Galery

1

The official announcement that Greece is not able to meet the targets for reducing the budget deficit for 2011 caused the Athens Stock Exchange to plummet and had a negative impact on its European counterparts. Officially, according to the financial aid programme, the budget deficit at the end of 2011 should be 7.6% of GDP. It soon became clear that ideally it would drop to 8.5% of GDP from its current level of about 10%, not excluding a further growth.  The financial markets were quick to respond. But not in a positive way.

The stock exchange closed with a 2.4 per cent loss and the basic indicator hit 779.29 bps. In inverse proportion to the stock index, there was an increase in the interest rates on ten-year Greek government bonds and the spread index reached 2100 bps. The London Stock Exchange FTSE 100 fell by 2.28 per cent. In Paris, CAC 40 lost 1.77 per cent and DAX 30 in Frankfurt tumbled 2.34 per cent. Analysts estimate that the total negative effect on European markets is not due to Greece's problems with the implementation of the economic cuts but to the lack of a general solution to the debt crisis in Europe as a whole. Meanwhile, the Tokyo Stock Exchange index NIKKEI 225 also showed a decrease of 1.96 per cent and the Dow Jones on Wall Street rose a little by 0.36 per cent.

"It seems that Greece may not be able to achieve the target set for this year and the next whole year. The measures agreed so far are not sufficient to achieve any financial goals," admitted the Commissioner for Economic Affairs in the European Union, Olli Rehn, before the meeting of finance ministers in Luxembourg. He added that Greece had taken important decisions in recent weeks, including yesterday, and stressed that the representatives of the Troika are still in Athens. Rehn said that the mission continues and the work on assessing the measures taken by the Greek government has not been completed. On Sunday night, the Greek government took the draft for 2012 as a street artist takes a rabbit out of a hat. Now it will be assessed by the Troika to examine the feasibility and reliability of the measures set for next year.

The failure of the rescue model for Greece induced ​​the European leaders to find a new and better plan than the current one. This led to the convening of an extraordinary meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy on October 10 to discuss the Greek issue. The next meeting of Eurogroup is expected to take place on October 13 when the euro area finance ministers will decide whether Greece will receive the sixth tranche. The summit of EU leaders will take place on October 17, followed by the summit of the heads of euro zone countries a day later.

As regards Greece, first and foremost is the completion of the Troika mission, after which a report by the International Monetary Fund and the European institutions on the pace of the changes made so far is expected. As a result, it will become clear whether the country will receive eight billion euros from the sixth tranche of aid or if it will have to declare bankruptcy and make the budget deficit zero faster and harder. Markets have not trusted the words of Greek politicians for a long time, but after the omission in the calculation of the effect of recession on GDP and the revenue collection, capital markets are starting to not believe the estimates of the supervisory mission in Athens. The Financial Times reports that Greece is becoming one of the lesser problems of the euro zone leaders and pop economist Nouriel Roubini states that to prevent the collapse of the common European currency Brussels should provide, in the coming weeks, at least two billion euros in reserve to prevent a financial rout.