that interest rates will increase later this year. This speculation appears to be echoed in Australia as the currency down under also climbed for the second consecutive day versus the Yen. This came as they also stated that interest rates may be raised later this year instead of considering cuts.